ANNUAL REPORT 2014

CONNECT.
EYE-CATCHER
MAXIMUM PERFORMANCEFORBO – IN EVERY DAY LIFE

EYE-CATCHER.
An entrance says a lot about a building and extends
a welcome to visitors. The first impression is decisive.
Our entrance flooring systems make all the difference
because they combine unique aesthetic qualities witha high level of functionality to make a stylish impression.

MAXIMUMPERFORMANCE.
Hygiene is an essential factor in the production offoods of all kinds. Our conveyor belts with individual
surface textures pass through icy cooling rooms
and glowing ovens – challenges that they easily master
thanks to their excellent quality.

4This E. Schneider

Stephan Bauer

Executive Chairman

CEO‘Forbo remained on course for success in 2014. Its­strategic focus on high-end products, coupled withongoing expansion in growth markets and newmarket segments, drove strong growth and raised
profit significantly in both divisions. Profitability,
already at a high level, was further increased by targeted investments along the value chain.’

FORBO ANNUAL REPORT 2014 – LETTER TO SHAREHOLDERS5

TO OURSHAREHOLDERS
Dear Madam, dear Sir,
Forbo remains on course for success. Our three-pronged strategy – creating added value for our customers
with high-end products and services, strengthening our distribution channels in growth markets, and systematically opening up new market segments outside the public sector – paid off again in 2014. We achieved
gratifying, double-digit sales growth, especially in the expanding Asian markets, whereas expansion was more
moderate in Russia and the South American markets.
In both divisions we positioned our attractive and innovation-enriched product portfolio in such a way that
we were able to post above-average growth and gain market share even in the developed markets. In the
consolidated income statement, though, the appreciation of the Swiss franc once again eroded the strong sales
performance in local currencies.
In the Flooring Systems division, we successfully launched versatile new collections of our broad productportfolio, in particular modular designer floors, while selectively optimizing the value chain in order to further
increase profitability.
In the Movement Systems division, we not only stepped up market activities but also had great success inlaunching a number of technologically sophisticated new developments that generated added value forour customers. At the same time, we streamlined manufacturing processes and optimized our services, andthese efficiency gains contributed to a further significant increase in profitability.
In order to continue growing sales and profitability, we significantly increased investments in expanding
capacity and raising efficiency.

Sales well above previous year
Sales trend remains firm
In 2014, Forbo generated gratifying growth in sales, which came to CHF 1,226.8 million (previous year:
CHF 1,199.7 million). This is equivalent to an increase of 4.6% in local currencies, but only 2.3% when calculated
in the corporate currency, owing to the negative impact of currency fluctuations. Sales in Swiss francs wereeroded by about CHF 28 million in particular because of the weakening of the Russian ruble and the Japaneseyen.
The sales of Flooring Systems rose by about CHF 11 million to CHF 884.6 million (previous year: CHF 873.5
million). This is equivalent to an increase of 3.4% in local currencies, but only 1.3% when calculated in the corporate currency, owing to negative currency effects. The success of our determined efforts to expand market
segments in the private sector more than offset public sector sales, which are flat or even declining.
Movement Systems reported sales of CHF 342.2 million (previous year: CHF 326.2 million), a significant increaseof 7.8% in local currencies. In the corporate currency, however, adverse currency effects reduced this increase to4.9%. The investments in growth markets, particularly in recent years, are now having a positive impact.

6

FORBO ANNUAL REPORT 2014 – LETTER TO SHAREHOLDERS

Strong operating profit
Profitability further strengthened
Despite the ongoing expansion of our activities in growth markets, investments in production plants, andsubstantial expenditures for the development of high-end products plus various global market launches,
we again succeeded in significantly increasing profitability in both divisions. The contributing factors werehigher sales and further productivity gains all along the value chain.
Significantly higher operating profit margins
Both divisions reported a significant improvement in operating profit before depreciation and amortization(EBITDA), which rose by 7.6% to CHF 185.1 million (previous year: CHF 172.1 million). Forbo reported operating
profit (EBIT) of CHF 149.4 million (previous year: CHF 135.7 million), which was again a double-digit gain of
10.1%.
Both divisions also considerably improved their operating profit margins. The EBITDA margin rose by 0.8
percentage points to 15.1% (previous year: 14.3%). The EBIT margin was up by 0.9 percentage points to 12.2%(previous year: 11.3%).

Again double-digit growth in Group profit
Another year of above-average profitability
Driven by the marked improvement in operating profit and bolstered by financial income of CHF 4.9 million(previous year: CHF 5.2 million), growth in Group profit from continuing operations was again in the doubledigit range, up 12.0% to CHF 123.4 million (previous year: CHF 110.2 million).

Balance sheet remains in great shape
High net cash
In the year under review, net cash decreased by CHF 54.3 million to CHF 252.6 million (previous year: CHF 306.9
million).
The decline is due on the one hand to higher investments designed to secure our future operational activities
and on the other hand to the share buyback program in the reporting year. In addition, as at December 31,
2014, Forbo held 261,150 of its own shares valued at year-end at CHF 259.7 million (previous year: CHF 165.6
million). Of this total, 158,467 shares are earmarked for the capital reduction in accordance with the decisionof the 2015 Ordinary General Meeting.
The equity ratio still remains at a high level of 67.4% (previous year: 69.8%).
The program to repurchase the company’s own shares in the reporting year has resulted in earnings accretion.
Earnings per share from continuing operations (undiluted) therefore rose disproportionately by 16.4% to
CHF 61.92 (previous year: CHF 53.21).

7

Forbo is in pole position for further growth opportunities
With our focused market leadership, our sound balance sheet and our systematically implemented strategy,
we are well placed to force the pace of expansion in growth markets while also taking advantage of external
growth opportunities in order to enhance Forbo’s strategic positioning. However, we will make acquisitions
only if we can thereby create added value for our shareholders. For the time being, we are holding the liquidity
as a strategic reserve. The high level of liquidity, plus future operating cash flows, enable the Board of Directors
to make further share buybacks without restricting the Group’s scope for future acquisitions.

Proposals to the Ordinary General Meeting
The Ordinance against Excessive Remuneration in Listed Public Companies (OaER) entered into force on
January 1, 2014. The Ordinance allows for a transition period until the end of 2015. The Board of Directors
promptly submitted a comprehensive amendment of the Articles of Association to the Ordinary General
Meeting of April 25, 2014, which was passed by a large majority.
Elections to the Board of Directors
As of the 2014 Ordinary General Meeting and in accordance with the OaER and the amended Articles of
Association, all members of the Board of Directors are now elected in individual ballots for a term of one year.
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 from CHF 14 to CHF 16
Despite the volatile environment and in the interests of a consistent dividend policy, the Board of Directors willpropose to the Ordinary General Meeting the distribution of a dividend of CHF 16 per share for the 2014business year (previous year: CHF 14), which equates to an increase of CHF 2 per share. This dividend will be
paid out to shareholders as a tax-exempt distribution from capital contribution reserves.
Share buyback program
The Board of Directors will propose to the Ordinary General Meeting the cancelation of the company’s own
shares repurchased to date as part of the share buyback program. At the same time, the Board of Directors
proposes, over a period of three years, the repurchase of further own shares up to a maximum of 10 percent of
the share capital via a second trading line on the SIX Swiss Exchange or by other means in order to reduce
capital.

Well positioned for 2015
Outlook for 2015
The current global political and economic situation is difficult to assess.
Since the Swiss National Bank decided to no longer peg the Swiss franc to the Euro exchange rate on January
15, 2015, the foreign exchange markets have also been in turmoil and this has had a knock-on effect on
economic developments.
In recent years, Forbo has strongly increased its global presence and now operates in various economic zones
with different currencies, which on the whole has had a stabilizing effect on the Forbo Group. Thanks to ourstrong strategic positioning, we again anticipate an increase in sales and profitability in local currencies in 2015.

8

FORBO ANNUAL REPORT 2014 – LETTER TO SHAREHOLDERS

However, sales and profit in the corporate currency will be eroded once the local results are translated into
Swiss francs. We have therefore taken a number of additional measures to offset these currency effects by evenstronger operational performance.
Barring any change in the foreign exchange situation, we anticipate to generate a Group profit from continuing
operations in 2015 that is at the same level as in the previous year.

Thank youThanks to employees, business partners, and shareholders
The impressive performance in the past year is due to the cooperation of all our employees who have made avaluable contribution through their commitment and professionalism. The key factors for success in the future,
as in the past, are quality, reliability, innovation, efficiency and prudence in turbulent times.
We also wish to thank our customers, business partners, and suppliers for their professionalism and theconfidence they have placed in our company.
On behalf of the Board of Directors and the Executive Board, we thank you too, in particular, dear shareholders,for the deep trust and loyalty you show to Forbo.

Baar, March 2015

This E. Schneider
Executive Chairman

Stephan Bauer
CEO

Financial calendar
Ordinary General Meeting:
Publication of Half-Year Report 2015:
Publication of Annual Report 2015:

April 24, 2015
August 18, 2015
March 15, 2016

9

CONTENTS
At a glance
Forbo in figures
Strong growth and a significant increase in earnings
Sustainable engagement

Activity report
Two divisions with leading market positions
Flooring Systems:
Solid foundation for future growth
Movement Systems:
Success driven by know-how and reliability

11
14
18
24

29
31
34
40

Organization45
Executive BoardGroup structure 
Board of Directors

46
49
50

The Forbo share

53

Corporate governance report

57

Remuneration report

75

Forbo Group financial report

93

Consolidated balance sheet
94
Consolidated income statement
95
Comprehensive income statement
96
Consolidated shareholders’ equity
97
Consolidated cash flow statement
98
Notes – accounting principles
99
Notes109
Group companies
146
Report of the statutory auditor
150
Consolidated income statements 2010 – 2014
152
Consolidated balance sheets 2010 – 2014
153

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

155
156
157
158
163
164

10

11

AT A GLANCE
Forbo in figures
14
Strong growth and a significant increase in earnings18
Sustainable engagement
24

122014 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 5,100 people
and has an international network of 24 production
and distribution ­companies, 6 assembly operations and 42 pure sales organizations in a total of
36 countries. Forbo is headquartered in Baar in
the canton of Zug, Switzerland.

14

FORBO ANNUAL REPORT 2014 – AT A GLANCEFORBO IN FIGURES
Forbo is a global player, and its two divisions 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 systems reflect the quality and stability of
our relations with our business partners.

Flooring Systems
15 production facilities in 6 countries and distribution
companies in 24 countries. Sales offices in Europe,
North, Central and South America as well as Asia/
Pacific.
Floor coverings
Building and construction adhesives
Movement Systems
9 production sites and 6 assembly operations in 9
countries and distribution companies in 29 countries.
300 sales and service offices worldwide.
 Production facilities andassembly operations

Net sales 	
EBIT 		EBIT margin 	Group profit	

CHF 1,226.8 m
CHF 149.4 m
12.2%
CHF 123.4 m

Earnings per share	

CHF 61.92

from continuing operations

undiluted

FORBO ANNUAL REPORT 2014 – AT A GLANCE

15

Net sales 	+ 4.6%EBIT 		Group profit	+ 10.1%+ 12.0%Earnings per share	+ 16.4%in local currencies

from continuing operations

undiluted

16

FORBO ANNUAL REPORT 2014 – AT A GLANCE

Net sales by division
Change on previous year
CHF m 2014
884.6
342.2
1,226.8

Flooring Systems
Movement Systems
Total

in %
+ 1.3
+ 4.9
+ 2.3

in localcurrencies in %
+ 3.4
+ 7.8
+ 4.6

In % of total
72.1
27.9
100.0

27.9%

Movement Systems

72.1%
Flooring Systems

Employees by division

Number 2014
3,059
2,060
42
5,161

Flooring Systems
Movement Systems
Corporate Functions
Total

39.9%
59.3%

Movement Systems

Flooring Systems

0.8%

Corporate Functions

Change onprevious year in %
+ 1.0
+ 4.3
+ 2.4
+ 2.3

In % of total
59.3
39.9
0.8
100.0

FORBO ANNUAL REPORT 2014 – AT A GLANCE

17

Financial overview Forbo Group
2014

2013

Change onprevious year

Income statement
Net sales
Flooring Systems
Movement Systems
EBITDA
EBITGroup profit from continuing operations
Group profit

CHF m
1,226.8
884.6
342.2
185.1
149.4
123.4
123.6

CHF m
1,199.7
873.5
326.2
172.1
135.7
110.2
117.6

in %
+ 2.3
+ 1.3
+ 4.9
+ 7.6
+ 10.1+ 12.0+ 5.1

Balance sheet
Total assets
Operating assets
Shareholders’ equity
Net cash

CHF m
1,095.6
803.5
738.8
252.6

CHF m
1,127.0
788.4
786.8
306.9

in %
– 2.8
+ 1.9
– 6.1
– 17.7

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

CHF m
147.3
– 13.0
134.3

CHF m
128.1
52.9
181.0

in %
+ 15.0n/a– 25.8

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

%
15.1
67.4
– 34.2%
14.3
69.8– 39.0

in %
+ 5.6
– 3.4
+ 12.3

Number
5,161

Number
5,047

in %
+ 2.3

Ratios per share, from continuing operations
Earnings per share (undiluted)1)
Equity (undiluted)
Dividend

CHF
61.92
370.7
16.02)

CHF
53.21
379.9
14.03)

in %+ 16.4– 2.4+ 14.3

Stock market capitalization (as at December 31)
Stock market capitalization4)

CHF m2,138.2

CHF m
1,714.5

in %+ 24.7

Employees (as at December 31)
Total employees

1) See note 14 ‘Earnings per share’ on page 117 of the financial­report.

3) Approval of a dividend of CHF 14 per registered share at theOrdinary General Meeting of April 25, 2014.

2) The Board of Directors proposes to the Ordinary General Meetingof April 24, 2015, the distribution of a dividend in the amount of
CHF 16 per registered share.

4) Total number of shares multiplied by year-end share price.

18

FORBO ANNUAL REPORT 2014 – AT A GLANCESTRONG GROWTH
AND A SIGNIFICANT
INCREASE IN EARNINGS
Amid challenging market conditions in
the 2014 business year, Forbo stayedright on course and produced impressive results. Both divisions generated
robust growth stimuli and contributed
to the positive sales figures in all regions. This success was driven by anumber of factors: the launch of new
high-end products and collections offering added value for our customers,
the ongoing development and expansion of local distribution sites and service points in fast-growing markets,and selective measures to improve customer service and logistics.
Taken together, the gratifying growth insales plus targeted investments in new
tools, steps to expand production, andproductivity gains along the entire value chain produced sustained earnings
power and profitability at Forbo.
With our very healthy balance sheet
and our leading market positions, we
are well placed to capitalize on future
growth opportunities.

Sales trend remains firm
In 2014, Forbo generated gratifying growth in sales,
which came to CHF 1,226.8 million (previous year: CHF
1,199.7 million). In local currencies, this is a gain of 4.6%,
but in the corporate currency the increase came to only
2.3% owing to the negative impact of currency fluctuations. The adverse currency effects, affecting in particular the Japanese yen and the Russian ruble, had an
impact of about CHF 28 million on sales.
The Flooring Systems division posted sales of CHF 884.6
million in the 2014 business year (previous year: CHF
873.5 million). In local currencies, this is a gain of 3.4%,
but in the corporate currency the increase came to only
1.3% owing to the negative impact of currency fluctuations. The steady increase in sales since mid-year 2013
stems from the systematic implementation of our strategy, which calls for strengthening distribution channels
and targeted expansion of the product portfolio for private sector customer segments.
The Movement Systems division generated sales of
CHF 342.2 million in the year under review (previous
year: CHF 326.2 million), which reflects a significant increase of 7.8% in local currency terms. In the corporate
currency, the increase came to a gratifying 4.9% despite the negative currency effects. All regions – thesaturated markets in Europe somewhat more modestly
than the Asia/Pacific and Americas markets – contributed to this steep rise in sales and the corresponding
gains in market share.

19

Net sales by geographic area
Change on previous year

North, Central, and South America
Asia/Pacific and Africa
FranceGermany
Great Britain/Ireland
Benelux
Scandinavia
Eastern Europe
Southern Europe
Switzerland
Total

%
18.8
13.4
13.3
11.8
11.2
10.2
9.2
5.1
4.7
2.3
100.0

in %
+ 4.3
+ 2.9
– 2.3
+ 2.2
+ 13.2
– 3.6
– 1.0
– 2.9
+ 7.9
+ 4.2
+ 2.3

in local currencies in %
+ 7.1
+ 7.7
– 1.0
+ 3.6
+ 9.2
– 2.4
+ 4.2
+ 7.0
+ 9.4
+ 4.2
+ 4.6

2014
CHF m
229.1
164.9
163.6
144.8
137.7
124.9
113.0
62.7
57.4
28.7
1,226.8

Strong operating profit
Despite the continuous expansion of our business­activities in growth markets, investments in production plants, and substantial expenditures for the de­velopment of high-end products plus global market
launches, both divisions significantly improved both
operating profit before depreciation and amortization(EBITDA) and operating profit (EBIT).
Group EBITDA rose by 7.6%, while in the divisions
Flooring Systems raised EBITDA by 7.8% and Movement Systems by 10.8%.

25

50

75

100

125

150

175

200

225

230

Group EBITDA came to CHF 185.1 million (previous
year: CHF 172.1 million), while Flooring Systems reported EBITDA of CHF 149.6 million (previous year: CHF
138.8 million), and Movement Systems CHF 46.1 million (previous year: CHF 41.6 million). The Group increased its EBITDA margin by 0.8 percentage points to
15.1% (previous year: 14.3%), Flooring Systems by 1.0
percentage points to 16.9% (previous year: 15.9%), andMovement Systems by 0.7 percentage points to 13.5%(previous year: 12.8%).

20

FORBO ANNUAL REPORT 2014 – AT A GLANCEEBITDA by division

Flooring Systems
Movement Systems
Corporate

2014
CHF m
149.6
46.1
– 10.6

Forbo again reported a double-digit gain of 10.1% inoperating profit (EBIT), which rose to CHF 149.4 million(previous year: CHF 135.7 million). The Group EBIT margin rose by 0.9 percentage points to 12.2% (previous
year: 11.3%).
The marked improvement in operating profit plus thestrong financial income once more resulted in a double-digit increase in Group profit from continuing operations, which rose by 12.0% to CHF 123.4 million in
the reporting year from CHF 110.2 million the previous
year.

Change onpre­vious year in % – 25
+ 7.8
+ 10.8– 27.7

0

25

50

75

Taxes and financial income
The tax rate in the year under review came to 20.1%,
compared with 21.8% the previous year.
Financial expenses declined to CHF 1.0 million (previous year: CHF 5.7 million) owing to the complete repayment of the CHF 150 million bond issued in 2009
with residual maturity in the summer of 2013. On theother hand, the Forbo Group posted financial incomeof CHF 5.9 million, due in particular to the investmentof excess liquidity in a positive market environment.
On balance, the financial result came to CHF 4.9 million(previous year: CHF 5.2 million).

100

125

150

21

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

2014
CHF m
147.3
– 13.0134.3

Net cash flow from operating activities
In the year under review, cash flow from operating activities came to CHF 147.3 million, which was CHF 19.2
million higher than the previous year (CHF 128.1 million), the main factor being the increase in operating
profit. Cash flow from investing activities was negativein the year under review (CHF – 13.0 million versus
CHF 52.9 million the previous year). One reason is thatinvestments in property, plant, and equipment werehigher than the previous year, but another is the factthat far fewer financial instruments were sold compared with the previous year. Free cash flow thus
amounted to CHF 134.3 million (previous year: CHF
181.0 million).

2013
CHF m
128.1
52.9
181.0

– 50

0

50

100

150

200

Balance sheet remains in great shape
Total assets as at December 31, 2014 stood at CHF
1,095.6 million (previous year: CHF 1,127.0 million). Net
cash decreased by CHF 54.3 million to CHF 252.6 million (previous year: CHF 306.9 million). This decline canbe explained primarily by the share repurchases madein the reporting year. Likewise, shareholders’ e­ quity reduced to CHF 738.8 million as at the end of December
2014 (previous year: CHF 786.8 million) owing to theshare buybacks. The equity ratio still remains at a highlevel of 67.4% (previous year: 69.8%).

22

FORBO ANNUAL REPORT 2014 – AT A GLANCE

Significant increase in investment volume
In order to continue growing sales and profitability, we
significantly increased investments in expanding capacity and boosting efficiency. In the reporting year,
we concentrated our resources on key activities andstrategic projects in the areas of market expansion andproduct technology. Accordingly, total investments in
fixed assets in 2014 came to CHF 39.5 million, an increase in investment volume of 14.2% compared withthe previous year’s figure of CHF 34.6 million. In the­reporting period, Flooring Systems invested CHF 29.9
million, 10.3% more than the previous year (CHF 27.1
million). The investments included automation pro-jects and the expansion in production of high-quality
modular vinyl designer floorings, new tools for modular linoleum production, and additional warehouse capacity. At Movement Systems, investments in fixed assets came to CHF 9.4 million, which was 32.4% higher
than the previous year (CHF 7.1 million). The resourceswere invested mainly in the expansion of the productportfolio for specific applications in complex plant constructions, new tools for the production of plastic modular belts, the extension of the production plant in China, further expansion in growth markets, and new
manufacturing technologies worldwide in order to satisfy customer needs even better and more efficiently.

Investments 2010 – 2014

2014
2013
2012
2011
2010

Flooring
Systems
CHF m

Movement
Systems
CHF m

Corporate
CHF m

Total
CHF m

30
27
24
24
22

9
7
9
7
6

1
1
1
1
0

40
35
34
32
28

10

20

30

40

23

Increased headcountAt year-end 2014, the Forbo Group employed 5,161
people. This is altogether 114 employees more than at
the end of the previous year. The individual percentagechanges in staff levels by and large reflect market developments in the regions in question. The increases in
Asia/Pacific, the Americas, and Eastern Europe were

driven by the expansion of the sales and distribution
organizations in these fast-growing markets. In Germany and the UK, where new hiring has been restrictive
for some years, there was a personnel build-up in someareas, whereas in France we have acted responsiblywith regard to staff increases owing to the currently
muted level of demand in this market.

Employees by geographic area
Benelux
North, Central, and South America
Asia/Pacific and Africa
Germany
Great Britain/Ireland
Eastern Europe
FranceSwitzerland
Scandinavia
Southern Europe
Total

%
21.3
14.0
13.9
12.2
12.1
8.9
8.5
3.6
3.2
2.3
100.0

Change onpre­vious year in %
+ 0.5
+ 4.0
+ 6.3
+ 2.9
+ 2.1
+ 4.9
– 3.1
0.0
– 0.3
0.0
+ 2.2

2014
1,100
722
719
632
625
459
438
185
166
115
5,161

200

400

600

800

1,000

1,200

24

FORBO ANNUAL REPORT 2014 – AT A GLANCESUSTAINABLE
ENGAGEMENT
A responsible attitude towards the management of resources in all dimensions
is one of the fundamental values at
Forbo. We are committed to protecting
the environment and continuously investing in a sustainable future. As aman­ufacturer and employer consciousof its responsibilities, Forbo sets very
high standards for health, safety, environment, and quality.
Social dimension
Forbo cultivates a high-performance culture in orderto fulfill the high demands of our customers and business partners as well as our own demands on ourselves. This is why we promote the necessary capabilities and competences on all organizational levels, andsupport 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 applications, health and safety in the workplace, sales andmarketing, finance, operations, project management,
strategy implementation, and Forbo’s values. Continuous intensive trainings in the area of health and safetyinclude measures in the areas of accident prevention,risk awareness, and work safety.
On the Group level Forbo has successfully established
an internal management 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 and persons in key positions consists of afirst training week that includes various modules frommanagement and sales to marketing and operations.
A second training week expands on this and includes
additional leadership modules, focusing on strategic
implementation and leadership themes such as dealing with organizational and team changes as well as
performance management.

25

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 products 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, is regarded 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 43% recycledmaterial, which lowers the consumption of primary raw
materials accordingly.

Vinyl floor coverings receive their elasticity, pliability
and flexibility properties from plasticizers. Flooring Systems is the clear leader in the use of phthalate-free plasticizers of the latest generation. They also contain up to
45% recycled material in the substrate layer. Within theframework of our ‘back to the floor’ program, we collectoff-cuts of our vinyl coverings as well as waste material
from our own production and put these back into the
production of new coverings, for example for the substrate layer of carpet tiles and Flotex.
Flooring Systems gets 100% of the electricity used
at our production locations from renewable energy
sources.
With the BioBelt, Movement Systems is the first everconveyor belt manufacturer to develop a biodegrad­able conveyor belt whose physical and dynamic properties 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
from renewable, plant-based raw materials.

26

FORBO ANNUAL REPORT 2014 – AT A GLANCESUSTAINABLE
ENGAGEMENT
In order to maximize environmental compatibility andat the same time increase the product advantages,
Movement Systems patented a special coating (AmpMiser) that significantly reduces the friction between
the underside of the belt and the slider bed comparedwith conventional conveyor belts. Conveyor belts coated with AmpMiser display their advantages most clearly where goods are being continuously conveyed andmany belts are in use, for example at airports or in
logistics and distribution centers. For this type of application, energy savings for the overall systems of up to
40% are achieved.
We have also made it our aim to continually shape ourown activities more sustainably and efficiently. We do
this by using less material and energy to realize equivalent or even better solutions. Both divisions are working constantly on the optimization of production processes in terms of water and energy consumption,
reduction of emissions, reuse of heat generated in the
production process, and in the reduction and the efficient recycling of waste material in order to reduce theburden on the environment. A wide range of certifi­
cations verify these efforts. At the same time, we areworking 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 and­define our living, leisure, and working space. Whether
as a direct end customer, builder of a major project,architect or installer, for every demand group the issueof sustainability plays an important role in the decision-making process. This is why it is important for
Flooring Systems to differentiate itself from its competitors with comprehensible and convincing arguments,
also in terms of sustainability.
With the new approach ‘committed to the health ofone’ Flooring Systems wants, alongside a fully transparent product declaration, to highlight the sustainability features more clearly than up to now and placethem in correlation to each individual. Under HEALTH
we understand holistic physical, mental, and social
well-being, and with ONE we mean persons as well ascompanies, the environment, organizations, customer
segments, etc. In this way, the relevant product prop-

27

erties and explicit differentiation features are emphasized for each demand group: for example, suitablefloor covering solutions for allergy sufferers, children ina playgroup, patients in a ward, doctors in an operating
theater, cleaning personnel in large buildings, employees at the workplace, travelers on the train, etc.

companies to be reused in their production. The locations in North America collect sanding dust in filters
which is then processed as material by external partners in their production. Some of the waste from plastic
modular belts and polyurethane cut-offs is recycled
back into our own production.

MOVEMENT SYSTEMS
Movement Systems’ resource management is basedon the continuous improvement of consumption efficiency by the development and the targeted implementation of measures for the optimization of elec­
tricity, gas, and water consumption. Alongside savingenergy, energy recovery is an important factor, i.e. theuse of energy released in the downstream incineration
plant for the purposes of heating and/or power generation. In order to reduce water consumption and avoid
unnecessary waste, Movement Systems is increasingly
using closed water circulation systems. Some of theused water can be used in another production step inorder to minimize water requirements. The reduction
and productive reuse of waste material is increasingly
the focus of sustainability initiatives. Cut-offs from thebelts we produce in certain countries are sold to other

Economic dimension
As a listed company, Forbo also engages intensively
with the economic dimension of sustainability. Compliance is enormously important for the reputation andpositioning of a company. We are successful as a company when we fulfill the expectations of the customers,
when the employees are enthusiastic and committed,
and when we create added value in the long term forour shareholders.
In the reporting year we have constantly maintained
our efforts in terms of a conscious attitude to what we
do by reinforcing consciousness regarding the contents of the code of conduct, competition law and anti-corruption principles, as well as the uncompromising
implementation of the risk management process.

28

29

ACTIVITYREPORT
Two divisions with leading market positions

31

Flooring Systems:
Solid foundation for future growth

34

Movement Systems:
Success driven by know-how and reliability

40

30

EYE-CATCHER

MAXIMUMPERFORMANCEFORBO ANNUAL REPORT 2014 – ACTIVITY REPORT31

TWO DIVISIONSWITH LEADING
MARKET POSITIONSForbo aims to operate primarily in bu­
siness areas in which it has or canachieve a leading global market po­sition – something it has achieved forboth Flooring Systems and Movement
Systems.

Flooring Systems
The Flooring Systems division offers a broad and attractive range of environmentally friendly linoleum,high-quality vinyl floors, entrance flooring systems forcleaning and drying shoes, carpet tiles, needle felt, and­Flotex, the washable textile flooring. Thanks to their­excellent technical properties and attractive design,these flooring products are invariably the first choicefor public buildings, department stores, hospitals, andother healthcare facilities, schools, libraries, commercial and office spaces, leisure centers, shops, hotels, restaurants, and cafeterias as well as for applications in theresidential market. With a market share of over 65 percent, Forbo is the world leader in linoleum.
Flooring Systems also provides ready-made adhesives
for flooring installations and ceramic tiles as well as
leveling compounds for the construction industry under the trade name Eurocol.

Movement Systems
Movement Systems is a global industry leader for sophisticated con­veyor and processing belts, synthetic
modular belts, top-quality power transmission belts, aswell as timing and flat belts made of synthetic materials. These products are known under the brand name
Siegling. They are used in a wide range of applicationsin industry, trade, and the service sector, including
conveyor and processing belts in the food i­ndustry,treadmill belts in fitness studios, and flat belts in maildistribution centers.

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, and a strong global brand,
we are creating global leadership 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.

32

FLOORINGSYSTEMS

33

EYE-CATCHER

BEAUTIFULLY
MAINTAINEDOur high-performance entrance flooring systems are
not only eye-catching but keep entrance areas clean
and well maintained. Their absorbent fibers and robust
dirt-removal yarns prevent dirt and moisture from being tracked onto interior surfaces. This prolongs the lifeof the interior flooring and effectively reduces building
and maintenance costs. Entrance flooring systems arerightly considered the perfect way to link functionality
and aesthetics.

34

FORBO ANNUAL REPORT 2014 – ACTIVITY REPORTFLOORING SYSTEMS:SOLID FOUNDATION FOR
FUTURE GROWTH‘The continuous increase in our sales
since mid-year 2013 confirms that weare on the right track with the systematic implementation of our strategy inline with changing market conditions.
In the year under review, we expanded
our attractive product portfolio for
private sector customer segments by­adding appealing designs and coor­dinating the portfolio with various ap­
Matthias P. Huenerwadel
plication areas. We also broadened our Executive Vice President
market know-how, strengthened our Flooring Systems
distribution structures, and made ourcustomer contacts more interactive bygains along the entire value chain, had a posmeans of mobile presentation and in- ductivity
itive ­impact on operating profit (EBIT), which climbed
formation tools. We boosted our opera- to CHF 123.4 million (previous year: CHF 113.3 million).
tional performance by focusing invest- This is equivalent to an increase of 8.9% over the prements on various steps in production vious year. The EBIT margin came to 14.0% (previous
13.0%), a year-on-year increase of 1.0 percentage
and by further improving the supply year:
points.
chain. Taken together, all these activities have greatly improved our earn- Sustainable sales growthings situation once again, ensuring that Our business received strong growth stimuli from the
expansion of our private sector offering, for
we have a solid foundation for future ongoing
instance for shop fittings, offices, hotels, restaurants,
growth and enabling us to reinforce and leisure facilities, and this more than made up forour market position as the leading sys- the weak demand in the public sector among ourtems supplier in the commercial seg- high-revenue customer segments.
ment.’The markets in which we do business are still mixed.
The Flooring Systems division posted sales of CHF 884.6
million in the 2014 business year (previous year: CHF
873.5 million). In local currencies, this is a gain of 3.4%,
but in the corporate currency the increase was only
1.3% owing to the negative impact of currency fluctuations. The division accounts for 72.1% of Group sales.
The steady increase in sales since mid-year 2013 confirms that we are systematically implementing ourstrategy, which calls for strengthening of distribution
channels especially in growth markets and targeted expansion of the product portfolio for private sector customer segments. These intensified activities are counteracting stubbornly weak public sector demand andmaking up for the decline in demand in certain markets
where the construction industry is in the doldrums.
The gratifying increase in sales, coupled with pro­

Especially in Europe, demand in some markets such as
the Netherlands and France has remained sluggish. In
Russia, the economy suffered a sharp downturn in thecourse of 2014, although for the year as a whole, sales
were still significantly higher than the previous year.
The regions Germany/Austria/Switzerland, Scandinavia,
Southern and Eastern Europe, and Great Britain all performed well compared with the previous year. In North
America, market sentiment is by and large more upbeat than in earlier years, and the sales trend was correspondingly firm despite a few harsh winter months.
We generated additional growth with a new service offering – a comprehensive solution for the commercial
sector that enables us to deliver turnkey projects tocustomers with floors that are professionally laid by certified floor layers. The Asia/Pacific markets performed
well on the whole. Some countries such as China and35South Korea reported above-average growth driven bymajor customer installations, whereas others such as
Japan, Australia, and Southeast Asia saw stable demand.
The building and construction adhesives activity is still
operating in a difficult economic environment and is
not experiencing any genuine recovery in demand,
particularly in the Netherlands, which accounts for thelion’s share of sales. In contrast Germany and Russia
showed some signs of growth, though the building
and construction adhesives market in Russia has also
weakened considerably in recent months. We anticipate positive growth stimuli from the launch of a newliquid floor finishing for various customer segments
and from our recently developed do-it-yourself business in Russia.
Attractive product portfolio thanks
to modular collections
In the reporting year, Flooring Systems enhanced
its versatile and innovative product portfolio with attractive, new collections in all product groups. The
high-quality, modular vinyl designer floorings again
generated double-digit growth in a highly competitivemarket, gaining market share and delighting customers with new designs, structures, and installation methods. Vinyl floorings for the commercial sector, entrance
flooring systems, carpet tiles and needle felt floor coverings along with Flotex – our washable, high-tech textile floor covering – played their part in driving sales
growth. Linoleum is generally still facing fairly modest
demand because it is widely used in the healthcare
and educational sectors where investments in newbuilds and renovations often depend on public spending budgets. The downtrend is being offset by themodular linoleum floor coverings launched in 2014,
especially for private sector customer segments, where
customers are excited by the versatile design options
and the impressive range of colors. Sales of vinyl floorings for the residential sector declined in the year under review in the wake of strategic portfolio adjustments.

Investments to drive future growth
In addition to these many new collections, we havebeen steadily strengthening distribution channels in
the growth markets and have established a local sales
team in Turkey.
Given the buoyant sales of high-quality, modular vinyl
designer floorings, we have further automated and expanded production in the Netherlands. In addition to
expanding our cutting capacity, we have invested in
an additional packaging line, which will be extended
again in the current year. We are now also producing
vinyl designer floor coverings in Russia for the local
market, with our own designs that are geared to local
needs. To do so, we expanded the production line in
Russia and built a new warehouse. We invested in new
tools for modular linoleum production in Scotland andinitiated an expansion of warehouse capacity for storage of large reels. In China we created additional warehouse capacity, which helps us streamline delivery andspeed up delivery times in daily operations.
Solid foundation for further profitable growth
We have steadily increased net sales since mid-year2013 amid a challenging market environment, thereby
confirming that we are on course with our strategy. We
will continue to focus our efforts on profitable growthin the year ahead as well. The growth drivers will be thevaried and large collections launched in 2014, the newlaunches of vinyl floorings for the commercial sector
and carpet tiles planned for 2015, and the ongoing expansion of our distribution channels in growth markets.
In 2015, we will continue to step up investments in innovative and sustainable product portfolios and focus
on achieving operational efficiency gains.
Three challenges we face are the renewed rise in volatility in some European markets, the modest resources
available in the public sector and in healthcare, and themarket conditions confronting the building and construction adhesives activity.

36

FORBO ANNUAL REPORT 2014 – ACTIVITY REPORTFLOOR COVERINGSWITH THEIR OWNIDENTITY
Making products and processes moresustainable and more environmentallyfriendly is a priority for Flooring Systems
in every change and new development.
Forbo floor coverings combine attractive and innovative design with long lifeand high product quality. In the reporting year Forbo again made its mark withnew, diverse trends.
The current trend in floor coverings is moving increasingly in the direction of modular designer coverings.
These offer a great diversity of designs and colors, thus
allowing infinite combination options for the customer’s own floor covering creations. Compared to roll material, these are easier to transport and easier to handle
in the installation; they generate fewer sections andcan be easily replaced if damaged.

The Flooring Systems product portfolio has been meeting these demands for several years, and now includes
luxury vinyl designer tiles as well as carpet and Flotex
tiles. This range was supplemented in the reporting
year with a very versatile collection of modular lino­
leum.
Modular linoleum
This unique range corresponds to two trends: sustainability and modularity, namely because linoleum is
manufactured almost exclusively from renewable raw
materials such as linseed oil, natural resins, wood flour
and limestone, as well as pigments. Instead of the jutebacking, a polyester fleece ensures the necessary flexi­
bility and dimensional stability of the modular coverings.
With various square and rectangular shapes and sizes,
as well as countless colors, they offer a wide range oflayout and design options and thus open up, alongsideclassical application areas such as the healthcare and37

education sectors, new application surfaces in shop
­fitting, offices, hotels, restaurants, and in the leisuresector. One can play with subtle tonal color variations
to create natural floor coverings that imitate naturalstone or concrete. Or one can be more daring andcolorful, taking up a dash of color from the environment and using it to create one’s own design highlights. This gives rise to creative floor covering designs
with their own identity.
New striped designs will be added to the collection inspring 2015.

Luxury vinyl tiles
Luxury vinyl tiles have been the fastest growing product group in the area of resilient floor coverings forsome years now. Their extremely realistic wood, stone,
and metal designs offer architects, interior designers,
and planners an abundance of options for the mostdiverse room concepts. New collections were introduced in the reporting year to further extend therange and the diversity. The tiles and planks are avail­able in new sizes and designs, with new textures andembossments, have very good shape stability, and arealso available in different thicknesses of wear layer for
optimized impact noise reduction as well as in a click
version.

‘DIVERSITY CREATES which are 100% re­cycable, fulfill a series of sustainable
criteria: they are made of a phthalate-free vinyl fromUNIQUE ROOMS’ recycled raw materials, all printing processes are exeThese high-quality, modular vinyl designer floorings,

cuted with water-based colors and they are produced
using green energy in a state-of-the-art production environment.

38

MOVEMENTSYSTEMS39

MAXIMUM PERFORMANCEUNCOM­PROMISINGQUALITY
Baked goods are produced in a wide range of shapes
and diverse types. Equally diverse are the high quality
requirements for the process and conveyor belts usedin the food industry in order to guarantee hygienic
production. The high cleanability and freedom fromgerms of our high-quality belts are essential for strict
compliance with hygiene standards. Ingenious surface
structures with excellent separation properties and innovative belt edge seals make Forbo the know-how
carrier for applications in the food processing industry,and ensure decisive competitive advantages for ourcustomers.

40

FORBO ANNUAL REPORT 2014 – ACTIVITY REPORTMOVEMENT SYSTEMS:

SUCCESS DRIVEN BY KNOW-HOW
AND RELIABILITY‘2014 was another successful year for
Movement Systems. Focused efforts toimplement the strategy in all the division’s business areas had a very positive
impact on all fronts. We considerably increased both sales and earnings in all
regions. The drivers were innovative andapplication-specific new products withfeatures that generate added value inthe production and logistics processes
Jean-Michel Winsof our customers in a wide range of in- Executive Vice President
dustries; new manufacturing technolo- Movement Systems
gies that guarantee efficient installationand optimum maintenance; and otherregions on the growth path
improvements all along the global val- All
Almost without exception, all markets contributed toue chain that further increased both the gratifying jump in sales with strong growth stimuli.
productivity and efficiency. We are on Although the business environment in Europe is still
the right track. By sticking to our strate- mixed, most companies performed much better than
did in the previous year. Only in Germany, one of
gic focus, we can systematically pursue they
our major markets, and in Russia, demand was more
our goals as we seek to strengthen and subdued – though still higher than the previous year.
expand our market position.’
The Americas region reported above-average growth,
The Movement Systems division generated sales of
CHF 342.2 million in the year under review (previous
year: CHF 326.2 million), which reflects a significant increase of 7.8% in local currency terms. In the corporate
currency, however, adverse currency effects reduced
this gratifying growth to 4.9%. The division accounts
for 27.9% of Group sales. All regions – the saturated
markets in Europe somewhat more modestly than the
Asia/Pacific and Americas markets – contributed tothis steep rise in sales and the corresponding gains inmarket share. The consistent implementation of thestrategy with a clear focus in all business areas had
a strong positive impact on operating profit (EBIT),
which climbed to CHF 37.0 million (previous year: CHF
31.7 million), a significant increase of 16.7%. The EBIT
margin came to 10.8% (previous year: 9.7%), a year-onyear increase of 1.1 percentage points.

due in part to years of close cooperation with major
accounts in customer segments such as food-processing, logistics, and sports treadmills, where we completed some large-scale projects, and in part to the steady
expansion of business in the field of plastic modular
belts. Asia/Pacific also stayed on the growth track. A
major factor was an above-average in sales in fastgrowing markets such as China, South Korea, India,
and Southeast Asia, where we focused on expanding
the local sales and assembly operations. Japan also
enjoyed more buoyant demand.
In Thailand we completed the organizational build-up
for which we laid the groundwork the previous year,
and we are now successfully operating with a local
team.
Strategic customer segments withdouble-digit growth
Following years of strategically focused development,
the Prolink plastic modular belts product group again
posted double-digit growth. These belts are usedmainly in the food-processing industry, logistics and­industrial manufacturing, wherever conventional conveyor belts, owing to their design, are not entirely suit-41

able for some conveyance and process tasks. In the year
under review, we expanded the product portfolio withsegment-specific new developments. In hygiene-sensitive applications, for instance, new surface structures
were developed that are adapted to the specific areaof use and feature improved cleaning properties anddifferent colors to ensure ease of quality control of thegoods on the belt.
All other strategic customer segments also reported
buoyant growth. Demand for various belt types for the
food-processing industry was very satisfactory in all regions, and this uptrend was no doubt due to innovative
product line extensions that feature high-quality properties. Demand for professional applications in logistics
was also stronger than in the previous year; here we
generate added value for our customers, for instancein postal distribution and logistics centers, with our energy-saving conveyor belts. Sales in the customer segments textiles, sports treadmills, industrial manufacturing, and raw materials rose on the back of specific andpersuasive additions to the range. The paper/printing
and tobacco segments were either flat or slightly weaker owing to general business conditions.
Innovation partner for equipment manufacturers
Movement Systems not only supplies a wide range of
conveyor and power transmission belts but is also a reliable provider of technical know-how for total solutions as well as an innovation partner for equipment
manufacturers and end customers. In new product­developments, small details often play a crucial role in
the interaction of application features and the materials
used. Again in the year under review, we committed
significant resources to expanding the product portfolio and to developing specific applications in complex
facilities.
We launched a range of new belt types for the foodprocessing industry that are geared to specific cus­
tomer requirements, feature diverse surface structures,
have excellent release and grip properties, are highly
resistant to oil and grease, and are easy to clean. The
surface structures and the novel materials used areadapted to specific hygiene requirements.
We also focused efforts on expanding the productportfolio of Extremultus flat belts and power transmission technology. These belts are particularly durable,
elastic, and vibration and shock-absorbent. They areused, for instance, for generator drives, for live roller

drives in logistics, and as box-folding and conveyor
belts in paper processing. Our investment in two newmachines for finishing marks a further step towards
bringing the value chain back in house. This speeds up
the launch of new products in serial production andprovides greater flexibility in raw-material processing.
Among the innovations launched in the reporting year
are the new high-efficiency tangential belts that areused in ring spinning frames, twisters and texturingmachines. The combination of a reinforced tension
member with improved friction coating saves energy
and ensures a significantly higher throughput with virtually constant yarn twist.
In addition, we made targeted investments in various
manufacturing facilities, for instance in new tools forthe production of plastic modular belts, expansion of
the production plant in China, and new manufacturing
processes worldwide, in order to meet customer needs
even better and more efficiently.
We continue to focus on top
operational performance
In 2015, we will continue to vigorously pursue ourstrategic initiatives in all the division’s business areas bytargeted expansion of our product portfolio and thebuild-up of new sales offices especially in Asia/Pacificand the Americas.
In addition, we will again review all processes andmethods involved in operations, production planning,supply chain management, and quality in order to improve our efficiency and raise our industry standard.
An important factor is steadily improving our em­
ployees’ product, process, and application know-how,which we intend to maintain at a high level.

42

FORBO ANNUAL REPORT 2014 – ACTIVITY REPORTINDIVIDUALOVERALL SOLUTIONSIN FOCUS
Not always visible, but present none­
theless almost everywhere, Movement
Systems is making sure that many production steps are optimized and trouble-free. Our solutions are distinguishedby being highly efficient, precise andreliable. Forbo again managed to profile itself in the reporting year as a­com­petent partner in the developmentof sector-specific and future-oriented
solutions for driving, conveying, andpro­ducing.
Special belt for printing ceramic tiles
Movement Systems is a leading belt supplier to the ceramic tile printing industry where our high-quality conveyor and process belts are used in systems for the
printing of ceramic tiles. In recent years the technology

has shifted from rotary printing – where the material tobe printed is pressed between two rotating rollers – toinkjet printing – where ink is pressed through nozzles
in fine drops onto the material. The new system constructions are much more flexible in terms of changing
the print pattern. They have clear advantages regarding
maintenance, and are thus less cost-­intensive. They do,
however, place much greater demands on the belt
properties.
Our development teams have accompanied these new
system constructions in the inkjet printing process inclose collaboration with machinery manufacturers andend customers in Europe and Asia. The challenge forhigh print quality is, for example, the precise positioning of the belt so that tiles are printed at exactly theright place. The belt must not only have low expansion
and excellent chemical resistance, it must also be possible to make fine adjustments to the belt during theprinting process. At the highest print quality, around 40
meters of tiles are printed per minute, even on belts forlarge tile formats which are up to 1.8 meters wide.

43‘APPLICATIONS THAT to a container for the last processing steps, or are accumulated in their complete packaging on belts with
STAND FOR PRECISION freely rotating rollers ready for palleting. In this way anaccumulation of products can be achieved with low
AND RELIABILITY’ friction between product and belt, low abrasion and,production process where the products are conveyed

ultimately, low energy consumption.

Plastic modular belts with integrated rollers
Due to their construction, conventional conveyor belts
are only conditionally suitable for certain conveyor andprocess tasks. As the optimum complement to these,
Movement Systems is focused on expanding the product range in the area of plastic modular belts. In thereporting year we developed plastic modular belts
with integrated rollers for the accumulation or separation of the goods being conveyed. The accumulationof conveyed goods often takes place at the end of aAlongside the accumulation of conveyed goods, belts
with integrated rollers are also often used for separating conveyed goods. On the belts the products are­accelerated relative to the speed of the belt, which increases the distance between the individual products.
This application is often found at the start of a conveyor process to ensure that incoming goods are not too
close or even parallel to each other on the belts so thatthey may, for example, not be scanned properly, orthat too many products are arriving at the same time
for the next processing step.

44

45

ORGANIZATION
Executive BoardGroup structure
Board of Directors

46
49
50

46

FORBO ANNUAL REPORT 2014 – ORGANIZATIONEXECUTIVE BOARD

Jean-Michel Wins, Stephan Bauer, Andreas Spreiter, Matthias P. Huenerwadel

47

Stephan Bauer

Andreas Spreiter

Stephan Bauer was born in 1961 and is a German citizen. He took a degree in Engineering and Management
at the Munich University of Applied Sciences (FH) andbegan his professional career at BMW in Munich in1987 as a project manager for the launch of new vehicle models. From 1991 to 2008 he worked for Siemens
VDO Automotive AG (which became Continental Automotive in 2007) in various regional and global management positions in the field of sales and marketing andgeneral management. In 2004 he was appointed CEO
of Diesel Systems. From 2008 to 2013 Stephan Bauer
was CEO and President Control Products & Systems at
the Siemens Building Technologies division, where he
was responsible for the entire product spectrum. He
joined our company in September 2013 and took overthe position of Chief Executive Officer and Chairmanof the Executive Board of the Forbo Group as of Jan­uary 1, 2014.

Andreas Spreiter was born in 1968 and is both a Swissand a British citizen. He studied at the Federal Instituteof Technology (ETH) in Zurich where he was awarded
his engineering degree in plant production and en­gineering. From 1993 to 1998 he was Business Unit
Controller at Landis + Gyr (Europe) AG. He then joined
Siemens Metering AG, where he was Head of Financeand Controlling for two years and was then appointed
to head the Electronic Meters Competence Center.
From 2002 to 2012 he was Executive Vice President andGroup Chief Financial Officer of Landis + Gyr AG. He isa member of the Board of Directors at Reichle & DeMassari AG. Andreas Spreiter joined the Forbo Groupin January 2013 as a member of the Executive Board
and Chief F­ inancial Officer.

Chief Executive Officer

Chief Financial Officer

48

Matthias P. Huenerwadel

Jean-Michel Wins

Matthias P. Huenerwadel was born in 1968 and is a
Swiss citizen. He studied engineering at the Federal­Institute of Technology (ETH) in Zurich, specializing
in manufacturing technologies and technology management. He began his professional career as assistantto the Executive Board of Franke Holding AG. In 1996,
he moved to the USA, where he was responsible forlogistics, information technology, and customer service with Federal Home Products, Ruston. From 1999,
he held various managerial positions for Franke Foodservice Systems and managed its European operations
from 2002 to 2005. Matthias P. Huenerwadel joined
the Forbo Group as a member of the Executive Board
in October 2005 where he was appointed head of theMovement Systems division. He has been Head of the
Flooring Systems division since January 1, 2013.

Jean-Michel Wins was born in 1967 and is a Belgian
citizen. He studied business administration and languages at the IPET in Nivelles, Belgium, and began his
professional career in Germany at Calberson GmbH,
where he held various specialist functions. He thenmoved to Simut Sicherheit GmbH for two years, where
he was in charge of sales and marketing. From 1992
to 1996 he was Export Manager at Brabus GmbH andfrom 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 and se­nior management positions; in 2009 he was appointed
Vice President responsible for the Offroad Seating­Business Unit. As a member of the Executive Board,
Jean-Michel Wins took over management of the Movement Systems division in January 2013.

Executive Vice President Flooring Systems

Executive Vice President Movement Systems

FORBO ANNUAL REPORT 2014 – ORGANIZATION

49

GROUP STRUCTURE
Forbo has performed better than average in recent years compared with other listed companies. With its
two focused divisions, the Group is now a world leader in its markets, free of debt and in possession ofsignificant resources for further strategic development. The task Forbo is facing now is, on the one hand, tomaintain its successful performance of recent years and, on the other hand, to reinforce and expand its
positions in the global market with the means available through strong organic growth and acquisitions.
Whereas Forbo has been managed over the past ten years by the Delegate of the Board of Directors and
CEO in a dual function, the change approved by the Ordinary General Meeting in April 2014 redefined
the tasks and responsibilities of the highest executive by appointing a separate Executive Chairman of theBoard of Directors and a CEO.

BOD / HRNC / RC / AFC
Executive Chairmanof the Board of Directors
	Tasks of the Executive
Chairman of the Board of Directors– Leading the Board of Directors– Preparing the decisions of theBoard of Directors and ensuring
they are executed– Representing and positioning
the Group in the public– Overall management of strategy­development and involvement inrealizing key strategic projects– Management of relationships withkey accounts and business, sector
and capital market partners
	Tasks of the Chief Executive Officer– Operational management of the Group– Leading the Executive Board– Development and operational
implementation of the strategies– Implementation and monitoring ofmulti-year planning and budgets– Supporting the Executive Chairmanof the Board of Directors in preparing
important projects relating tostrategy, personnel, and finances fordiscussion and decision-taking by
the Board of Directors

Board of Directors Office
Investor Relations
Corporate Communications
Internal Audit
CEO

Corporate HR
Corporate Development

Executive Vice President
Flooring Systems

Executive Vice President
Movement Systems

CFO

Sales and Marketing

EuropeSupply Chain

Americas

Corporate Controlling
and Reporting

Business Development

Asia/PacificFinance

Plastic Modular Belts

Building and Construction
Adhesives

Operational Areas

Member of the Executive Board

Corporate Tax
Risk Management
Corporate Legal Services

IT

Business andProduct Development

Human Resources

Marketing

M&A

Process Development

Finance

F & A Managers
Group CompaniesIT
BOD Board of Directors
HRNC Human Resources and Nomination Committee
RC Remuneration Committee
AFC Audit and Finance Committee

Corporate Treasury

Human Resources

Corporate IT

50

FORBO ANNUAL REPORT 2014 – ORGANIZATIONBOARD OF DIRECTORS

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

51

This E. Schneider
Executive Chairman

Member of the Board of Directors of Galenica SA, Berne
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 (formerly Franke Holding AG), Hergiswil
Chairman of the Management Board of Artemis Management AG (formerly Franke Management AG), Aarburg
Member of the Board of Directors of Hero AG, Lenzburg
Member of the Board of Directors of advalTech Holding AG, Niederwangen near Berne
Member of the Board of Directors of Berenberg Bank (Schweiz) 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 Huber + Suhner AG, Herisau
Member of the Board of Directors of agta record ag, Fehraltorf
Member of the Board of Directors of Abegg Holding AG, Zurich
Member of the Board of Directors of Altin AG, Baar
Member of the Board of Trustees of Werner Abegg Fonds, Zurich
Member of the Board of other private and foreign banks and non-listed investment andreal-estate companies in Switzerland

Claudia Coninx-Kaczynski
MemberMember of the Board of Directors of Tamedia AG, Zurich
Member of the Board of Directors of P.A. Media AG, Zurich
Member of other Trustees and Committees

Dr. Reto Müller
MemberFull-time Chairman of the Board of Directors of Helbling Holding AG, Zurich
Member of the Council of SWISSMEM, Zurich
Member of other Boards of Directors

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

52

53

THE FORBO
SHARE

54

FORBO ANNUAL REPORT 2014 – THE FORBO SHARETHE FORBO SHAREThe Swiss Performance Index (SPI) gained almost 10% by mid-June 2014 but then corrected by around 5% in thesubsequent weeks. The broad market posted gains between mid-August and the end of September. However,in the downturn that followed, by mid-October the SPI had lost almost all the gains it had made over the year.
The positive environment starting in the second half of October resulted in the market rising by as much as 15%
before it corrected again in December. The SPI closed the year with an overall gain of 13.0%.
The Forbo share price rose from its year-end 2013 level of CHF 762 to CHF 974.50 by mid-June 2014 – a gain ofalmost 28%. Even after the subsequent correction of the broad market, the Forbo share was still up by about 8%.
When the stock market began to recover, the share price posted strong gains until mid-September, at times reaching CHF 992 – an increase of about 30%. Even in the wake of the market downturn that followed, the Forbo shareprice remained above CHF 900 and climbed to CHF 1043 by early December. When the broad market correctedagain in December, the share closed the year at CHF 994.50, an overall gain of 30.5%. Once again, therefore, theForbo share clearly outperformed the SPI in 2014.

The Forbo share in comparison to the SPIForbo share
SPI
1,100
1,000
900
800
700
600
500
400
300
200

250%
200%
150%
100%
50%
0%
– 50%
31.12.2010

31.12.2011

31.12.2012

31.12.2013

31.12.2014

55

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

2014
Number2,150,000

2013
Number2,250,000

2012
Number2,500,000

2011
Number2,500,000

2010
Number2,713,152

1,888,850
158,467
81,264
21,4192,032,703
99,47096,40821,4192,052,740
250,000
175,841
21,4192,298,758
179,823
21,4192,339,162
213,152
139,419
21,419CHF
215,000

CHF
225,000

CHF
250,000

CHF
250,000

CHF
271,315

188,885
15,8478,126
2,142

203,270
9,947
9,641
2,142

205,274
25,00017,5842,142

229,876
17,982
2,142

233,916
21,315
13,942
2,142

CHF
371
62.0
16.04)
1.55)
2.25)
26

CHF
380
56.8
14.0
1.85)
2.45)
26

CHF
329
96.4
12.0
1.85)
2.55)
13

CHF
349
62.8
12.0
1.75)
3.55)
19

CHF
320
71.6
12.0
2.05)
3.55)
17

CHF
1,043
719
995
2,242
1,545
2,138

CHF
769
580
762
1,730
1,305
1,715

CHF
685
484
585
1,712
1,210
1,463

CHF
713
343
493
1,782
857
1,232

CHF
595
343
590
1,614
931
1,601

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 share2) 3)
Gross dividend and cash distribution
Gross dividend yield (in %)

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 2014, 2013, 2012, 2011 and 2010: CHF 0.10
2) Based on the weighted average of the number of shares as set out innote 14 ‘Earnings per share’ on page 117 of the financial report.
3) See note 14 ‘Earnings per share‘ on page 117 of the financial report.
4) Proposal of the Board of Directors to the 2015 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

58

FORBO ANNUAL REPORT 2014 – 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 interests long term. 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 committees of the Board of Directors. The following information is set out in line with the
Directive on Information relating to Corporate Governance (Directive on Corporate
Governance ‘DCG’) and the relevant publications 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 operational structure of
the Group is shown in the organizational chart on page 49. The scope of consolidation of Forbo Holding Ltd does
not include any listed companies. The unlisted companies within the scope of consolidation of Forbo Holding Ltd
are listed under ‘Group companies’ starting on page 146 of the financial report. The company name and domicile,share capital and percentage of participation, along with information relating to the allocation 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, 2014, 1,728 shareholders were listed in the share register of Forbo Holding Ltd, or 209 (11%),
fewer than in the previous year. As of December 31, 2014, Forbo Holding Ltd knew of the following significant
shareholders with a holding of more than 3%:

Michael Pieper1)
Forbo Holding Ltd2)This E. Schneider
UBS Fund Management (Switzerland) AG
Norges Bank

31.12.2014
as a percentage
28.69
12.15
3.02
3–5
3–5

1) Michael Pieper holds his interest directly and indirectly through Artemis Beteiligungen I AG.
2) – First trading line 4.78%, share buyback programs 7.37%.
– Forbo Holding Ltd holds its interest directly and indirectly through Forbo International SA and Forbo Finanz AG.

Disclosure of significant shareholders and significant shareholder groups and their holdings is effected in­accordance with the disclosures made in the year under review pursuant to Article 20 of the Federal Act on Stock
Exchanges and Securities Trading (SESTA) and the provisions of the Ordinance of the Swiss Financial Market­Supervisory Authority on Stock Exchanges and Securities Trading (SESTO-FINMA).
Forbo Holding Ltd reported on July 1, 2014 that it had exceeded the threshold of 10% and that it held 225,059 of
its own shares, corresponding to 10.003% of voting rights, directly or indirectly via Forbo International SA, Baar,
Switzerland, and Forbo Finanz AG, Baar, Switzerland. Forbo Holding Ltd further reported on July 12, 2014 that, asa result of the completion of the capital reduction approved by the Ordinary General Meeting of Forbo Holding
Ltd on April 25, 2014, it had fallen below the threshold of 10% as at July 9, 2014 and that it held 127,881 of its own
shares, equivalent to 5.948% of voting rights, directly or indirectly through Forbo International SA, Baar, Switzer-

59

land, and Forbo Finanz AG, Baar, Switzerland. In addition, Forbo Holding Ltd reported on October 3, 2014 that it
had exceeded the threshold of 10% and that it held 215,294 of its own shares, corresponding to 10.014% of voting
rights, directly or indirectly via Forbo International SA, Baar, Switzerland, and Forbo Finanz AG, Baar, Switzerland.
Finally, Forbo Holding Ltd reported that it had granted 9,047 stock purchase rights on 9,047 registered shares ofForbo Holding Ltd, corresponding to 0.40% of voting rights before and 0.42% after the above-mentioned capital
reduction.
No other disclosures were made in 2014.
For further information on significant shareholders or shareholder groups, we refer the reader to the table on page
58 and to page 160 of the financial report (duty of disclosure pursuant to Article 663c, Swiss Code of Obligations).
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, 2014, Forbo Holding Ltd had a fully paid up share capital of CHF 215,000, which was divided
into 2,150,000 listed registered shares, each with a par value of CHF 0.10. Of this amount:–– 62.06% were registered in the name of 1,699 shareholders with voting rights;–– 30.18% were shares of banks or of SIX SIS AG pending registration of transfer;–– 7.76% were registered in the share register without voting rights.
The shares of Forbo Holding Ltd (security number 000354151/ISIN CH0003541510) are listed on SIX Swiss Exchange. No different categories of shares exist. Each share entitles the owner to one vote. Further information on
Forbo shares can be found on pages 54 and 55. Further information on the rights of participation associated withshares can be found on pages 69 and 70 of this Annual Report.
The share buyback program launched by the Board of Directors on November 6, 2012, based on the authorization
given by the Extraordinary General Meeting of Forbo Holding Ltd of November 5, 2012, was completed on April
28, 2014. By this date, Forbo Holding Ltd had repurchased a further 530 shares via the second trading line in theyear under review. The Ordinary General Meeting of April 25, 2014 approved the cancelation of the total of
100,000 shares acquired through the share buyback program. At the Ordinary General Meeting of Forbo Holding
Ltd of April 25, 2014, the Board of Directors was again authorized to buy back own shares up to a maximum of
10% of the share capital over a period of three years either on a second trading line at the SIX Swiss Exchange orotherwise, with the purpose of extinguishing them at a later stage. The Board of Directors reserves the right tointerrupt or terminate the share buyback program if this should become necessary in order to finance external
growth. The Board of Directors once more opted for a two-stage procedure in which the shareholders took thebasic decision at the Ordinary General Meeting of Forbo Holding Ltd on April 25, 2014, and will be asked to approve the cancelation of the repurchased shares at one of the forthcoming General Meetings. By December 31,
2014, Forbo Holding Ltd had repurchased 89,954 shares via the second trading line. In addition to the repurchase
via the second trading line, an additional 68,513 shares were tendered to Forbo Holding Ltd in a fixed-price repurchase program. In total, therefore, Forbo Holding Ltd repurchased 158,467 shares, corresponding to 7.37% of theshare capital.

60

FORBO ANNUAL REPORT 2014 – CORPORATE GOVERNANCE REPORT

Conditional and authorized capital
Pursuant to Paragraph 4 of the Articles of Association, Forbo Holding Ltd has a maximum conditional capital of
CHF 16,645, corresponding to 166,450 registered shares to be paid up in full with a par value of CHF 0.10 each.
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 share issues.
The registration of new shares is subject to the general restriction set out in Paragraph 6 of the Articles of Association, which stipulates that shareholders are entered in the share register with voting rights only if they declareexpressly that they have acquired the shares 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 25, 2014 decided, based on the audit report of alicensed audit expert, to reduce the ordinary share capital of the company by CHF 10,000 from CHF 225,000 to
CHF 215,000 by canceling 100,000 shares with a par value each of CHF 0.10. It was further decided to amend the
Articles of Association accordingly.
In 2013, except for the implementation of the decision of the Extraordinary General Meeting of November 5,
2012, there was no change to the capital of Forbo Holding Ltd.
The Extraordinary General Meeting of Forbo Holding Ltd on November 5, 2012, decided, based on the audit
report of a licensed audit expert, to reduce the ordinary share capital of the company by CHF 25,000 from
CHF 250,000 to CHF 225,000 by canceling 250,000 shares with a par value of CHF 0.10 each. It was further decided to amend the Articles of Association accordingly.
Participation certificates and ‘Genussscheine’ (non-voting equity securities)
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 stock in the share register if the purchaser of the stock does not expressly declare at the company’s request that he/she has acquired the shares in his/her own name and for his/her own account.
Pursuant to Paragraph 6 of 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 share capital entered in the Commercial Register. Over andabove this limit, nominees are only entered provided the name, address, and shareholding of those persons aredisclosed for whose account the nominee holds a total of 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.

61

Convertible bonds and warrants/options
Forbo Holding Ltd has no outstanding convertible bonds nor has it issued any marketable warrants/options.
­Details on the Management Investment Plan (MIP) for the Executive Board as amended in 2012, under which
options allocated before the amendment are still outstanding, can be found on page 88, as well as on pages 125
and 126 of this Annual Report.

Board of Directors
Members of the Board of Directors
The cut-off date for the following information is December 31, 2014.
With the exception of This E. Schneider, Executive Chairman of the Board of Directors, none of the members of
the Board of Directors listed below holds or has held any operational management positions for Forbo Holding
Ltd or its Group companies. With the exception of This E. Schneider, none of the members of the Board of Directors sat on the Executive Board of Forbo Holding Ltd or the management of its Group companies in the threebusiness years preceding the period under review. There are no essential business relationships between themembers of the Board of Directors and Forbo Holding Ltd or its Group companies.
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 various management
functions in Europe and the USA, he joined the Executive Board of Schmidt Agency, 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.
Dr. Albert Gnägi, who was Chairman of the Board of Directors for nine years, did not stand for re-election to theBoard of Directors in spring 2014 as he had by then reached the statutory age of retirement. In the interest ofcontinuity and forward-looking succession planning, the Board of Directors has expressed the wish that This E.
Schneider should continue to play an important role in the development of Forbo. The Board of Directors therefore proposed the election of This E. Schneider as Executive Chairman of the Board of Directors at the Ordinary
General Meeting on April 25, 2014. He was elected by an overwhelming majority.
This E. Schneider is also a member of the Board of Directors of Galenica SA, Rieter Holding AG and Autoneum
Holding AG.
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 since1989. He is a member of the Board of Directors of Hero AG, advalTech Holding AG, Berenberg Bank (Schweiz) AG,
Autoneum Holding AG and Rieter Holding AG. He was first elected to the Board of Directors of Forbo Holding Ltd
in 2000.

62

FORBO ANNUAL REPORT 2014 – CORPORATE GOVERNANCE REPORT

Dr. Peter Altorfer, Vice Chairman
Peter Altorfer, born in 1953, is a Swiss citizen. He studied law at the University of Zurich and holds a doctorate
in law (Dr. iur.). 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 andcompany law. Peter Altorfer sits on the Board of Directors of several companies, including Huber + Suhner AG
in Herisau, agta record ag in Fehraltorf, Abegg Holding AG in Zurich, Altin AG in Baar, the Werner Abegg Fundin Zurich and various private and foreign banks, as well as unlisted investment and real estate companies in
Switzerland. He has been a member of the Board of Directors of Forbo Holding Ltd since March 2005.
Claudia 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. From 2006
to 2011 she managed the business of Faerbi Immobilien AG (subsequently Rietpark Immobilien AG) in Zurich asa member of the Board of Directors. Afterwards until 2014, she implemented various projects for P. A. Media AG
and Swisscontent AG in Zurich (M & A amongst others). She is currently a member of the Board of Directors of
Tamedia AG, P. A. Media AG – a subsidiary of Swisscontent AG – and holds directorships in other foundations andcommittees. 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 Helbling group of companies, for which he has worked since 1984. From 2000 to 2011 he was the CEO and Chairman of the Board and in
July 2011 he was appointed full-time Chairman of the Board of Helbling Holding AG. Between 2002 and 2010
Reto Müller was either a member or chairman of the Zurich Regional Economic Advisory Board (Zurich) of the
Swiss National Bank. He has been a member of the Council of SWISSMEM since 2008. He also holds other directorships. 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 completed the Advanced School of Economics and Business
Administration in Berne and trained as a Swiss certified public accountant. In addition, he has attended various
national and international training courses. From 1991 to 2008, Vincent Studer worked at Ernst & Young AG in
Berne as an external auditor and was head auditor responsible for auditing the statements of national and international companies in various industries. In 2001 he was appointed a partner in the area of Auditing. Since 2008
he has been a partner and member of management 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 Directors of BankEEK AG in Berne. He holds further directorships in other companies and foundations. He has been a member ofthe Board of Directors of Forbo Holding Ltd since April 2009.

63

Board of Directors of Forbo Holding Ltd
as per December 31, 2014
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
Committee for Human Resources and Remuneration
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

–

–

64

FORBO ANNUAL REPORT 2014 – CORPORATE GOVERNANCE REPORT

Statutory regulations governing the number of permissible activities pursuant
to Article 12, Paragraph 1, Section 1 OaER
In accordance with §22 of the Articles of Association, members of the Board of Directors may hold no more than
five mandates in listed companies and twenty mandates in unlisted legal entities. A mandate is defined as any
activity in 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.
Elections and terms of office
The members of the Board of Directors will be elected in individual votes for a one-year term of office, in accord­
ance with the Ordinance against Excessive Remuneration in Listed Public Companies (OaER). A year is defined as
the period 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 may, however, approve exceptions. In determining the compositionof the Board of Directors, importance is attached to the election of independent individuals with international
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 (RC) and the­independent 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 63.
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 the 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 themeasures adopted by the Board. He is the direct superior of the CEO, is in regular contact with him, and has anadvisory and supervisory function. In addition, the Executive Chairman represents the Board and the Forbo Groupvis-à-vis the public, the authorities and the shareholders. The tasks of the Executive Chairman of the Board andthe demarcation of responsibilities from those of the CEO are set out in the chapter ‘Areas of responsibility’.
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.

65

The Board of Directors meets on being convened by the Executive Chairman as often as business requires but atleast four times a year. When the Board is convened, the items on the agenda must be announced at least fiveworking days before the day of the meeting. This notification period may be shortened in urgent cases. In 2014,
the Board of Directors met seven times, the meetings usually lasting a whole day.
The Executive Chairman may invite members of the Executive Board or other senior employees to attend Board
meetings for individual items. Regular use is made of this option. External consultants participate in the meetingsof the Board of Directors, the AFC, the RC or the HRNC only in exceptional circumstances to deal with particular
items. As a rule, however, the meetings are held without external consultants.
Audit and Finance Committee
The Audit and Finance Committee (AFC) advises the Board of Directors in respect of its duties on behalf of thecompany in the areas of financial reporting, the accounting standards and systems used, and decisions withsignificant 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 for the attention of the General Meeting. The CEO and the CFO are regularly
requested to attend meetings in an advisory capacity, while 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 2014 business year, three meetings
were held, each lasting about half a day. The external auditors were present for some items on the agenda of the
AFC’s meeting on the financial statements, while the Ernst & Young representatives responsible for internal auditing attended all meetings held to discuss the internal audit reports.
Human Resources and Nomination Committee
We refer to the explanations in the compensation report on page 77.
Remuneration Committee
We refer to the explanations in the compensation report on pages 77 and 78.
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:–– ultimate management of the company and issuing the necessary directives–– definition of the organization–– organization of accounting, financial controlling, and financial planning–– 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
to compliance with the law, articles of association, regulations, and directives–– preparation of the Annual Report and of the General Meeting and implementation of its resolutions–– preparation of the remuneration report–– notification of the court in the event of over-indebtedness

66

FORBO ANNUAL REPORT 2014 – CORPORATE GOVERNANCE REPORTThe Board of Directors bears ultimate responsibility for supervising and monitoring the management of the company 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 exception 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 theGeneral Meeting or another body of Forbo by law, the Articles of Association, or regulations.
Tasks of the Executive Chairman of the Board of Directors:–– leading the Board of Directors–– preparing the decisions of the Board of Directors and ensuring they are executed–– representing and positioning the Group in the public–– overall management of strategy development and involvement in realizing key strategic projects–– management of relationships with key accounts and business, sector and capital market partners
Tasks of the Chief Executive Officer:–– operational management of the Group–– leading the Executive Board–– development and operational implementation of strategies–– implementation and monitoring of multi-year planning and budgets–– support for 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, but is not himself a member of the Boardof Directors. 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 are delegated to the CEO and are conductedby him on his own responsibility. The CEO is responsible for ensuring compliance with the provisions 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 the two divisions; it is responsible
for the 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 co-responsibility 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
The Executive Board meets as often as business requires, normally once a month. In the 2014 business year,
eleven meetings were held, the meetings usually lasting half a day.
At the meetings of the Board of Directors, any member may request information about any matter concerning
the Forbo 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
the AFC, HRNC, and RC meetings. The Executive Board reports to the AFC through the CFO in consultation with
the CEO; it reports to the HRNC and RC through the CEO.
The Board is also regularly briefed outside meetings about events and challenges facing the Group and the general performance of the divisions. In addition, the Executive Chairman and the two Vice Chairmen are in regularcontact when essential policy issues are involved. For important, particularly urgent events, the CEO informs the
Executive Chairman of the Board of Directors immediately.
The CEO conducts 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, see the sections on internal organization and on the AFC, HRNC, and RC on pages 64 and 65 as well as 77 and 78 respectively.
The Board of Directors furthermore fulfills its supervisory and monitoring obligations by means of financial reporting and its role in the planning cycle. The internal and external auditors also assist the Board in this task. Neither
the external auditors nor the internal auditors, however, were invited to any meetings of the Board of Directors in2014 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 approved at mid-year by the Board of Directors. Based on themedium-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 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 in a second estimate mid
October. On completion of the business year, the extent to which the budget has been reached is checked anddeviations are analyzed. This analysis is used to derive appropriate measures, which are then implemented in thenext planning cycle.
Internal auditing is effected by Ernst & Young, which has been commissioned for this purpose. Internal auditing
is administratively 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 2014 – 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, compliance
audits, 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 2014, a total of seven internal audits were conducted. The internal audits were restricted to individual businessprocesses. In its review of audited Group companies, Internal Audit included any issues that had been definedin the framework of the internal control system (ICS). Internal audits also involved various compliance reviews
related to these processes. Lastly, additional risks and controls in connection with the above-mentioned businessprocesses were analyzed in the audit. At least three companies in each division were audited in the course of theinternal 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 particu­
lar 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 monitored centrally and hedged in certain cases. The liquidity and financing
of subsidiaries are also monitored centrally. Please also refer to pages 141 to 145 of the financial report for more
information on this subject.
With regard to the risk management process pursuant to Article 663b Section 12 of the Swiss Code of Obligations,the reader is referred to the relevant explanations on pages 141 to 145 (note 35 ‘Risk assessment and financial risk
management’).

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 pages 47 and 48 of this Annual Report.

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Statutory regulations governing the number of permissible activities pursuant
to Article 12, Paragraph 1, Section 1 OaER
In accordance with §22 of the Articles of Association, members of the Executive Board may hold no more than
two mandates in listed companies and seven mandates in unlisted legal entities. The acceptance of mandates bymembers of the Executive Board is subject to prior approval by the Board of Directors. A mandate is defined as
any activity in the senior managerial or supervisory bodies of legal entities that are entered in the Swiss Commer­
cial Register or comparable foreign registers and do not belong to the Forbo Group. Mandates with associatedcompanies outside the Forbo Group are deemed to be a single mandate.
Changes on the Executive Board
Stephan Bauer was appointed as the new CEO and Chairman of the Executive Board of the Forbo Group as ofJanuary 1, 2014. This E. Schneider, Delegate of the Board of Directors, took over as Executive Chairman of theBoard of Directors in the spring of 2014, replacing Dr. Albert Gnägi, who had reached the statutory retirement
age in the spring of 2014 and therefore retired from the Board of Directors.
Management contracts
Forbo Holding Ltd has concluded no management contracts with third parties.

Compensation, shareholdings, and loans
For the relevant information we refer to the remuneration report as of page 76.

Shareholders’ participation
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 share cap­
ital entered in the Commercial Register. The restriction also applies to shares that are subscribed or acquired
through exercise of a subscription, option or convertible right. Resolutions on the amendment or abrogation of
the clause on the registration of registered shares require a majority of two-thirds of the votes represented at theGeneral 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 Ordinary General Meeting§12 of the Articles of Association defines the rules for electronic issuing of instructions to the independent proxy;
the precise modalities for this are defined by the Board of Directors. In accordance with §14 of the Articles of­Association, voting and elections at the Ordinary General Meeting are in principle conducted electronically, unless
the Ordinary 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 2014 – 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 Ordinary General Meeting.
Convening of the General Meeting
The General Meeting is convened in accordance with the statutory provisions.
AgendaShareholders who represent shares with a par value of 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 §12 of the Articles of Association, the Board of Directors, in its invitation to the Ordinary Gen­
eral Meeting, announces the cut-off date for entries in the share register authorizing shareholder participationand 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 Article 32 and 22 SESTA.
Clause on changes of control
As per year-end 2014, no clauses on changes of control existed in agreements or plans involving members of
the Board of Directors, the Executive Board or other members of management.

Auditors
Duration of the mandate and term of office of the head auditor
PricewaterhouseCoopers has been the Forbo Group’s auditors since 1987. The predecessor company of Price­waterhouseCoopers had been Forbo’s auditors since 1928. The auditors are elected every year by the Ordinary
General Meeting on a proposal by the Board of Directors. As the Auditor in Charge has to be changed at least
every seven years, Daniel Ketterer took over the function of Auditor in Charge as of the 2009 business year.
For corporate governance reasons, the Board of Directors will propose to the Ordinary General Meeting ofApril 24, 2015 that the external auditor be changed and that KPMG be elected as new audit company.
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 1.0 million in the year under review.
Additional fees
The additional consultancy fees that were invoiced by the auditing company amounted to CHF 0.4 million in 2014.
These fees consist in the main of general tax advice.

71

Information instruments of the external auditors
The external auditors prepare as needed for the Executive Chairman of the Board of Directors, the CEO and the
CFO an annual management letter on their work and the results of their audit at Group level in the year underreview. 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 it has 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 themeetings 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 are, in particular, their technical and operational competency, their independence and objectivity, delivery of the audit reports on time, scope and focusof the audits, and the ability to provide effective and practical recommendations. This assessment by the AFC
forms the basis for 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 with shareholders, the capital market, the media, and the
public by reporting in 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 on the Internet at www.forbo.com. The General Meeting is an additional source of information. Periodic publication of media releases, the annual media andanalysts’ conference, and road shows are further information tools for the media and the capital market.

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FORBO ANNUAL REPORT 2014 – 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 addresses:
www.forbo.com � Medien � Medienmitteilung ‘Subscription Service’
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. Written notification to shareholders takes place through a simple letter tothe 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 54 and 55 of this Annual Report.
Publications may be ordered by e-mail, fax, or telephone:
E-mail 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 Corporate Development & 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

76

FORBO ANNUAL REPORT 2014 – REMUNERATION REPORTREMUNERATIONREPORT
Introduction
The Ordinance against Excessive Remuneration in Listed Public Companies (OaER) entered into force on January
1, 2014. The Ordinance allows a transition period until the end of 2015. The Board of Directors promptly submitted
a comprehensive amendment of the Articles of Association to the Ordinary General Meeting of April 25, 2014. The
present remuneration report was drawn up by the Board of Directors in compliance with the OaER and theamended Articles of Association.
As of the 2014 Ordinary General Meeting, and in accordance with the OaER and the amended Articles of Association, all members of the Board of Directors, including members of the Remuneration Committee, are now
elected in individual ballots for a term of one year.
In accordance with the amendment of the Articles adopted at the 2014 Ordinary General Meeting, the below
rules apply to votes on remuneration.
Once a year, 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 a separate and binding
ballot. In addition, a vote is taken on the maximum total amount of fixed remuneration to be paid to the Executive Board for the business year following the Ordinary General Meeting, and the amount of variable remuneration
to be paid to the Executive Board for the business year preceding the Ordinary General Meeting.
At the 2015 Ordinary General Meeting, shareholders will vote individually on the following three remuneration
payments for the first time:–– Maximum total remuneration of the Board of Directors for 2016–– Maximum fixed remuneration of the Executive Board for 2016–– Variable remuneration of the Executive Board for 2014
The total compensation was approved by an overwhelming majority in a consultative vote on the 2013 remuneration report at the Ordinary General Meeting of April 25, 2014 (agenda item 1.2). Participants in the 2015 Ordinary
General Meeting will also be invited to vote in a consultative ballot on the entire 2014 remuneration report.

77

Content and methodology for determining the
remuneration and shareholding program
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 responsibilities for the Group in matters relating to human resources and nominations both for the Board and the mostsenior level of management. More specifically, the HRNC formulates personnel policy proposals for appointments
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 theBoard and the CEO regarding Executive Board appointments and employment contracts. It also approves theacceptance of mandates by members of the Executive Board in companies that are not part of the Forbo Group.
The Human Resources and Nomination Committee meets as often as business requires, but at least twice a year.
In the 2014 business year, the HRNC held two meetings, each lasting a couple of hours.
The Human Resources and Nomination Committee consists of at least two members of the Board of Directors.
The Ordinary General Meeting of April 25, 2014 elected Dr. Peter Altorfer (Chair), Claudia Coninx-Kaczynski andMichael Pieper to the HRNC for the 2014 business year.
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 within 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 Committee 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 2014 business
year, the Remuneration Committee held two meetings, each lasting a couple of hours.
The Remuneration Committee consists of at least two members of the Board of Directors. The Ordinary General
Meeting of April 25, 2014 elected Dr. Peter Altorfer (Chair), Claudia Coninx-Kaczynski und Michael Pieper to theRemuneration Committee for the 2014 business year. The members of the Remuneration Committee are independent (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.

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FORBO ANNUAL REPORT 2014 – REMUNERATION 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 remuneration paid to the Executive Board are determined by the Remuneration Committee as a rule 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 target bonus for the Executive Board is determined by the Remuneration Committee
once a year in November for the following year.
ProposalAcceptanceApproval

Remuneration budget
Maximum total remuneration of the Board of Directors
Maximum fixed remuneration of the Executive Board
Variable remuneration of the Executive Board

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

Performance targets
Performance targets – Executive Board
Performance targets – CEO

RC
RC

BoD
BoD

Important changes in 2014
In the 2014 business year there were no important changes in the remuneration system for the Board of Directors
or the Executive Board. The contractual adjustments to the OaER were made partly in 2013 and partly in the year
under review.

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 to­remunerate employees appropriately for their achievements, commitment, and performance and thereby gain
their long-term loyalty to the company. The purpose of paying part of the remuneration in the form of shares is
to link the interests of the managers to those of the shareholders.
The members of the Board of Directors receive a fixed remuneration, the amount of which is determined according to 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
shares in 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 variable remuneration consists of a per­formance-based remuneration (bonus), at least 50% of which must be taken in the form of locked-up sharesof Forbo Holding Ltd (see the description of the Management Investment Plan (MIP) on pages 83 and 84 of thisremuneration report). The bonus is tied to the achievement of individual (qualitative) targets by each Executive
Board member and of financial (quantitative) targets by the company. Depending on the function and responsibilities of the Executive Board member in question, these financial targets may be tied to Group and/or divisional objectives. It may not exceed 200% of the fixed remuneration of the individual Executive Board member.

79

The relevant statutory provisions governing the principles of performance-based 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, from respected market data providers, andfrom data published by Ethos (the Foundation for Socially Responsible Investment and Active Shareownership)
or is known to Board members from their experience of office in similar companies. Industrial companies are­regarded as comparable if they are similar to Forbo in terms of sector, structure, size (sales and number of employees), geographic presence, profitability, market capitalization, and complexity. As a general 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

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 according to whether the member is Board Chairman, a simple Board member or also a member ofthe 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. These shares have a lock-up period of three years. The number of shares issued is determined by taking 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 relevant business 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 insurance benefits.
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 Delegate of the Board of Directors and as of April 25, 2014 the Executive Chairman of
the Board of Directors is disclosed separately and included under total compensation to the Board of Directors.
80

FORBO ANNUAL REPORT 2014 – REMUNERATION REPORTWith effect from May 2013, the employment contract with the Delegate of the Board of Directors and as of April
25, 2014 the Executive Chairman of the Board of Directors was extended to encompass the period from May 1,
2013 to December 31, 2016. The remuneration will again be paid mainly in locked-up shares which have lock-up
periods of three, four, and five years respectively, and in an annual cash payment of CHF 310,000, to be usedin part for taxes and for employee contributions to the pension fund and social security. The underlying shareprice used to calculate the number of shares is the weighted average price of the first and last five days on which
Forbo Holding Ltd shares were traded on the stock market in 2012 (CHF 522.12), less the reduced value as a resultof locking up the shares. The share package corresponds to annual compensation of CHF 2,200,000 (5,314 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. The last third of thelocked-up shares will be available on May 1, 2018 at the earliest. This compensation model is thus geared to longterm and sustainable corporate development and is fully consistent with the interests of the company and its
shareholders.
The total compensation of the Delegate of the Board of Directors and as of April 25, 2014 the Executive Chairmanof the Board of Directors for the period from May 1, 2013 to December 31, 2016 was described in detail inthe 2012 Annual Report and was approved by a majority of 98% in a consultative vote at the Ordinary General
Meeting of April 26, 2013.
The Ordinance against Excessive Remuneration in Listed Public Companies (OaER) entered into force on January
1, 2014. According to Article 28 of the OaER, employment contracts must be compliant with the OaER by December 31, 2015 at the latest. Consequently, all payments that had been agreed and were paid out for 2016 have tobe reversed by December 31, 2015 at the latest. The value of this fixed remuneration for This E. Schneider comesto CHF 2,200,000 for 2016. In order to comply with and implement the provisions of the OaER, Forbo and This E.
Schneider have agreed that he will repay Forbo in cash the amount of his fixed compensation for the period fromJanuary 1, 2016 to December 31, 2016, plus interest of 0.5% from May 1, 2013 to December 31, 2013. The repayment was completed before year-end 2013 and will be paid out to him again in monthly installments in 2016
after approval by the 2015 Ordinary General Meeting. The compensation package and the relevant agreements
were adjusted accordingly. No severance payment or compensation in the event of a takeover was agreed; theperiod of notice is 12 months.
The total compensation for the Delegate and Executive Chairman of the Board of Directors came to CHF 2,939,400
for the year under review. Contained in this amount and reported in the column ‘Other payments’ are employer
contributions to the pension fund, other usual social insurance benefits, private use of the company car, contributions for accident and health insurance, and location expenses. The Delegate of the Board of Directors and asof April 25, 2014 the Executive Chairman of the Board of Directors is not a party to the Management Investment
Plan (MIP) or the share-based compensation program of 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 86 until 89 of this remuneration report.

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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 experience 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, from respected market data providers, and from data published by
Ethos (the Foundation for Socially Responsible Investment and Active Shareownership) or is known to the members of the Remuneration Committee from their experience of office in similar companies. Industrial companies
are regarded as comparable if they are similar to Forbo in terms of sector, structure, size (sales and number of
employees), geographic presence, profitability, market capitalization, and complexity. As a general rule, no external consultants are co-opted for determining the remuneration.
Alignment of performance-based remuneration to 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 tied to Group and/or divisional objectives depending on the function of the individual Executive Board member; these include net sales, free cash flow and EBIT.
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 strategy 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 and asecond e­ stimate 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 performance-driven remuneration paidout to the Executive Board is determined on the basis of the achievement of these individual targets. The Boardof Directors defines the relation between budget target achievement and payment ratio.
The performance-driven portion of the remuneration for the previous year is paid out on completion of the business year and after approval by the shareholders. Impacts/performance criteria affecting the amount of the payment are tied directly to Group profitability. The chart below provides a detailed breakdown on the timing andconnection between the corporate targets and the remuneration.

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FORBO ANNUAL REPORT 2014 – REMUNERATION REPORT

Planning cycle
1st quarter
Ordinary General Meeting
Corporate strategy
Review/amendment of strategy
Establishing mid-term plan
Establishing budget
Working out remuneration
Defining maximum total remunerationof Board of Directors
Defining maximum total remunerationof Executive Board
Ordinary General Meeting approval of total remunerationof Board of Directors and of fixed remuneration of
Executive Board for following business year
Setting targets for Executive Board
Assessing target achievement and proposal forvariable remuneration of Executive Board
Approval of variable remuneration of Executive Boardfor previous business year
Decision period

2nd quarter3rd quarter

4th quarter

83

Elements of remuneration of the Executive Board
Remuneration of the members of the Executive Board consists of a fixed base salary and a performance-driven
bonus.
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).
Performance-based remuneration
The variable (performance-based) remuneration component is tied to 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
between 10% and 20% of the total variable remuneration. The remaining portion of the variable remuneration
component depends on 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 30% of the variable remuneration), EBIT of
the Group and/or a division (50% to 55% of the variable remuneration), net working capital of the Group and/or
a division (5% to 10% of the variable remuneration), and free cash flow of the Group (0% to 10% of the variable
remuneration).
The defined objectives of the entire variable remuneration are equivalent to 100% target achievement. The maxi­
mum 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 remuneration 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 performance-driven bonus, which is based on achievement of the individual and Group­targets, is set in March on 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 is linked to the Management Investment Plan (MIP), which was introduced in 2006 andamended in 2012. According to this plan, at least 50% of the annual bonus of Executive Board members must be
paid into the MIP.
As for the remaining 50% of the annual bonus, the Executive Board members may either draw all or part of it incash or pay it into the MIP. The Executive Board members may redefine the allocation of this remaining 50% every
year.
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:

84

FORBO ANNUAL REPORT 2014 – REMUNERATION REPORT((SPA – SPP)/SPP) + 1, where ‘SPA’ stands for the share price applicable for the allocation of shares in the year of­allocation 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 from the unweighted average of the closing
prices of the Forbo share in the first fourteen trading days in January of the allocation year. The shares are locked
up for a 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%x 1.25x Factor 0.95 – 1.1
depending on shareprice development

in shares
3-year lock-up

Actual bonus payments
Readers are referred to pages 86 until 89 of this remuneration report for the amount of the actual variable­remuneration paid to the Executive Board in the year under review and for the details on valuation and allocationof shares.

85

Employment contracts of the Executive Board members
According to Article 28 of the OaER, employment contracts must be compliant with the OaER by December 31,
2015 at the latest.
Consequently, the employment contracts of the Executive Board members have been adjusted in order to meetthe ordinance guidelines that come into effect in 2015. The employment contracts of the Executive Board members provide for contracts of indefinite duration with a maximum 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 may be revoked wholly or in part upon the occurrence 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.

Remuneration elements allocated for previous
years and still outstanding
Under the previous MIP, 25% of the payments was invested in options and 75% in shares of Forbo Holding Ltd.
The shares and options were locked up for a period of three years, and the lifetime of the options was five years.
The options issued in connection with the MIP come to maturity no later than April 21, 2017. Owing to the revision of the MIP, the sums paid into the MIP are no longer invested in options and shares as of January 1, 2013, butsolely in shares of Forbo Holding Ltd. These shares are subject to a lock-up period of three years.
Of special note with regard to the options issued before the revision of the MIP is the treatment of these optionsin the event of termination of the employment contract, disability or retirement. If notice is given by either party
terminating the employment contract during the lock-up period, the MIP participants may either sell back theoptions (the reselling price then corresponds to the difference between the strike price of the option and theaverage price of the shares during the last five trading days before the employment contract was terminated) or
they may keep the options and sell or exercise them after the lock-up period during their remaining lifetime. In
the event of death, disability or retirement (including early retirement), the options – regardless of whether or notthey are still subject to a lock-up period – may be sold during the entire remaining period to maturity from themoment the disability or retirement begins or from the date of death.
Details on MIP allocation
The shares and options issued in connection with the MIP are equity-settled. The options were issued on thebasis of a valuation by an independent bank, with the valuation being based on the average market price of theshares in the first 14 trading days in January of the year the allocation was made. The last allocation of options wasmade in 2012. The shares that were distributed in connection with the MIP up to and including 2012 were issued
at the average market price for the first 14 trading days in January of the corresponding year.

86

FORBO ANNUAL REPORT 2014 – 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 880,480 in
the year under review (previous year: CHF 1,015,001). This sum consists of the base salary in cash (60% of the
remuneration), amounting to CHF 519,099 (previous year: CHF 557,154) and the base remuneration in shares(40% of the remuneration) of CHF 264,234 (previous year: CHF 372,846). This corresponds to 290 shares (previous
year: 627 shares) at a market value of CHF 911.15 (previous year: CHF 594.65). 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 compensation’.
The compensation paid to the Executive Chairman of the Board of Directors is explained in detail on pages 79
and 80 of this remuneration report.
Remuneration of the Executive Board
The total compensation paid to the members of the Executive Board came to CHF 3,879,680 in the year underreview (previous year: CHF 2,951,241), subject to approval of the variable portion by the 2015 Ordinary General
Meeting. This sum includes a fixed base salary of CHF 1,714,347 (previous year: CHF 1,296,160) and variable remuneration of CHF 1,664,955 (previous year: CHF 1,293,034) plus the private use of the company car, employer contributions to the pension fund and other usual social insurances, which are reported separately in the column‘Other compensation’.
The fixed portion of the base salary paid in shares (lock-up period of five years) came to CHF 403,207. The portionof the variable remuneration paid in shares in connection with the MIP (lock-up period of three years) came to
CHF 1,592,868, subject to approval by the 2015 Ordinary General Meeting.

87

Disclosure of remuneration of the Board of Directors and the Executive Board
Remuneration
for the business year 20141)

Variable
remuneration2)

Base salary
CashName and function

This E. Schneider, Executive Chairman4)
Dr. Albert Gnägi, Chairman5)
Michael Pieper, Vice Chairman
Dr. Peter Altorfer, Vice Chairman6)
Claudia Coninx-Kaczynski, member7)
Dr. Reto Müller, member
Vincent Studer, member
Total Board of Directors8)
Total Executive Board9)10)11)
Of whom highest-paid
Executive Board member

SharesCash

CHF

Number

CHF

CHF

297,983
128,333
80,331
104,841
47,19971,70986,686
817,082
1,311,140
400,000

5,314
0
60
77
36
53
64
5,604
455
227

2,200,020
054,66970,15932,801
48,291
58,3142,464,254
403,207
201,120

72,087
0

Other
remu­
neration3)

Total

SharesNumber

1,649
778

CHF

CHF

CHF

1,592,868
751,517441,397
39,681
11,443
16,712
8,572
12,8707,869
538,544
500,378
206,447

2,939,400
168,014
146,443
191,71288,572
132,870
152,869
3,819,880
3,879,680
1,559,084

1) The remuneration of the Board of Directors and the Executive Board is reported gross before deduction of employee social insurance contributions. The amounts shown in the table are based on valuation models used and disclosed in the consolidated financial statements.
2) The variable remuneration of the Executive Board corresponds to the actual degree to which targets were reached in 2014 and will be submitted to the April 2015 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 price of the Forbo shares in the first 14 trading days in January of the allocation year inconnection with the MIP. The shares are allocated at the end of April/beginning of May (subject to approval by the Ordinary General Meeting)for the period from January to December of the previous year: CHF 965.96. The shares are locked up for a period of three years.
3) ‘Other remuneration’ includes in particular employer contributions to the usual social insurances, the private company car use and lump sum
or local expenses.
4) This E. Schneider was Delegate of the Board of Directors until the 2014 Ordinary General Meeting. From this point on, he has had the function of Executive Chairman of the Board of Directors. For details on the structure of his remuneration, please refer to pages 79 and 80 of thisremuneration report. These remarks also contain the criterion for determining the number of shares issued and their lock-up periods.
5) Dr. Albert Gnägi retired from the Board of Directors at the 2014 Ordinary General Meeting on reaching the retirement age. His remuneration
was paid in cash pro rata temporis.
6) Vice Chairman since the 2014 Ordinary General Meeting (previously member).
7) New member of the Board of Directors since the 2014 Ordinary General Meeting.
8) 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 911.15. The shares are locked up for a period of three
years.
9) Remuneration of the entire Executive Board including the highest-paid Executive Board member.
10) 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 at the end of April/beginning of May for the period fromMay of the previous year to April of the year of allocation. The shares are locked up for a period of five years. The corresponding value of theshares allocated was proportionate CHF 759.68 for 2014 and CHF 965.65 for 2015.
11) 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 fiscal 2014 will be allocated in late April/early May 2015, subject to approval by the 2015 Ordinary General Meeting. The shares are locked up for a period of three years. The value atallocation was CHF 965.65.

88

FORBO ANNUAL REPORT 2014 – REMUNERATION REPORT

Remuneration
for the business year 20131)

Cash
Name and function

Dr. Albert Gnägi, Chairman
Michael Pieper, Vice Chairman
Dr. Peter Altorfer, member
Dr. Reto Müller, member
Vincent Studer, member
Non-executive members of the Board of Directors
This E. Schneider, Delegate of the Board and CEO3)
Total Board of Directors
Total Executive Board

Base salary

Variable
remuneration

Other
remuneration2)

SharesCash, Shares

CHF

Number

CHF

CHF

CHF

CHF

230,986
80,88786,724
71,83386,724557,154
256,667
813,821
1,029,493

259
91
98
81
98
627
7,796
8,423
0

154,01454,11358,27648,16758,276
372,846
2,138,632
2,511,478
266,667

1,293,034

27,363
11,44914,661
23,662
7,866
85,001
398,005
483,006
362,047

412,363
146,449
159,661
143,662
152,866
1,015,001
2,793,304
3,808,305
2,951,241

1) The remuneration of the Board of Directors and the Executive Board is reported gross before deduction of employee social insurance contributions. The amounts shown in the table are based on valuation models used and disclosed in the consolidated financial statements.
The table therefore discloses the maximum remuneration that was granted in the year under review, including compensation for which thepayment date or definitive legal title occurred after December 31, 2013.
2) ‘Other remuneration’ includes in particular employer contributions to the usual social insurances, the private company car use, and lump sum
or local expenses.
3) The compensation paid to the Delegate of the Board of Directors and CEO is disclosed separately and included under total compensation to
the Board of Directors. It is not possible to clearly allocate the total compensation paid for the two functions.

Options
In the year under review and the previous year, no options were issued in connection with the MIP. However, there
are still options outstanding within the Management Investment Plan (MIP), which was launched in 2006 andrevised in 2012.
As at the balance sheet date December 31, 2014, the Executive Board held the following options:
Allocation
2012

Number3,051

Term
20.04.2012 – 21.04.2017

Total

Locked-up until
20.04.2015

Subscription ratio
1:1

Strike price (CHF)
616.33

Advances and loans
As at December 31, 2014, 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 can be downloaded at:www.forbo.com � Investors � Ordinary General Meeting

89

Disclosure of shareholdings pursuant to Article 663c CO2014 business year
As at December 31, 2014, 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 2014
SharesName and function
This E. Schneider, Executive Chairman3)
Michael Pieper, Vice Chairman
Dr. Peter Altorfer, Vice Chairman4)
Claudia Coninx-Kaczynski5), member
Dr. Reto Müller, member
Vincent Studer, member
Total Board of Directors
Stephan Bauer, Chief Excecutive Officer
Matthias P. Huenerwadel, Executive Vice President Flooring Systems
Andreas Spreiter, Chief Financial Officer
Jean-Michel Wins, Executive Vice President Movement Systems
Total Executive Board

Options1)
2012 series
1:12)

64,981
616,779
1,032
36
456
695
683,979
538
1,500
570
92
2,700

3,051

3,051

1) Following the amendment of the MIP, all the sums paid into it are invested in shares of Forbo Holding Ltd starting as of January 1, 2013. Asof the 2013 business year, no further options were issued in connection with the MIP. However, there are still options outstanding within the
MIP, which was launched in 2006 and revised in 2012.
2) Subscription ratio.
3) The share portion for the Executive Chairman of the Board of Directors amounts to 19,483 shares from the employment contract for theperiod from May 1, 2013 to December 31, 2016. The shares are subject to lock-up periods of three, four, and five years. The last third of theshares will be available on May 1, 2018 at the earliest.
4) Vice Chairman since the 2014 Ordinary General Meeting (previously member).
5) New member of the Board of Directors since the 2014 Ordinary General Meeting.

90

FORBO ANNUAL REPORT 2014 – REMUNERATION REPORTAs at December 31, 2013, 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 2013
SharesName and function
Dr. Albert Gnägi, Chairman
Michael Pieper, Vice Chairman
Dr. Peter Altorfer, member
Vincent Studer, member
Dr. Reto Müller, member
Non-executive members of the Board of Directors
This E. Schneider, Delegate of the Board of Directors and CEO2
Total Board of Directors
Matthias P. Huenerwadel, Executive Vice President Flooring Systems
Andreas Spreiter, Chief Financial Officer
Jean-Michel Wins, Executive Vice President Movement Systems
Total Executive Board

5,162
681,719955
631
403
688,870
86,368775,238
2,310
56
0
2,366

Options3)
2012 series
1:11)

2011 series
1:11)

2010 series
1:11)

3,051

2,033

565

3,051

2,033

565

1) Subscription ratio.
2) The compensation to the Delegate of the Board of Directors and CEO is disclosed separately and shown in the line Board of Directors.
3) Following the amendment of the MIP, all the sums paid into it will be fully invested in shares of Forbo Holding Ltd starting on January 1, 2013.
As of the 2013 business year, no further options were issued in connection with the MIP. However, there are still options outstanding within
the MIP, which was launched in 2006 and revised in 2012.

91

Report of the statutory auditor

Report of the statutory auditor to the General Meeting
Forbo Holding Ltd, Baar
Report of the statutory auditor on the remuneration report
We have audited pages 87 to 90 of the accompanying remuneration report of Forbo Holding Ltd for the year
ended December 31, 2014.
Board of Directors’ responsibility
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 and defining
individual remuneration packages.
Auditor’s responsibility
Our responsibility is to express an opinion on the accompanying remuneration report. We conducted our audit
in accordance with Swiss Auditing Standards. Those standards require that we comply with ethical requirements
and plan and perform the audit to obtain reasonable assurance about whether 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 of Forbo Holding Ltd for the year ended December 31, 2014 complies
with Swiss law and articles 14 – 16 of the Ordinance.
PricewaterhouseCoopers AG

Daniel Ketterer
Revisionsexperte
Audit expert

Zurich, March 11, 2015

Reto Tognina
Audit expert

FINANCIAL REPORT
Forbo Group financial report
93
Consolidated balance sheet
94
Consolidated income statement
95
Comprehensive income statement	
96
Consolidated shareholders’ equity	
97
Consolidated cash flow statement
98
Notes – accounting principles
99
Notes109
Group companies
146
Report of the statutory auditor
150
Consolidated income statements 2010 – 2014
152
Consolidated balance sheets 2010 – 2014
153
Financial statements for Forbo Holding Ltd
Income statement	
Balance sheet	Notes to the financial statements
Proposal for appropriation of available earnings
Report of the statutory auditor

155
156
157
158
163
164

94

FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS

Consolidated balance sheet

Assets
CHF m
Non-current assets
Property, plant, and equipment
Intangible assets
Deferred tax assets
Investments in associates and other non-current assets
Current assets
Inventories
Trade receivables
Other receivables
Deferred income and prepaid charges
Other current financial instruments
Cash and cash equivalents
Total assets
Shareholders’ equity and liabilities
CHF m
Shareholders’ equity
Share capital
Treasury shares
Reserves and retained earnings
Non-current liabilities
Non-current financial debt
Employee benefit obligations
Non-current provisions
Deferred tax liabilities
Current liabilities
Trade payables
Current provisions
Accrued expenses
Current financial debt
Current tax liabilities
Other current liabilities
Total liabilities
Total shareholders’ equity and liabilities

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

31.12.2014

31.12.2013

418.5
234.9
146.1
37.2
0.3
677.1
230.6
150.6
24.0
17.3
49.5
205.1
1,095.6

408.2
232.3
146.4
29.3
0.2
718.8
213.4
148.8
29.2
18.3
68.1
241.0
1,127.0

738.8
0.2
– 0.1
738.7
112.6
1.4
60.5
24.2
26.5
244.2
86.5
17.8
90.4
0.6
18.9
30.0
356.8
1,095.6

786.8
0.2
– 0.1
786.7
99.1
1.2
51.8
26.1
20.0
241.1
87.2
17.3
88.5
0.7
14.5
32.9
340.2
1,127.0

Note

15
16
13
17
18
19

20
21

23
23

25
26
27
13

27
28
29

FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS

95

Consolidated income statement

CHF mContinuing operations
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

2014

2013

1,226.8– 765.8
461.0– 16.5– 196.6– 94.2– 13.2
8.9
149.4
5.9
– 1.0
154.3
– 30.9
123.4
0.2
123.6

1,199.7– 747.3
452.4– 16.4– 197.1– 90.7– 19.3
6.8
135.7
10.9
– 5.7
140.9
– 30.7
110.2
7.4
117.6

Note

5

6
7
8
9
11
12
13
30

Earnings per share, total
CHF
Basic earnings per share
Diluted earnings per share

14
14

62.04
61.95

56.78
56.76

Earnings per share from continuing operations
CHF
Basic earnings per share
Diluted earnings per share

14
14

61.92
61.83

53.21
53.19

Earnings per share from discontinued operations
CHF
Basic earnings per share
Diluted earnings per share

14
14

0.12
0.12

3.57
3.57

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

96

FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS

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 may be subsequently reclassified to the income statement:
Translation differences
Other comprehensive income for the year, net of tax
Total comprehensive income

The items under ‘Other comprehensive income forthe year, net of tax’ include income tax effects, which
are described in note 13 ‘Income taxes’.

2014

2013

123.6

117.6

– 6.2

0.9

0.6
– 5.6
118.0

– 8.2
– 7.3
110.3

The accompanying notes are an integral part of theconsolidated financial statements.

FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS

97

Consolidated shareholders’ equity

2014

CHF m
December 31, 2013
Group 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, 2014

SharecapitalTreasuryshares0.2– 0.1

Reserves

– 0.0

0.0

0.2

– 0.1

1,031.5
123.6
– 6.2
117.4
4.2
– 141.6– 28.6982.9

Share
capitalTreasurysharesReserves

0.3

– 0.1

Translationdifferences– 244.8
0.6
0.6– 244.2

Translationdifferences

Total

786.8
123.6
– 5.6
118.0
4.2
– 141.6– 28.6
738.8

2013

CHF m
December 31, 2012
Group 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, 2013

– 0.1

0.0

0.2

– 0.1

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

965.6
117.6
0.9
118.5
3.1
– 30.8– 24.91,031.5– 236.6
– 8.2
– 8.2

– 244.8

Total

729.2
117.6
– 7.3
110.3
3.1
– 30.9– 24.9786.8

98

FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS

Consolidated cash flow statement

2014

2013

Cash flow from operating activities
CHF mGroup profit for the year
Profit from disposal of discontinued operations after taxes
Tax expense
Group profit before taxes
Financial result
Depreciation of property, plant, and equipment
Amortization of intangible assets
Profit from the sale of non-current assets
Share-based payments
Income tax paid
Decrease in provisions and employee benefit obligations
Increase (–)/Decrease in net operating working capital1)
Decrease/Increase (–) in other current assets
Net cash flow from operating activities

123.6
– 0.2
30.9
154.3
– 4.9
32.8
2.9
– 1.2
4.2
– 27.1– 1.4– 15.7
3.4
147.3

117.6
– 7.4
30.7
140.9
– 5.2
33.3
3.1
0.0
3.1
– 24.9– 5.7
1.3– 17.8
128.1

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
Purchase of current financial instruments
Proceeds from current financial instruments
Interest received
Net cash flow from investing activities– 39.5
2.2
0.0
23.7
0.6
– 13.0– 0.3– 34.6
1.6
– 0.8
86.2
0.8
52.9

Cash flow from financing activities
CHF m
Repayment of current financial debt
Repayment of non-current financial debt
Interest paid
Purchase of treasury shares
Proceeds from sale of treasury shares
Dividend payment
Net cash flow from financing activities– 0.2– 152.7
9.3– 28.6– 172.3– 132.4– 1.4– 5.5– 62.237.4– 24.9– 189.0

Change in cash and cash equivalents
CHF m
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– 38.0
2.1
241.0
205.1

– 8.0
– 2.3
251.3
241.0

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.

– 0.1

FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS

99

Notes –
accounting principles
1 General information
Forbo Holding Ltd (‘the company’) and its subsidiaries(together with the company constituting the ‘Group’)
manufacture floorings, construction adhesives, anddrive and conveyor technology. The Group has a global network of locations with production and distribution as well as pure sales companies.
The company is a public limited company under Swisslaw, domiciled in Baar, Switzerland. It is listed on the SIX
Swiss Exchange.
These financial statements were approved by the Boardof Directors on March 11, 2015, and released for publication on March 17, 2015. The report is subject to approval by the Ordinary General Meeting of April 24,
2015.

2 Summary of significant
accounting policies
The principal accounting policies applied in the preparation 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 Holding Ltd were prepared in accordance with the International Financial Reporting Standards (IFRS) and in compliance with Swiss law. They were drawn up on thebasis of the audited financial statements of the sub­sidiaries prepared according to uniform corporate accounting policies. The reporting date for all Group companies is December 31.
The consolidated statements were prepared in accordance with the principle of historical costs with the exception of available-for-sale financial assets and derivative financial instruments, which are measured at fairvalue.

The preparation of the consolidated financial statements requires management to make estimates andassumptions that can affect reported revenues, expenses, assets, liabilities, and contingent assets and liabilities at the date of the financial statements. If the estimates and assumptions made by management at thedate of the financial statements to the best of theirknowledge differ from the actual circumstances, theoriginal estimates and assumptions will be adjusted in
the reporting year in which the circumstances havechanged.
Scope and principles of consolidation
The subsidiaries of Forbo Holding Ltd are all domestic
and foreign companies in which the company holds
rights to direct relevant activities, has exposure to variable returns from its involvement with the investee,
and is able to use its power over the investee to affectthe amount of the investor’s returns. They are deconsolidated from the date that control ceases.
The purchase method of accounting is used to account for the acquisition of subsidiaries. The value ofthe transferred consideration in a business combination is recognized at the fair value on the acquisition
date. The consideration includes cash payments andthe fair value of the assets transferred, liabilities incurred or acquired, and equity instruments issued by
the acquirer on the transaction date. Liabilities dependent on future events which are based on agreementson contingent considerations are accounted for at theirfair value in the accounting treatment of the acquisition. Acquisition costs are reported as expenditure in
the income statement. At the acquisition date, the acquirer recognizes the acquired identifiable assets, liabilities, contingent liabilities and any non-controlling interest in the acquiree. The acquired identifiable assets
and liabilities assumed are recognized at their fair value.
Provided the acquirer does not acquire a 100% share in
the acquiree, the non-controlling interest recognized
as the proportionate share of the fair value of the net
assets acquired. Goodwill is the excess of the consideration of the business combination and the amount of
the non-controlling interest over the identifiable net
assets assessed at fair value. Goodwill is not amortized
but is tested for impairment at least after each reporting date or earlier if there are any indications of a possible impairment.

100 FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS

Inter-company transactions, balances, and unrealized
gains or losses on transactions between Group companies are eliminated. Accounting policies of subsidiaries
have been changed, where necessary, to ensure consistency with the policies adopted by the Group.
Associates are all entities over which the Group has significant influence but not control, generally accompanied by a shareholding of between 20% and 50% of thevoting rights. Investments in associates are accounted
for using the equity method of accounting and are initially recognized at cost. The Group’s investments in associates include goodwill identified on acquisition.
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 amount of
the investment. When the Group’s share of losses in an
associate equals or exceeds its interest in the associate,
the Group does not recognize further losses, unless it
has incurred obligations or made payments on behalfof the associate.
The subsidiaries included in the group of consolidated
companies are listed under ‘Group companies’ (frompage 146 of this report).

Foreign currency translation
The individual companies prepare their financial statements in their functional currency, which generally
corresponds to the local currency. The functional currency is the currency of the primary economic environment in which the company operates. Foreign cur­rency transactions are translated into the functional
currency using the exchange rates prevailing at thedates of transaction. Foreign exchange gains and losses resulting from the settlement of such transactions
and from the translation at year-end exchange rates ofmonetary assets and liabilities denominated in foreign
currencies are recognized in the income statement,
unless recognized in other comprehensive income as
qualifying cash flow hedges and qualifying net investment hedges.
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 annual statements of foreign
Group companies stated in foreign currencies aretranslated into Swiss francs as follows: assets and liabilities at year-end exchange rates; the income statement
and cash flow statement at average exchange rates forthe year. Currency translation differences arising fromthe different translation of balance sheets and income
statements and from equity capital transactions arerecognized in other comprehensive income and taken
to profit or loss for the period (reclassified) in the eventthe foreign Group company is disposed of.
On consolidation, exchange differences arising fromthe translation of net investments in independent foreign operations are recognized in other comprehensive income. The same applies to borrowings and other currency instruments designated as hedges of suchinvestments. When a foreign operation is disposed of,these exchange differences in profit or loss for the period are transferred to the income statement as part of
the gain or loss on sale.

FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS 101

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

Current and non-current classification
Assets are designated current assets if they are realized
or consumed in the Group’s ordinary business cycle
within one year or if they are held for trading purposes.
All other assets are assigned to non-current assets.
All obligations which the Group intends to settle within the ordinary business cycle using operating cash
flows or which are due within one year of the reporting
date are assigned to current liabilities. All other obligations are assigned to non-current liabilities.
Segment information
Segment reporting discloses financial and descriptive
information on the reportable segments. The reportable segments are the business segments for which
separate financial information is available and which
are regularly reviewed by the chief operating decision-maker concerned in order to determine how resources are to be allocated and performance assessed.
Segment reporting is made on the basis of internal
controlling.

1
1
1
100
100
100

Balance sheet(year-end exchange rates)

2014

2013

2014

2013

1.21460.91551.50710.865314.8600
13.35171.23070.92711.4494
0.951715.0800
14.23281.20300.9943
1.54860.830816.0200
12.7370

1.2256
0.89151.46980.847814.6900
13.6790

The reportable segments apply the same accounting
policies as the Group. The provision of services among
the reportable segments is transacted at arm’s length,
and the prices applied are therefore comparable tothose that would have applied in a transaction with athird party.
Segment result is determined on operating profit level(EBIT). Allocation of interest and taxes to the individual
divisions and Corporate is not appropriate owing to
the highly centralized Finance and Tax functions.
Discontinued operations
Discontinued operations are recognized separately if
a component of the Group has either already been discontinued or been classified as held for sale. The prior-year figures affecting the income statement are adjusted accordingly and are also presented separately.

102 FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS

Net sales and revenue recognition
Net sales include the fair value of the consideration received or to be received for the sale of goods and services as part of ordinary business activity. Net sales arereported net of revenue reductions such as sales tax,
returns, discounts, and rebates.
Revenue from the sale of goods and services is recognized in the income statement if the risks and rewardsof ownership have been transferred to the buyer, theamount of the revenue can be reliably determined, andpayment is deemed to be likely.
Appropriate provisions are made for expected warranty
claims.
Research and development
All research costs are posted directly to the income
statement in the period in which they are incurred. Development costs must be capitalized if all the recognition criteria have been met, the research phase can beclearly distinguished from the development phase,and costs can be clearly allocated to individual project
phases without any overlap. Development expenses
that do not meet these criteria are taken to the income
statement.
Share-based payments
Equity-settled share-based payments to employees
are valued at the fair value of the equity instrument on
the date on which the instruments are granted. The fairvalue of the share options is determined by the BlackScholes model. The anticipated life of the option usedin the model is adjusted on the basis of best estimateswith regard to the effects of non-transferability, restrictions on exercise, and conduct. The fair value determined on granting equity-settled share-based payments is recognized in the income statement over thevesting period and is included in personnel expenses.

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.
Deferred tax assets and tax liabilities are measured at
the tax rates that are expected to apply in the period inwhich the asset will be realized or the liability will besettled based on enacted rates. Current and deferred
tax assets and liabilities are offset when they arise fromthe same tax reporting group, relate to the same tax
authority, the legal right to offset exists, and they areintended to be settled 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.

FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS 103

Property, plant, and equipment
Property is recognized at cost on acquisition. Land is
not depreciated, but allowances are set aside for impairments 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 capitalized and depreciated over the remaining useful
lives.
Depreciation is calculated according to the straight-line
method over the following estimated useful life:
Land 
no depreciation
Buildings
20 to 40 years
Modifications and installations
5 to 10 years orduration of rental contract
Machines and tools
Other operational assets
VehiclesIT
Assets under construction

5 to 10 years
3 to 10 years
5 years
3 to 5 years
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.
Assets which are held in financial leasing arrangements
are depreciated over their estimated useful life in thesame way as assets belonging to the company or, if thisis shorter, over the life of the underlying lease agreement. The costs of short-term leasing are charged directly to the income statement. The corresponding liabilities are disclosed in the notes (see note 32 ‘Leasing’).

Intangible assets
Goodwill is the excess of the consideration paid or payable of a business combination and the amount of the
non-controlling interest over the identifiable net assets
assessed at fair value. Goodwill derived in a businesscombination is included in ‘Intangible assets’. Goodwill
is tested at least annually for impairment and carried atcost less accumulated impairment losses.
Trademarks, licenses, customer relationships, and technologies acquired in a business combination are recognized at fair value at the acquisition date. Trademarks
carried in the balance sheet with an indefinite usefullife are not subject to amortization but are tested for
impairment at least annually. Any impairment is recognized as an expense in the income statement. Certain
trademarks, licenses, customer relationships, and technologies have a finite useful life and are carried at costless accumulated amortization. Amortization is calculated using the straight-line method: trademarks 20
years, customer relations between 5 and 25 years, andtechnologies 30 years.
Acquired computer software licenses are capitalized on
the basis of the costs incurred to acquire and bring to
use the specific software. These costs are amortizedover an estimated useful life of 3 years.

104 FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS

Financial instruments
Financial instruments can be classified as follows:(a) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss arefinancial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Derivatives are alsoclassified in this category unless they are designated ashedges.
(b) Loans and receivables
Loans and receivables are loans and receivables granted by the Group with fixed or determinable paymentsthat are not quoted in an active market. They are included in current assets except for maturities greaterthan twelve months after the end of the reporting year,
in which case they are classified as non-current assets.
(c) Financial assets available-for-sale
Available-for-sale financial assets are non-derivative financial assets that are either designated in this category or not classified in any of the other categories.
RECOGNITION AND MEASUREMENT
Purchases and sales of financial assets are basically recognized as soon as the Group becomes a contractual
party. In the case of regular purchases or sales, the settlement date is relevant for the initial recognition andderecognition.
Financial assets not classified as being at fair value
through profit or loss are initially recognized at fair value plus transaction costs. Financial assets which arecarried at fair value through profit or loss are initiallyrecognized at fair value, and transaction costs are expensed in the income statement. Financial assets are
derecognized when the rights to receive cash flows
from the investments have expired or have been transferred and the Group has transferred substantially all
risks and rewards incidental to ownership.

Available-for-sale financial assets and assets in the category ‘Financial assets at fair value through profit orloss’ are carried at fair value after their initial recognition. Loans and receivables are carried at amortizedcost using the effective interest method.
Gains or losses arising from financial assets in the category ‘Financial assets at fair value through profit orloss’ are recognized in the income statement in the period in which they are incurred. Dividend income fromfinancial assets classified as at fair value through profit
or loss is recognized in the income statement when
the Group’s right to receive payments is established.
Changes in the fair value of securities classified as available-for-sale are recognized in other comprehensive
income. When securities classified as available-for-saleare sold or impaired, the accumulated fair value adjustments previously recognized in other comprehensive
income are reclassified to the income statement.
The Group assesses at the end of each reporting year
whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the caseof equity investments classified as available-for-sale financial assets, a significant or prolonged decline in thefair value of the equity investments below their cost isalso regarded as evidence that the equity investments
are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss –measured as the difference between the acquisition
cost and the current fair value, less any previous impairment losses on that financial asset – is reclassified
to the income statement. Impairment losses on equity
instruments recognized in the income statement are
not reversed through profit and loss. Impairment testing of trade receivables is described in note 19 ‘Trade
receivables’.

FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS 105

Derivative financial instruments
The Group uses derivative financial instruments solely
to manage financial risks and not for the purpose of
speculation. The derivatives used are accounted for on
the day the trade is conducted. Derivative financial instruments are recognized, in accordance with IAS 39,
at market value in the balance sheet under ‘Other current financial instruments’ or under ‘Liabilities from current financial debt’.
To hedge its currency risks, the Group uses mainly currency spot transactions, forward currency contracts,
and currency swap transactions. The fair values of thevarious derivative instruments used for hedging purposes are disclosed in note 33 ‘Additional information
on financial instruments’.
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 av­
erage cost. Adjustments are made for unsaleable inventories and inventories with insufficient turnover.
Inter-company profits on intra-Group deliveries are
eliminated in the income statement.

Trade receivables
Trade receivables are stated at invoiced amounts lessallowances for doubtful risks. Allowances for doubtful
risks are established based on the maturity structureand discernible solvency risks. In addition to individual
allowances for specific identifiable risks, allowances arealso made on the basis of statistically determined default risks.
Cash and cash equivalents
Cash and cash equivalents are stated at nominal value.
They include cash on hand, postal and bank accounts,and fixed-term deposits with maturities of up to 3
months.
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 debited to reserves. On the sale of treasury shares, gains orlosses 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.
Current and non-current financial debt
Current and non-current financial debt comprise bankloans and finance lease obligations. It is stated at amortized cost (less transaction costs).
Financial debt is assigned to current debt, except if theGroup has to settle the obligation earliest 12 months
after the reporting date or enjoys unlimited right topostpone payment of the debt by at least 12 months
after the reporting date.

106 FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS

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 liabilities are assessed annually by independent actuaries according
to the projected unit credit method. The liabilities correspond to the present value of the expected future
cash flows. The plan assets are stated at market value.
Current service costs incurred in the relevant period,
less employee contributions, are stated as personnel
expenses in the income statement. Past service costs
resulting from changes in pension plans are posted directly to the income statement. Profits resulting frompension plan curtailments or settlements are immediately taken to the income statement.
Actuarial gains and losses are reported in the statementof comprehensive income under ‘Other comprehensive income for the year, net of tax’, with due accountbeing taken of deferred taxes.
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 estimateof the amount can be made. No provisions are madefor future operating losses. The provision is the best estimate on the reporting date of the amount required tomeet the current obligation, taking into account therisks and uncertainties underlying the obligation.
Trade payables
Trade payables are non-interest-bearing and are disclosed at nominal value.

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 appear reasonable in the given circumstances. The actual
results may, of course, deviate from the estimates andassumptions of management.
The following are the main areas in which a significant
risk exists in the coming business year involving a significant adjustment of the carrying value of assets andliabilities.
Impairment of non-current assets
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 theseamounts can no longer be realized due to changed
circumstances or events. If such a situation occurs, therecoverable amount is determined based on expected
future revenues. This corresponds to either the discounted expected cash flows or the expected net
sales price.
Important assumptions in these calculations include
growth rates, margins, estimates and management’s
expectations of the future development of net working capital, and discount rates. The actual cash flows
may deviate from the planned discounted future values. Likewise, the useful lives may be shortened or
non-current assets impaired in the event of a change
in the use of buildings, machinery and facilities, changeor abandonment of locations, or lower-than-expected
revenues over the medium term. Further informationon this topic can be found in note 15 ‘Property, plant,
and equipment’ and note 16 ‘Intangible assets’.

FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS 107

Employee pension schemes
Various employee pension plans and schemes exist for
employees of the Group. In the case 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 as assumptions for future wage trends. In theiractuarial calculations for determining employee benefit obligations, the actuaries also use statistical information such as mortality tables and staff turnover rates. If
these parameters change owing to a change in theeconomic situation or market conditions, the subsequent results may deviate considerably from the actuarial reports and calculations. These deviations may
have a significant medium-term effect on expenses
and income from the employee pension schemes andon the comprehensive income statement. Further information on this topic can be found in note 26 ‘Employee benefit obligations’.
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 27 ‘Provisions’.

Income taxes
The Group is obliged to pay income taxes in various
countries. Certain key assumptions are necessary in order 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 business 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 critical 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 13 ‘Income taxes’.

108 FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS

4 Application of new or revised
accounting standards

The first-time application of the before-mentioned IAS
standards had no effect on the Annual Report presented here.

Applied new and revised standards
The following new or revised standards and interpretations of the International Accounting Standards Board(IASB) were applied for the first time in the businessyear that began on January 1, 2014:

The Forbo Group has not early adopted standards, interpretations or amendments that have been published but are not yet mandatory.

–– IAS 19 (revised)
–– IAS 32 (revised)
–– IAS 36 (revised)
–– IAS 39 (revised)
–– IFRIC 21

‘Employee benefits:
employee contributions fordefined benefit plans’‘Financial instruments: offsetting’‘Recoverable amount disclosures’‘Novations of derivatives andcontinuation of hedge accounting’‘Levies’Standards approved but not yet applied
The following new or revised standards and interpretations had been published, though they had not yet become effective by the time the consolidated financial
statements were approved by the Board of Directors.
Since their impact on the consolidated financial statements has not yet been systematically analyzed, theanticipated effects shown in the corresponding noteto the table below represent an estimate by management.

Standards
Standard/Interpretation
IFRS 15 (new) – ‘Revenue recognition’
IFRS 9 (new) – ‘Financial instruments’*No significant impact on the consolidated financial statements
is expected.

Moreover, various adjustments to the standards were
published as part of the Annual Improvement Projectthat will be applied for the first time in the businessyear beginning on January 1, 2015. Since they havelittle impact on the financial statements, no detailed
list of the changes is given.

**

Date effective
January 1, 2017
January 1, 2018

PlannedApplication2017 business year2018 business year

FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS 109

Notes

5 Segment reporting
The Group is a global producer of Flooring Systems
and Movement Systems. The divisions correspond to
the internal 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 the various
accessory products required for laying, processing,cleaning, and care of flooring. In the Movement Systems ­division, the Group 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 thecosts of the Group headquarters and certain items ofincome and expenses that are not directly attributable
to a specific business.
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 Officer of
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:

2014
CHF m
Total net sales
Inter-segment sales
Net sales to third parties
EBIT
Operating assets
Number of employees (December 31)

Flooring
Systems
884.7
– 0.1
884.6
123.4
563.7
3,059

Movement
Systems
342.2
– 0.0
342.2
37.0
222.6
2,060

Corporate/
Elimination
– 0.1
0.1

Flooring
Systems
873.5
– 0.0
873.5
113.3
552.6
3,030

Movement
Systems
326.2
– 0.0
326.2
31.7
206.8
1,976

Corporate/
Elimination
– 0.0
0.0

– 11.0
17.2
42

Total
1,226.8
0.0
1,226.8
149.4
803.5
5,161

Segment information on the reportable segments forthe prior year:
2013
CHF m
Total net sales
Inter-segment sales
Net sales to third parties
EBIT
Operating assets
Number of employees (December 31)

– 9.3
29.0
41

Total
1,199.7
0.0
1,199.7
135.7
788.4
5,047

110 FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS

The management 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 performance ofthe reportable segments based on their operating result (EBIT). The net financial result is not allocated tothe segments since it is Corporate Treasury that mainly exercises central control over the financial result.

CHF m
Segment result (EBIT)
Financial result
Group profit before taxes

CHF mOperating assets
Non-operating assets
Total assets

Inter-segment sales are transacted at arm’s length. The
segments apply the same accounting principles as theGroup. 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 results to the income statement and balance sheet:
2014

2013

149.4
4.9
154.3

135.7
5.2
140.9

31.12.2014

31.12.2013

803.5
292.1
1,095.6

788.4
338.6
1,127.0

FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS 111

Third-party sales and operating assets broken down by
region in the reporting year and the prior year:

CHF m
Switzerland (domicile)
FranceGermany
Great Britain and Ireland
Benelux
Scandinavia
Eastern Europe
Southern Europe
EuropeNorth, Central, and South America
Asia/Pacific and Africa
Total net sales to third parties

CHF m
Switzerland (domicile)
FranceGermany
Great Britain and Ireland
Benelux
Scandinavia
Eastern Europe
Southern Europe
EuropeNorth, Central, and South America
Asia/Pacific and Africa
Total operating assets

In the reporting year, no customer accounted for sales
that exceeded 10% of the Group’s total sales.

6 Development costs‘Development costs’, which mainly comprise productdevelopment, amounted to CHF 16.5 million in the reporting year (2013: CHF 16.4 million).
Costs for manufacturing trials, recipe optimization andnew collections are not reported within ‘Development
costs’. As in the previous year, no development costs
were capitalized.

2014
Third-party sales

2013
Third-party sales

28.7
163.6
144.8
137.7
124.9
113.0
62.7
57.4
832.8
229.1
164.9
1,226.8

27.5
167.4
141.7
121.7
129.5
114.1
64.6
53.2
819.7
219.6
160.4
1,199.7

31.12.2014
Operating assets

31.12.2013
Operating assets

31.8
71.4
87.8
167.3
201.6
25.6
19.8
19.2
624.5
97.7
81.3
803.5

32.7
77.0
85.0
161.8
207.0
26.3
22.8
19.2
631.8
83.9
72.7
788.4

7 Administrative costs
This item consists of the usual expenses related to administrative activities.

112 FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS

8 Other operating expenses

9 Other operating income‘Other operating expenses’ comprises expenses of different kinds in connections with structural measures,
legal costs, warranties, taxes on capital, and levies
based on local legislation.

‘Other operating income’ comprises a range of income,mainly gains on sale of tangible assets, the release ofprovisions, insurance payments, rental income, and thesale of material for recycling purposes.

10 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, 2014, the headcount was 5,161(2013: 5,047). The average headcount over the year
was 5,141 (2013: 5,072).

2014

2013

287.4
64.8
5.4
357.6

278.9
61.4
6.5
346.8

Salaries and wages include share-based payments
expenses of CHF 4.2 million (2013: CHF 3.1 million). A
bonus program is available for around 120 managers,which is linked to achieving financial targets set for
the Group, the divisions, and individual objectives.

11 Financial income

Financial income
CHF mInterest income
Realized gains from financial instruments classified as being at fair value through profit and loss
Increase in fair value of financial instruments classified as being at fair value through profit and loss
Total financial income

The financial income in the year under review wasdue, as in the previous year, mainly to price gains andincome from securities.

2014

2013

0.6
1.9
3.4
5.9

0.8
3.2
6.9
10.9

FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS 113

12 Financial expenses

Financial expenses
CHF mInterest expenditure from financial liabilities valued at amortized cost
Amortization of issuance costs for private placement and bondForeign exchange losses, net
Other financial expense
Total financial expenses

Financial expenses in the previous year included interest expense for the CHF 150 million bond issued on
July 6, 2009, which fell due on July 31, 2013 and was
repaid in full. In the year under review, the Group did

2014

2013

0.2

3.4
0.2
1.7
0.4
5.7

0.2
0.6
1.0

not have any interest-bearing liabilities with the exception of some financial leasing arrangements. The average interest rate of the interest-bearing liabilities in thepast year was 3.5% (2013: 4.1%).

13 Income taxes

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

2014

2013

29.6
1.3
30.9

32.1
– 1.4
30.7

114 FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS

Analysis 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
Tax losses for which no deferred tax assets have been capitalized
Utilization of tax losses not capitalized in previous years
Previous-year 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 therevenues or losses in each country. The expected tax
expense is the sum of the expected individual tax in-

2014

2013

154.3
– 35.6140.9– 32.5

– 2.1
3.8
2.8
0.3
– 0.1
– 30.9

– 2.9
1.1
2.0
0.2
1.4
– 30.7

come/expense of all subsidiaries. The expected individual tax income/expense in a country is calculated
by multiplying the individual profit/loss by the tax rateapplicable in the country concerned. The expected tax
rate in the year under review was 23.1% (2013: 23.1%).

FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS 115

Capitalized and non-capitalized tax loss carry forwards, by expiry date:
2014
CHF m
Expiry after:
1 year
2 years
3 years
4 years
5 years
More than 5 years
Total tax loss carry forwards

2013
CHF m
Expiry after:
1 year
2 years
3 years
4 years
5 years
More than 5 years
Total tax loss carry forwards

In 2014, no unused tax loss carry forwards expired(2013: CHF 0.5 Mio).
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, net

Not capitalized

Capitalized

Total

0.6
0.8
1.6
1.3
1.2
103.4
108.9

0.0
0.1
0.3
0.1
0.1
35.4
36.0

0.6
0.9
1.9
1.4
1.3
138.8
144.9

Not capitalized

Capitalized

Total

0.2
0.4
0.3
1.8
1.4
120.5
124.6

1.9

2.1
0.4
0.3
1.8
1.8
154.0
160.4

0.4
33.5
35.8

that the legal right to offset exists, and they are intended either to be settled net or to be realized simultaneously. The following amounts are shown in the balance
sheet:

31.12.2014

31.12.2013

37.2– 26.5
10.7

29.3– 20.09.3

116 FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS

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

CHF m
As at December 31, 2013
Increase/decrease (–) in deferred tax assets
As at December 31, 2014
Netting
As at December 31, 2014, net

Inventories
5.4
1.6
7.0

Property,plant, andequipment
3.7
– 0.1
3.6

Provisions
7.9
– 2.8
5.1

Loss carryforwards
9.7
– 0.1
9.6

Employeebenefitobligations
9.6
6.4
16.0

Other
7.1
1.0
8.1

Total
43.4
6.0
49.4
– 12.2
37.2

Inventories
3.4
0.1

Property,plant, andequipment
5.1
0.0

Provisions
5.9
0.9

Intangible
assets18.4
0.3

Employeebenefitobligations
0.0
2.7

Other
1.3
0.6

Total
34.1
4.6

3.5

5.1

6.8

18.7

2.7

1.9

38.7
– 12.2
26.5

Deferred tax liabilities

CHF m
As at December 31, 2013
Increase in deferred
tax liabilities
As at December 31, 2014
Netting
As at December 31, 2014, net
Increase in deferred tax assets, net
Of which recognized in othercomprehensive income

1.4
2.7

Of which recognized in theincome statement– 1.3

As at December 31, 2014, no deferred tax liabilities on
undistributed profits from consolidated companies
have been recognized, since this income is deemed tohave been reinvested for an indefinite period. Should
there be a distribution, withholding and other taxes

might be incurred, which upon decision may be provided for accordingly.
Tax expense and income recognized directly in theother comprehensive income statement:
2014

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

2013

Before tax

Tax income

After tax

Before tax

Tax expense (–)

After tax

– 8.9
0.6
– 8.3

2.7
0.0
2.7

– 6.2
0.6
– 5.6

1.3
– 7.4
– 6.1

– 0.4
– 0.8
– 1.2

0.9
– 8.2
– 7.3

FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS 117

14 Earnings per share
Undiluted earnings per share are calculated by dividing
the net profit or loss for the year attributable to registered shareholders by the weighted average numberof registered shares issued and outstanding during theyear, less the average number of treasury shares.

Group profit for the year from continuing operations
Group profit for the year from discontinued operations after taxes
Weighted average number of shares
Amount of shares adjusted for stock option plans
Weighted average number of shares used to calculate diluted earnings per share

The figure for diluted earnings per share also takes into
account the potential dilution effects if all issued andin-the-money share options were to be exercised.
The calculations are based on the following information:

2014
123.4
123.6
1,992,635
2,915
1,995,550

2013
110.2
117.6
2,070,986
734
2,071,720

118 FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS

15 Property, plant, and equipment

Cost on acquisition
CHF m
As at December 31, 2012
Acquisition
Additions
Disposals
Transfers
Translation differences
As at December 31, 2013
Acquisition
Additions
Disposals
Transfers
Translation differences
As at December 31, 2014

Assetsunderconstruction

124.0

11.2

1.8
– 1.9
6.9
– 3.0
131.5

676.1
0.1
7.5
– 9.3
16.5
1.1
692.0

2.2
– 2.2
3.1
– 0.3
126.8

22.9
– 26.5
0.2
7.8

939.0
0.1
34.4
– 13.4
0.0
– 2.0
958.1

1.1
– 5.1
2.0
– 2.1
127.4

7.3
– 4.3
12.3
– 5.8
701.5

2.2
– 1.8
2.9
– 1.2
128.9

28.7
– 1.6
– 17.2
– 0.4
17.3

39.3
– 12.8
0.0
– 9.5
975.1

Land andbuildings

Machineryandequipment

Other
property,plant, andequipment

Assetsunderconstruction

Total
property,plant, andequipment

127.7

Machineryandequipment

Accumulated depreciation and impairments
CHF m
As at December 31, 2012
Depreciation
Disposals
Transfers
Translation differences
As at December 31, 2013
Depreciation
Disposals
Transfers
Translation differences
As at December 31, 2014
Net carrying amountAs at December 31, 2013
As at December 31, 2014

Total
property,plant, andequipment

Other
property,plant, andequipment

Land andbuildings

9.9
6.9
– 0.7
– 0.4
– 1.9
13.8
7.3
– 4.4
0.4
– 1.0
16.1

581.2
21.7
– 9.0

117.7
111.3

97.2
94.5

0.9
594.8
21.0
– 4.1
– 0.4
– 4.3
607.0

112.5
4.7
– 2.1
0.4
0.1
115.6
4.5
– 1.7

1.6

– 1.6

– 1.3
117.1

0.0

705.2
33.3
– 11.8
0.0
– 0.9
725.8
32.8
– 11.8
0.0
– 6.6
740.2

11.2
11.8

6.2
17.3

232.3
234.9

1.6

FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS 119

Property, plant, and equipment is recognized at amortized cost. As in the previous year, no impairments occurred in the year under review.

As at December 31, 2014 there were no assets forwhich interest on borrowed capital was capitalized
during the preparation phase.

Maintenance and repair costs amounted to CHF 22.6
million (2013: CHF 20.1 million). The depreciation expense of CHF 32.8 million (2013: CHF 33.3 million) is
included in the items ‘Cost of goods sold’, ‘Devel­
opment costs’, ‘Marketing and distribution costs’, and‘Administrative costs’.

As at December 31, 2014 the Group had outstanding
purchase orders for capital goods amounting to CHF
15.4 million (2013: CHF 0.4 million).

Property, plant, and equipment also includes leased
assets with a net book value of CHF 1.4 million (2013:
CHF 1.4 million). The leasing liability for fixed assets carried in the balance sheet amounts to CHF 1.5 million(2013: CHF 1.4 million).

The insured value of the insurance for buildings, machinery, equipment, and inventories was CHF 1,694.1
million (2013: CHF 1,718.8 million).

120 FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS

16 Intangible assets

Cost on acquisition
CHF m
As at December 31, 2012
Additions
Disposals
Translation differences
As at December 31, 2013
Additions
Disposals
Translation differences
As at December 31, 2014

Accumulated amortization and impairments
CHF m
As at December 31, 2012
Amortization
Disposals
Translation differences
As at December 31, 2013
Amortization
Disposals
Translation differences
As at December 31, 2014
Net carrying amountAs at December 31, 2013
As at December 31, 2014

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 carried out
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. During the detailed planning period,

Otherintangible assets

Total

34.0

86.6
0.2

212.8
0.2

0.5
92.7

– 0.1
33.9

– 1.1
91.6

0.4
34.3

– 0.3
86.5
0.2
– 2.9
3.1
86.9

0.1
213.1
0.2
– 2.9
2.4
212.8

Goodwill

Trademarks

Otherintangible assets

Total

9.6

25.8

28.2
3.1

63.6
3.1

0.1
9.7

0.0
25.8

– 0.2
9.5

0.0
25.8

– 0.1
31.2
2.9
– 2.9
0.2
31.4

0.0
66.7
2.9
– 2.9
0.0
66.7

83.0
82.1

8.1
8.5

55.3
55.5

146.4
146.1

Goodwill

Trademarks

92.2

relatively constant EBITDA margins are assumed, which
are around 17% for Flooring Systems and around 13%
for Movement Systems. The discount rate corresponds
to the total weighted cost of capital before taxes including an average risk charge estimated by management, which lies between 9.5% and 12.3% (2013: between 9.8% and 12.7%). The intangible assets with anindefinite useful life were also subject to impairment
testing in the form of sensitivity analyses.

FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS 121

The impairment tests conducted in connection withtrademarks are based on the sales turnover achieved
with these trademarks. The relief from royalty method
was used, in which the economic benefit of the trademark holder is determined by means of the discounted royalty savings. The cash flow forecasts during thedetailed planning period are based on expected royalty savings of between 1% and 2% of net sales. In theyear under review, no impairment was determined.
Goodwill is distributed among the following groups ofcash-generating units:31.12.2014
78.1
4.0
82.1

Flooring Systems
Movement Systems

The goodwill in Flooring Systems as at December 31,
2014, comprises primarily the goodwill acquired inconnection with the acquisition of Bonar Floors in
2008. The item ‘Trademarks’ includes mainly the trademarks acquired as part of the acquisition of Bonar
Floors. ‘Other intangible assets’ consists mainly of the

31.12.2013
79.0
4.0
83.0

customer relations and technologies as part of the acquisition of Bonar Floors, as well as acquired software.
The annual impairment test of goodwill yielded a value
in use that was greater than the carrying amount.

17 Investments in associates andother non-current assets

Investments in associates and other non-current assets
CHF m
Investments in associates
Other non-current financial assets
Total investments in associates and other non-current assets

31.12.2014

31.12.2013

0.0
0.3
0.3

0.0
0.2
0.2

122 FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS

18 Inventories

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

Valuation allowances for inventories amounted to CHF
27.9 million (2013: CHF 29.6 million).

31.12.2014

31.12.2013

44.0
75.0
139.5
– 27.9
230.6

39.8
67.7
135.5
– 29.6
213.4

Expenses for inventories recognized in the reporting
year came to CHF 496.7 million (2013: CHF 480.8 million).

19 Trade receivables

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

As a rule, no default interest is charged for receivables
past due. As at the reporting date, there was no indication that debtors would fail to meet their payment obligations in respect of trade receivables for which noallowance was made or which were past due. Valuation
allowances are made in the form of specific valuation

31.12.2014

31.12.2013

139.9
17.3
– 6.6
150.6

135.9
20.0
– 7.1
148.8

allowances. A specific valuation allowance is required if
the debtor is unable to pay, if the debt has been pastdue for more than 90 days, or if the debtor has given
notice of payment difficulties. Valuation allowancestake due account of default risks.

FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS 123

Trade receivables recognized as at the balance sheet
date:

CHF m
Total trade receivables, gross
Of which not due
Of which past due for:Less than 30 days
Between 31 and 90 days
Between 91 and 180 days
Between 181 days and 1 year
Over 1 year
Allowance for doubtful trade receivables
Total trade receivables

Of the total of CHF 20.2 million in trade receivables
past due as at December 31, 2014 (2013: CHF 21.9 million), CHF 14.8 million (2013: CHF 16.3 million) were
not subjected to a valuation allowance. Overall, valu-

31.12.2014

31.12.2013

157.2
137.0

155.9
134.0

8.7
6.2
3.7
1.3
0.3
– 6.6
150.6

10.7
5.6
2.9
2.0
0.7
– 7.1
148.8

ation allowances of CHF 6.6 million (2013: CHF 7.1 million) were made for receivables with a nominal valueof CHF 24.4 million (2013: CHF 25.2 m­ illion).

Gross value of trade receivables by currency:

CHF m
CHF
EUR
USD
GBP
JPY
CNY
SEK
Other
Total trade receivables, gross31.12.2014

31.12.2013

1.9
74.8
18.4
16.2
12.6
8.7
5.5
19.1
157.2

1.6
76.6
15.9
14.4
12.5
9.0
5.8
20.1
155.9

2014

2013

– 7.1
– 1.3
0.7
1.2
– 0.1
– 6.6

– 7.0
– 1.5
0.6
0.6
0.2
– 7.1

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

CHF m
As at January 1
Additions
ReleaseUse
Translation differences
As at December 31

124 FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS

Allowances of CHF 2.0 million were made for trade receivables not yet due and of CHF 4.6 million for tradereceivables past due.
The creation and release of allowances for doubtful
trade receivables are included in ‘Other operating expense and income’ in the income statement.

20 Other current financial instruments
The item ‘Other current financial instruments’ contains
securities (stocks and funds). As explained in note 33‘Additional information on financial instruments’, thisposition is valued on the basis of listed market prices.

21 CashCash and cash equivalents
CHF m
Petty cash
Bank accounts
Short-term deposits with banks
Total cash and cash equivalents

The change in cash and cash equivalents can be foundin the consolidated cash flow statement.

22 Pledged or assigned assets
There were no significant pledged or assigned assets.

31.12.2014

31.12.2013

0.1
160.7
44.3
205.1

0.1
215.7
25.2
241.0

23 Share capital
As at December 31, 2014, the share capital of Forbo
Holding Ltd stood at CHF 215,000 (2013: CHF 225,000),
divided into 2,150,000 registered shares with a par value of CHF 0.10 each. Thereof 21,419 registered shares
without voting or dividend rights are at the disposal of
the Board of Directors. Consequently, 2,128,581 registered shares were eligible for dividends as at December
31, 2014.
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

At the Ordinary General Meeting of Forbo Holding Ltd
held on April 25, 2014, the shareholders approved acapital reduction from CHF 225,000 to CHF 215,000 bycancellation of the shares acquired in connection withthe share buyback program approved at the Ordinary
General Meeting on November 5, 2012, and the corresponding amendment to the Articles of Association.
Following the legally mandatory notice to creditors,
the capital reduction was entered in the Commercial

31.12.2014
Number2,150,000

ChangeNumber– 100,000

31.12.2013
Number2,250,000

81,264
158,467
21,419261,150
1,888,850– 15,144
58,997

96,40899,47021,419217,297
2,032,703

43,853– 143,853

Register on July 4, 2014. The Board of Directors was furthermore authorized to buy back the company’s own
shares, over a period of three years, for the purpose of
subsequent cancellation of the share certificates, up toa maximum of 10% of the share capital. In the framework of this new share buyback program approved at
the Ordinary general meeting of Forbo Holding Ltd on
April 25, 2014, 158,467 shares had been repurchased by
the end of the year under review.

FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS 125

24 Employee participation plan
Variable compensation for the Executive Board is linked
with the Management Investment Plan (MIP), which
was introduced in 2006 and amended in 2012. The
members of the Board of Directors do not participate
in the MIP. According to this plan, at least 50% of theannual variable remuneration of Executive Board members is paid into the MIP. As for the remaining 50% of
the annual variable remuneration, the Executive Board
members may either draw all or part of it in cash or pay
it into the MIP. They may redefine the allocation of thisremaining 50% every year anew.
Under the previous plan until 2012, 25% of the payments were invested in options and 75% in shares ofForbo Holding Ltd. The shares and options were subject to a three year lock-up period and the term of theoptions was five years. The options issued in connection with the MIP come to maturity on April 21, 2017, atthe latest. Following the amendment of the MIP, all thesums paid into it will be invested only in shares of Forbo
Holding Ltd as of January 1, 2013 and no longer in options. These shares, too, are subject to a three year lockup period. The shares and options issued under the MIP
are equity-settled. The share-based portion of the variable compensation is recognized at fair value, offset byequity instruments and entered as a corresponding increase in equity. The shares that are distributed under
the MIP are issued at the unweighted average closing
price of the Forbo share for the first 14 trading days in
January of the year in which they are distributed. The
options until 2012 were issued on the basis of a valuation by an independent bank, whereby the valuation
was based on the average market price of the sharesin the first 14 trading days in January of the respective
year.
Options
Change in the number of outstanding options andtheir weighted average strike price:

2014

Options outstanding as at January 1
GrantedExercised
ExpiredOptions outstanding as at December 31

2013

Numberof options

Weighted
averagestrike pricein CHF

Numberof options

674

22,088675

31,744714– 13,041

616

9,047

435
822
674

– 3,612– 6,044
22,088Weighted
averagestrike pricein CHFOf the 9,047 (2013: 22,088) options outstanding, none
are exercisable as at December 31, 2014 (2013: 847).
The exercise of 13,041 (2013: 3,612) options resulted in
the issue of 13,041 (2013: 3,612) Forbo Holding sharesat a weighted average issue price of CHF 714 (2013:
CHF 435). The weighted average share price on the exercise days was CHF 945 (2013: CHF 625).

126 FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS

Information on the outstanding options as at December 31, 2014:

Series2012
Total options outstanding

SharesIn the year under review, 1,373 shares of Forbo Holding
Ltd were issued under the MIP (2013: 368). A further
440 shares were allocated to Executive Board membersin the reporting year as part of base remuneration(2013: 112). The share price at valuation date was CHF
760 (2013: CHF 606).
The Executive Chairman of the Board of Directors iscompensated primarily with shares. The detailed information and figures for this compensation model canbe found on pages 140 and 141 of this financial reportand on pages 79 and 80 of the remuneration report.

Strike price
(CHF)

616

Number ofoutstanding
options

Averageremainingterm (years)

Number of
exercisable
options

9,047
9,047

2.3

0

The number of shares with a three-year lock-up period
allocated to the non-executive members of the Boardof Directors came to 290 in the reporting year (2013:
627).
In the year under review, the amount charged to theincome statement in application of IFRS 2 for sharesissued came to CHF 4.2 million (2013: CHF 3.1 million).

FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS 127

25 Non-current financial debt

CHF mBank debt
Lease obligations
Less current portion
Total non-current financial debt

Maturities of non-current financial debt
CHF m
After 1 year
After 2 years
After 3 years
5+ years
Total non-current financial debt

The item ‘Non-current financial debt’ now contains only
financial leasing liabilities.

31.12.2014

31.12.2013

1.5
– 0.1
1.4

1.3
– 0.1
1.2

31.12.2014

31.12.2013

0.1
0.1
0.3
0.9
1.4

0.1
0.1
0.2
0.8
1.2

At year-end one derivative financial instrument contract was open. The hedged gross value was CHF 12.0
million, and the fair value was CHF 0.0 million.

128 FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS

26 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 benefit plans are assessed annually by independent actuaries 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
63% of the Group’s total pension liabilities. The FSF is apension plan whose benefits are based on the final salary and which pays out a guaranteed pension for life
to its members. The FSF is closed to new entrants, but
benefits continue to accrue for a small number of existing members. The composition of the pension liabilities
is as follows: 4% to active employees, 37% to deferredmembers and 59% 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 contribution
schedules – lies jointly with the company and the trustees. The board of the trustees must be composed ofrepresentatives of the company and plan participantsin accordance with the FSF’s regulations and British
pension law.

The pension plan follows an investment strategy that isgeared to the structure of the pension liabilities (LDI –liability-driven investment approach). The core elements of this strategy are:–– Hedging of liabilities: 60% of the assets of the fundare held in physical form in corporate bonds and afurther 10% in funds geared to the pension liabilities.
This approach hedges a substantial portion of interest rate and inflation risks. The target hedge ratio is
80% of the assets held by the FSF.
–– Return-seeking assets: 30% of the assets of the FSF
are held in the form of diversified growth investment
funds.
The use of any surplus is not subject to any restriction
under the FSF’s articles of incorporation and may be
used freely by the Group. These surpluses are therefore
recognized in the balance sheet as assets in accordance with IAS 19 revised.
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 retirement 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 17% 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. Such a situation may occur,for instance, if the pension fund is unable to meet its
obligations or decides to end the insurance relationship. The pension fund guarantees a minimum returnand is responsible for the payment of a pension for life
once the insurance benefits fall due. As a result of theseguarantees, Swiss pension plans are treated as defined
benefit plans under IFRS, even though they contain essential elements of defined contribution plans.

FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS 129

The company cannot participate in any surplus of thepension plan. According to Swiss pension law, all surpluses belong to the pension plan and hence to its
members.
OthersThe Group has a number of other, smaller defined contribution and defined benefit plans in other countries,
in accordance with the legal provisions for employees.
The main plans exist in France, Germany, Japan, Norway, Sweden, and the USA.

The latest actuarial valuations of the present values ofdefined benefit liabilities and of service costs were performed as at December 31, 2014, by independent actuaries using the projected unit credit method. The fairvalue of the plan assets was determined as at December 31, 2014, based on the information available when
the annual financial statements were prepared. The
average duration of the pension plans until payment
of benefits (plan duration) is 14.5 years for the United
Kingdom, 18.4 years for Switzerland, and 16.5 years forthe other countries.
The principal assumptions underlying the actuarial calculations are summarized as follows.
2014

Actuarial assumptions
Discount rate (in %)Future increases in salaries (in %)Inflation rate (in %)Life expectancy at age of 65 (in years)
Year of birth 1949
Men
Women
Year of birth 1964
Men
Women

2013

Switzerland

UK

Other

Weighted

Switzerland

UK

Other

Weighted

1.1
1.7
1.2

3.7
4.0
3.3

2.1
2.7
1.7

3.0
2.4
2.8

2.4
2.0
1.5

4.3
4.2
3.5

3.1
2.6
1.6

3.8
3.6
2.9

22
24

22
24

19
23

21
24

22
24

19
23

23
25

23
26

21
24

23
25

23
26

21
24

130 FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS

The amounts reported in the consolidated income
statement and in equity can be summarized as follows.

Pension costs for defined benefit plans:

2014
Pension costs
CHF mCurrent service cost
Interest costs
Interest income on plan assets
Total actuarial net periodic
pension costs

2013

Switzerland

UK

Other

Total

Switzerland

UK

Other

Total

1.3
1.2
– 1.0
1.5

0.6
9.6
– 9.5
0.7

2.1
1.4
– 0.3
3.2

4.0
12.2
– 10.8
5.4

2.5
1.2
– 0.9
2.8

0.6
9.2
– 9.4
0.4

2.3
1.3
– 0.3
3.3

5.4
11.7
– 10.6
6.5

Changes in pension liabilities under the defined benefit plans:
2014
Benefit obligations
CHF m
As at January 1
Current service cost
Employee contributions
Interest costs
Benefits paid
Actuarial losses/gains (–)
Translation differences
As at December 31

2013

Switzerland

UK

Other

Total

Switzerland

UK

Other

Total

50.6
1.3
1.0
1.2
– 3.2
11.1

221.2
0.6
0.0
9.6
– 10.4
16.8
9.7
247.5

48.2
2.1
0.0
1.4
– 2.1
10.1
– 1.6
58.1

320.0
4.0
1.0
12.2
– 15.7
38.0
8.1
367.6

59.0
2.5
1.0
1.2
– 8.5
– 4.6

222.7
0.6
0.0
9.2
– 9.6
– 1.1
– 0.6
221.2

48.7
2.3
0.0
1.3
– 2.0
– 1.4
– 0.7
48.2

330.4
5.4
1.0
11.7
– 20.1
– 7.1
– 1.3
320.0

62.0

50.6

FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS 131

Changes in plan assets of the defined benefit plans atfair value:
2014
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
Translation differences
As at December 31

2013

Switzerland

UK

Other

Total

Switzerland

UK

Other

Total

40.9
1.0
1.7
1.0
– 0.1

219.5
9.5
0.1
0.0
29.3

7.8
0.3
2.2
0.0
– 0.1

268.2
10.8
4.0
1.0
29.1

46.0
0.9
1.7
1.0
– 0.2

226.1
9.4
0.1
0.0
– 5.9

7.2
0.3
2.0
0.0
0.3

279.3
10.6
3.8
1.0
– 5.8

– 3.2

– 10.4
9.9
257.9

– 2.1
– 0.2
7.9

– 15.7
9.7
307.1

– 8.5

– 9.6
– 0.6
219.5

– 2.0

– 20.1
– 0.6
268.2

41.3

In the reporting period there were no plan curtailments or settlements. There were also no changes occurring as a result of changes to the scope of consolidation.
Actuarial gains and losses are recognized in the balance sheet under ‘Pension liabilities’ and accounted for
directly in the other comprehensive income.

40.9

7.8

Most of the pension plans are financed in full or in partvia outsourced funds. Pension liabilities amounting to
CHF 37.0 million (2013: CHF 32.1 million) out of a totalof CHF 367.6 million (2013: CHF 320.0 million) are unfunded.

132 FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS

Changes in the net liabilities of defined benefit plans
recognized in the balance sheet:2014
Net liabilities
CHF m
As at January 1
Pension income
Employer contributions
Actuarial losses/gains (–)
Translation differences
Net liabilities as at December 31

2013

Switzerland

UK

Other

Total

Switzerland

UK

Other

Total

9.7
1.5
– 1.7
11.2

1.7
0.7
– 0.1
– 12.5– 0.2– 10.4

40.4
3.2
– 2.2
10.2
– 1.4
50.2

51.8
5.4
– 4.0
8.9
– 1.6
60.5

13.0
2.8
– 1.7
– 4.4

– 3.4
0.4
– 0.1
4.8
0.0
1.7

41.5
3.3
– 2.0
– 1.7
– 0.7
40.4

51.1
6.5
– 3.8
– 1.3
– 0.7
51.8

20.7

9.7

Gains and losses of defined benefit pension plans offset in the comprehensive income statement for all divisions:
2014
Recognized gains and losses
CHF mActuarial losses (–)/gains in
the current period:

2013

Switzerland

UK

Other

Total

Switzerland

UK

Other

Total

– 10.5– 16.8– 9.7– 37.0

5.1

– 6.7

0.7

– 0.9

Based on adjustment ofdemographic assumptions

0.0

0.0

0.0

0.0

1.5

– 0.2

1.3

Based on adjustment of
economic assumptions– 10.5– 16.8– 9.7– 37.0

3.6

– 6.7

0.9

– 2.2

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

– 0.6
– 0.1

0.0
29.3

– 0.1
– 0.4

– 0.7
28.8

– 0.5
– 0.2

7.8
– 5.9

0.7
0.3

8.0
– 5.8

Total losses (–)/gains recognizedin the comprehensive income
statement– 11.212.5– 10.2

– 8.9

4.4

– 4.8

1.7

1.3

FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS 133

Change in the present value of defined benefit liabilities:+ 0.5%
Sensitivities
CHF m
Discount rate
Rate of salary increase
Inflation rate
Interest credits on retirement assets– 0.5%

Switzerland

UK

Other

Switzerland

UK

Other

– 5.6
1.8
1.4
1.3

– 17.2
0.5
9.1

– 4.4
3.0
4.0

6.2
– 1.7
– 1.3
– 1.3

18.6
– 0.5
– 8.4

5.0
– 2.4
– 3.6

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 parameter, assuming that all other parameters remain unchanged. The table illustrates the overall effect for eachregion. However, sensitivities may differ for individual
plans within the regions. Sensitivity analysis aims to­visualize the uncertainty in valuating pension liabilities
under market conditions at the date of valuation. The

results cannot be extrapolated owing to possible
non-linear effects in the event of changes to the actuarial assumptions. Moreover, the analysis cannot say­anything about the likelihood of these changes occurring, nor can it present the view of the Group regarding­anticipated future changes in pension liabilities. Anymeasures taken by management to reduce the risks­inherent in pension liabilities are also not taken into
­account in the analysis.

Weighted average asset allocation of the defined benefit plan assets as at December 31:%
Shares
Bonds
Real estate
Cash and other investments
Total plan assets as at December 31

Cash and other investments amounting to 36.8% consist of listed investments (23.4%) and unlisted investments (13.4%). The shares, bonds, and real estate are alllisted investments. The plan assets do not include any
shares or other securities of the Forbo Group.
Future contributions to defined benefit plans are estimated in the following year on the basis of the period
under review.
The expense for the contributions to defined contribution plans, which is included in personnel expenses,
amounted to CHF 10.2 million in 2014 (2013: CHF 10.2
million).

2014

2013

2.4
60.7
0.1
36.8
100.0

2.2
56.8
0.2
40.8
100.0

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.

134 FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS

27 Provisions

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

Provisions
for legal
claims

Personnel
provisions

Other
provisions

Total
2014

Total
2013

– 0.1
12.0

13.9
3.6
0.0
– 5.5
– 0.1
11.9

12.0
3.8
– 1.9
– 2.5
– 0.1
11.3

3.1
2.4
– 0.3
– 1.3
0.0
3.9

43.4
11.5
– 3.1
– 9.4
– 0.4
42.0

52.2
8.4
– 4.7
– 12.5
0.0
43.4

0.0
12.0

1.5
10.4

11.3
0.0

2.7
1.2

17.8
24.2

17.3
26.1

Warranty
provisions

Environmental
provisions

2.3
1.7
– 0.9
– 0.1
– 0.1
2.9

12.1

2.3
0.6

Warranty provisions are linked to product sales andare based on past experience. The provisions for legal
claims relate mainly to product liability claims in which
the Group is involved in the course of its normal business. The personnel provisions include in particular thebonus programs, provisions for paid leave, and potential labor law issues.

Of the original provision of CHF 21.0 million in connection with the sale of the industrial adhesives activity,
including synthetic polymers, CHF 10.0 million was released in the previous year owing to the expiry of warranty deadlines: CHF 3.0 million for legal claims, CHF 3.0
million for personnel and CHF 4.0 million for other. The
remaining provisions of CHF 11.0 million are kept unchanged for anticipated cash outflows in connection
with risks in the areas of environmental (CHF 7.0 million), legal claims (CHF 3.0 million) and other (CHF 1.0
million).

FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS 135

28 Accrued expenses

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

Accrued expenses for compensation and employee
benefits mainly comprise overtime accruals and commissions. Other accrued expenses include accrued vol-31.12.2014

31.12.2013

35.4
55.0
90.4

36.1
52.4
88.5

ume rebates, commissions, premiums, interest andgoods and services received but not yet invoiced.

29 Current financial debt

Current financial debt
CHF mCurrent bank loans and overdrafts
Current portion of non-current debt
Total current financial debt

31.12.2014

31.12.2013

0.5
0.1
0.6

0.6
0.1
0.7

136 FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS

30 Discontinued operations and assets
held for sale as well as liabilities directly
associated with assets held for saleIn the year under review, the Group received CHF 0.3
million from H.B. Fuller for the result in the short fiscal
year 2012 because a control and profit and loss transfer
agreement was still in effect in Germany for this period.

The Group signed a contract with H.B. Fuller Company
on December 21, 2011, regarding the sale of its industrial adhesives business, including synthetic polymers,
belonging to the former Bonding Systems division. The
sale price was CHF 384.7 million. On fulfillment of allconditions, the transaction was successfully closed on
March 5, 2012.

Owing to the release of provisions that had been accrued for risks in connection with the sale of the industrial adhesives activity, including synthetic polymers(see note 27 ‘Provisions’), a profit of CHF 10.0 million
before tax, or CHF 7.4 million after tax, was generated
in the previous year from the sale of the discontinued
operations.

Group profit from discontinued operations:

CHF m
Net sales
Cost of goods sold
Gross profit
Other functional costs and other operating expenses
Operating profit
Profit before taxes
Related income taxes
Profit after taxes
Profit from the sale of the discontinued operations before taxes
Related income taxes
Profit from the sale of the discontinued operations after taxes
Group profit from discontinued operations

2014

2013

0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.3
– 0.1
0.2
0.2

0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
10.0
– 2.6
7.4
7.4

FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS 137

31 Contingent liabilities

CHF mContingent liabilities

The ‘Contingent liabilities’ shown in the table refer tosureties and guarantees in favor of third parties.
Furthermore, as announced in a media release on July
3, 2013, the activity of Flooring Systems in France isbeing investigated by the French competition author-

31.12.2014

31.12.2013

0.3

0.6

ities. The investigation affects the flooring market inFrance and was instituted on suspicion of anti-competitive practices by leading manufacturers. As the investigation is ongoing, the Group is unable to provide
any further information at present or estimate the possible repercussions.

32 Leasing

Leasing
CHF mOperating leasing liabilities:
Up to 1 year
2 – 5 years
More than 5 years
Total operating leasing liabilities

Expenses for operating leasing and rentals charged to
the 2014 income statement totaled CHF 20.6 million(2013: CHF 21.4 million). The Group has no individually significant operating leasing contracts.

2014

2013

9.8
22.3
6.4
38.5

8.1
15.4
3.2
26.7

Operating leasing liabilities increased compared withthe previous year owing to adjustments to leasing
agreements.
The liabilities arising from financial leasing are contained in the item ‘Non-current financial debt’.

33 Additional information on
financial instruments
Financial instruments that are valued at fair value areclassified in a three-level hierarchy as follows:–– Level 1: listed market prices in an active market for
identical assets and liabilities.
–– Level 2: input factors other than market prices included in level 1 that are observable for the asset or
liability, either directly (i.e. as prices) or indirectly (i.e.
derived from prices).

–– Level 3: input factors for the asset or liability that are
not based on observable market data (non-observable inputs).
–– The Group held the following financial instrumentson the balance sheet date: there were no financial
instruments in the fair value hierarchy level 3 nor
was there any regrouping between the levels of
the fair-value hierarchy. There were also no non-recurring fair-value measurements of financial instruments. The financial instruments held at the balance
sheet date fall into the following categories:

138 FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS

As at
December 31, 2014

Level 1

Level 2

Listed market prices

Significant otherobservable input factors

Fair-value measurement of financial instruments
using the method of the fair-value hierarchy
CHF mAssetsFinancial instruments valued at amortized cost:
Trade receivables and other receivables
Cash and cash equivalents
Financial instruments valued at fair value:
Other current financial instruments
Derivative financial instruments
Total

CHF m
Shareholders’ equity and liabilities
Financial instruments valued at amortized cost:
Interest-bearing debt
Trade payables and other payables
Financial instruments valued at fair value:
Derivative financial instruments
Total

174.6
205.1
49.5
0.0
429.2

49.5
49.5

1.5
96.8

98.3

As at
December 31, 2013

Level 1

Level 2

Listed market prices

Significant otherobservable input factors

Fair-value measurement of financial instruments
using the method of the fair-value hierarchy
CHF mAssetsFinancial instruments valued at amortized cost:
Trade receivables and other receivables
Cash and cash equivalents
Financial instruments valued at fair value:
Other current financial instruments
Derivative financial instruments
Total

CHF m
Shareholders’ equity and liabilities
Financial instruments valued at amortized cost:
Interest-bearing debt
Trade payables and other payables
Financial instruments valued at fair value:
Derivative financial instruments
Total

178.0
241.0
67.9
0.2
487.1

1.3
97.2

98.5

67.9
67.9

0.2
0.2

FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS 139

As at December 31, 2014
CHF mAssetsTrade receivables and other receivables
Cash and cash equivalents
Other current financial instruments
Derivative financial instruments
Total

Cash andcash equivalents

Loans andreceivables

Derivatives used
for hedging

Financial
instruments held
for trading

174.6
205.1
49.5
205.1

CHF m
Liabilities
Interest-bearing debt
Derivative financial instruments
Trade payables and other payables
Total

174.6

0.0
0.0

49.5

Financial liabilities
at amortized costs

Derivatives used
for hedging

Financial
instruments held
for trading

Derivatives used
for hedging

Financial
instruments held
for trading

1.5
96.8
98.3

As at December 31, 2013
CHF mAssetsTrade receivables and other receivables
Cash and cash equivalents
Other current financial instruments
Derivative financial instruments
Total

CHF m
Liabilities
Interest-bearing debt
Derivative financial instruments
Trade payables and other payables
Total

Cash andcash equivalents

Loans andreceivables

178.0
241.0
67.9
241.0

178.0

0.2
0.2

67.9

Financial liabilities
at amortized costs

Derivatives used
for hedging

Financial
instruments held
for trading

1.3
97.2
98.5

140 FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS

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

2014
1.7
0.2
1.5
3.4

2013
1.2
0.2
0.9
2.3

Board of Directors1)
2014
1.1
0.2
2.5
3.8

2013
1.1
0.2
2.2
3.5

1) The remuneration of the Delegate of the Board of Directors and
CEO until end-2013 and, as of 2014, the Executive Chairman of theBoard of Directors, This E. Schneider, is accounted for under the
Board of Directors for both 2013 and 2014.

The remuneration paid to the Executive Board in thereporting year came to CHF 1.7 million (2013: CHF 1.2
million) and consists of the fixed gross base salary incash, the variable remuneration in cash, private use of
the company car, and social security payments madeby the company. Employer contributions to the pension fund are reported separately. Share-based payments to the Executive Board consist of the proportionof the fixed gross base salary, which is paid in shares ofForbo Holding Ltd, and the variable remuneration
within the framework of the MIP (see note 24 ‘Employee participation plan’) for the reporting year, amounting to CHF 2.0 million (payable in spring 2015, subject
to approval by the 2015 Ordinary General Meeting)less the difference, amounting to CHF 0.5 million, between the bonuses deferred at the end of the previous
year (payable in equity instruments) and the value ofthe equity instruments actually issued in the year under review. The increase in the remuneration paid to
the Executive Board is largely due to the appointmentof the new CEO, Stephan Bauer, as per January 1, 2014.

The remuneration of the Board of Directors amounted
to CHF 1.1 million in the year under review (2013: CHF
1.1 million). This includes the gross base remunerationin cash, the employer contributions to the usual social
insurances, the lump sum and on-site expenses, andprivate use of the company car (only for the Executive
Chairman of the Board of Directors). The employer
contributions to the pension fund for the Executive
Chairman of the Board of Directors are reported separately. The share-based remuneration of the Board of
Directors includes the portion of the gross base remuneration in shares. This consists on the one hand of the
40% portion of the remuneration paid in shares tonon-executive Board members, amounting to CHF 0.3
million (2013: CHF 0.4 million) and, on the other, of theshare package of the Executive Chairman of the Boardof Directors amounting to CHF 2.2 million (2013: CHF
2.1 million).

Total
2014
2.8
0.4
4.0
7.2

2013
2.3
0.4
3.1
5.8

FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS 141

With effect from May 2013, the employment contract
with the former Delegate and as of April 25, 2014 theExecutive Chairman of the Board of Directors was extended to encompass the period from May 1, 2013 to
December 31, 2016. The bulk of the compensation willagain be paid in locked-up shares which have lock-up
periods of three, four, and five years respectively, and inan annual cash payment of CHF 310,000 to be used inpart for taxes and for employee contributions to thepension fund and social security payments. The underlying share price used to calculate the number ofshares is the weighted average price of the first and last
five days on which shares of Forbo Holding Ltd weretraded on the stock market in 2012 (CHF 522.12), lessthe discount as a result of the shares being locked up.
The share package corresponds to annual compensation of CHF 2,200,000 (5,314 shares). As per IFRS 2, they
are recognized pro rata for each calendar year.
With this share package and the cash remuneration,
all benefits such as bonuses, inflation, salary adjustments, options, etc. are settled. This share package
may not be either pledged or assigned. The last thirdof the locked-up shares will be available on May 1,
2018, at the earliest.
The OaER entered into force on January 1, 2014. According to Article 28 of the OaER, employment contracts must be compliant with this Ordinance no later
than December 31, 2015. Consequently, all paymentsthat had been agreed and were paid out for 2016 haveto be reversed by December 31, 2015 at the latest. The
value of this fixed remuneration paid to This E. Schneider for fiscal 2016 amounts to CHF 2,200,000. In order
to comply with and implement the provisions of the
OaER, the Group and This E. Schneider have agreed
that he will repay the Group in cash the amount of
his fixed compensation for the period from January 1,
2016 to December 31, 2016, plus interest of 0.5% fromMay 1, 2013 to December 31, 2013. The repayment wascompleted before year-end 2013 and will be paid out
to him again in monthly instalments in 2016 after approval by the 2015 Ordinary General Meeting. The
compensation package and the relevant agreements
were adjusted accordingly.
Information on the remuneration of the Executive
Board and Board of Directors is explained in detail on
page 87 of the Remuneration Report.
As at December 31, 2014 and 2013, Forbo had no significant receivables due from or liabilities to relatedparties.

35 Risk assessment and financial
risk management
The tasks of the Board of Directors include identifying
risks, determining suitable measures, and implementing 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 that they
are duly reported. This approach gives the Board acomplete overview of the key risks and measures. This
broad overview enables the Group to set priorities andallocate the necessary resources.
Financial risk management
In its day-to-day operations, the Forbo Group uses derivative and non-derivative financial instruments tomanage the risks and opportunities arising from fluctuations in exchange rates and interest rates. The various
risks associated with existing assets and liabilities aswell as planned 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 monitors both the risk exposure and the effectiveness ofthe hedging instruments and issues recommendations
with regard to partial or complete hedging of existingrisks.
The Group’s financial risk management policy does not
permit the use of derivative financial instruments for
speculation. In order to manage counterparty risk, derivative financial transactions are concluded only with
first-class banks. The creditworthiness of these institutions is assessed on the basis of evaluations by leading
rating agencies.
Derivatives include instruments used by the company
to manage foreign currency and interest risks or combinations thereof.

142 FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS

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 ongoingassessment of exchange rate movements. The Group
uses only 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 anappropriate financing policy.

Sensitivity analysis of existing foreign exchange
positions on the balance sheet date
The following table shows the sensitivity of profit before tax to changes in the exchange rate of the US dollar, the euro, and the pound sterling against the Swiss
franc. The table only displays sensitivity in relation totransaction risks from financial instruments.
Translation risks and the effects of loans that qualify as
net investments are not taken into account. Except for
the effect on profit, the same change in exchange rates
with a sensitivity of +/– 5% has no effect on equity.

Transaction risks from financial instruments
Change inexchange rate

Impact on profit
before tax

5%
– 5%

0.3
– 0.3

USD/CHF

5%
– 5%

0.7
– 0.7

EUR/USD

5%
– 5%

0.2
– 0.2

GBP/USD

5%
– 5%

– 0.2
0.2

Change inexchange rate

Impact on profit
before tax

5%
– 5%

0.5
– 0.5

USD/CHF

5%
– 5%

0.2
– 0.2

EUR/USD

5%
– 5%

0.0
0.0

GBP/USD

5%
– 5%

0.1
– 0.1

CHF m
2014
EUR/CHF

Transaction risks from financial instruments
CHF m
2013
EUR/CHFFORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS 143

Management of 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 themon a case-by-case basis. The table below shows only
the sensitivity of profit before tax to the stated changes in interest rates for cash and cash equivalents, inter-est-bearing debt, and financial derivatives. Except for
the effect on profit, the same change in interest rates
of +/– 50 bp has no effect on equity.
An average figure calculated from the opening andclosing balance has been used for cash and cash
equivalents since the final amount is not appropriate
for calculating interest-rate sensitivity.

Interest rate risks from cash and cash equivalents,
interest-bearing debt and financial derivatives
Change ininterest rate

Impact on profit
before tax

50bp– 50bp

0.3
– 0.3

USD

50bp
– 50bp

0.1
– 0.1

CHF

50bp
– 50bp0.4– 0.4

Change ininterest rate

Impact on profit
before tax

50bp– 50bp

0.2
– 0.2

USD

50bp
– 50bp

0.1
– 0.1

CHF

50bp
– 50bp

0.7
– 0.7

CHF m
2014
EUR

Interest rate risks from cash and cash equivalents,
interest-bearing debt and financial derivatives
CHF m
2013
EUR

144 FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTSManagement of liquidity risksGroup companies need sufficient cash in order to meettheir commitments. Corporate Treasury is responsible
for managing liquidity surpluses. The share of the aggregate cash and cash equivalents and securities managed by Corporate Treasury was around 64% on December 31, 2014. The Group has sufficient liquidity
reserves (as at December 31, 2014 these stood at CHF
205.1 million in cash and CHF 49.5 million in current
financial instruments) to be able to meet its commit-

ments at any time. At present, the Group regards a cash
level of roughly CHF 50 million as sufficient to meet its
payment obligations at all times.
The maturity structure of the existing financial liabilities
is shown in the following table. These liabilities correspond to contractually agreed maturities and represent
nominal payment outflows. Inflows and outflows offunds from derivative financial instruments are shown
separately.

As at December 31, 2014

CHF m
Interest-free liabilities
Leasing contract liabilities
Cash outflow from financial derivatives
Cash inflow from financial derivatives

Remaining term
to maturity up to
1 year
96.8
0.1
0.0
0.2

Remaining term
to maturity
1 – 2 years

Remaining term
to maturity
2 – 5 years

Remaining term
to maturity
over 5 years

0.1

0.4

0.9

Remaining term
to maturity up to
1 year
97.2
0.1
0.0
0.2

Remaining term
to maturity
1 – 2 years

Remaining term
to maturity
2 – 5 years

Remaining term
to maturity
over 5 years

0.1

0.3

0.8

As at December 31, 2013

CHF m
Interest-free liabilities
Leasing contract liabilities
Cash outflow from financial derivatives
Cash inflow from financial derivatives

Management of credit risks
Credit risks arise from the possibility that customers
may not be able to meet their agreed commitments.
To manage this risk adequately, the financial creditworthiness of various customers is constantly monitored. Credit risks are diversified by the company’s
broad customer base in various business segments

and geographic regions. With regard to counterparty
risk exposure to banks, Group-wide directives stipulatethat financial investments and other financial transactions are to be made only with first-class banks. Given
the credit ratings of these counterparties, the Group
does not anticipate any defaults.

FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS 145

Capital management
For the Group, capital management means both optimizing the capital employed and managing consolidated shareholders’ equity, which consists of paid-up
share capital, treasury shares, reserves, and translationdifferences. As at December 31, 2014, shareholders’ equity stood at CHF 738.8 million. The objectives of capital management are to ensure that the Group remains
a going concern, to preserve its financial flexibility forinvestments, and to achieve a risk-adjusted return on
equity for investors.

36 Events after the balance sheet date

Changes in economic conditions may require adjustments to the Group’s shareholders’ equity. These adjustments can take the form of dividend distributions,capital repayments or increases, or share buybacks.

The changes in the exchange rates after December 31,
2014 did in relation to the Group financial results notcause any major price gains or losses at the time theannual financial statements were approved. Foreignexchange risk management is described in note 35‘Risk assessment and financial risk management’.

On January 15, 2015, the Swiss National Bank announced that it was discontinuing its minimum exchange rate of CHF 1.20 per euro. The changes in theexchange rates after December 31, 2014 are not reflected in the present consolidated financial statements. Since the Group uses the Swiss franc as its reporting currency, any strengthening of the Swiss franc
has a negative translation effect on the consolidated
accounts.

146 FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS

Group companies(as at December 31, 2014)

Currency

Share capital

Equityinterest

Wetherill Park, NSW
Wetherill Park, NSW

AUD
AUD

500,000
6,000,000

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

2,000,000
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

335,631,092

50%

Czech Republic
Forbo Siegling Ceska 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

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, 2014
D Direct participation of Forbo Holding Ltd

N

N

D

Flooring
Systems

Movement
Systems

Holding/Services

S

S

MS

S

S

S
S

MS

H
MS
S
S

FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS 147

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%

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

2,883,900,000

100%

Ireland
Forbo Ireland Ltd.

DublinEUR125,000

100%

S

Segrate (Milan)
Paderno Dugnano(Milan)EUR
EUR

60,000120,000

100%
100%

S

Japan
Forbo Siegling Japan Ltd.

Tokyo

JPY

330,000,000

100%

Jersey, C.I.
Forbo Invest Ltd.

Saint Helier

GBP

25,000100%

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

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.

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%

Company

Registered office

Germany
Forbo Beteiligungen GmbH
Forbo Erfurt GmbH
Forbo Flooring GmbH
Forbo Siegling GmbH
Realbelt GmbH

LörrachErfurtPaderborn
Hanover
LörrachHong 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, 2014
D Direct participation of Forbo Holding Ltd

D

Flooring
Systems

Movement
Systems

Equityinterest

Holding/Services

H
MS
S
MS
S

H

S
S

S

S

MS

H

MS
MS
MS
H
MS
S

148 FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS

Currency

Share capital

Equityinterest

Auckland

NZD

650,000

100%

NorwayForbo Flooring AS

Asker

NOK

1,000,000

100%

S

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

Shanghai
Shenyang

CHF
USD

4,000,000
16,221,000

100%
100%

S

Portugal
Forbo-Revestimentos, S.A.

Maia (Porto)

EUR

74,850100%

S

Romania
Forbo Siegling Romania S.R.L.

Bucharest

RON

38,000100%

RussiaOOO ‘Forbo Flooring‘
OOO ‘Forbo Kaluga‘
OOO ‘Forbo Stroitech‘
ZAO ‘Forbo Siegling‘

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

15,281,639

100%

South Korea
Forbo Korea Ltd.

Seoul

KRW

900,000,000

100%

S

Barcelona
Montcada i Reixac(Barcelona)

EUR
EUR

60,101
1,532,550

100%
100%

S

SEK
SEK
SEK

8,000,000
50,000,000
1,000,000

100%
100%
100%

S

Company

Registered office

New Zealand
Forbo Siegling Ltd.

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

SwedenForbo Flooring AB
Forbo Project Vinyl AB
Forbo Siegling Svenska AB

S Sales
MS Manufacturing and Sales
H Holding/Services
N Not consolidated as at December 31, 2014
D Direct participation of Forbo Holding Ltd

Gothenburg
GothenburgKållered (Gothenburg)

D
D

Flooring
Systems

Movement
Systems

Holding/Services

S

MS
MS

S

S
MS
S
MS

MS

S

S

H
S

FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS 149

Company

Registered office

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

Baar
Baar
Baar
Giubiasco
Baar

Thailand
Forbo Siegling (Thailand) Co. Ltd.

Bangkok

TurkeyForbo Siegling Hareket Sistemleri Ticaret
Limited irketi

Currency

Share capital

D
D

CHF
CHF
CHF
CHF
CHF

100,000
10,000,000
250,000
100,000
100,000

100%
100%
100%
100%
100%

D

THB

9,000,000

100%

S

TRY

2,000,000

100%

S

GBP
GBP
GBP
GBP
GBP
GBP

3,609,990
17,262,001
8,000,000
50,77449,500,000
400,000

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

USD
USD
USD
USD

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

100%
100%
100%
100%

D
D

Istanbul

United Kingdom
Forbo Flooring UK Ltd.
Forbo Floors UK Ltd.
Forbo-Nairn Ltd.
Forbo Siegling (UK) Ltd.
Forbo UK Ltd.
Westbond Ltd.

Kirkcaldy
Derbyshire
Derbyshire
Dunkinfield
Derbyshire
Derbyshire

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

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

S Sales
MS Manufacturing and Sales
H Holding/Services
N Not consolidated as at December 31, 2014
D Direct participation of Forbo Holding Ltd

D

D

Flooring
Systems

Movement
Systems

Equityinterest

Holding/Services

H
H
H
MS
MS

MS

H

H
H
H
S
H
H

H
H
S
MS

150 FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS

Report of the statutory auditor

Report of the statutory auditor to the General Meetingof Forbo Holding Ltd, Baar
Report of the statutory auditor on the consolidated financial statements
As statutory auditor, we have audited the consolidated financial statements of Forbo Holding Ltd, which comprise the consolidated balance sheet, consolidated income statement, comprehensive income statement, consolidated shareholders’ equity, consolidated cash flow statement and notes (pages 94 to 145), for the year ended
December 31, 2014.
Board of Directors’ responsibility
The Board of Directors is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the International Financial Reporting Standards (IFRS) and the requirements of Swisslaw. This responsibility includes designing, implementing and maintaining an internal control system relevant to
the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. The Board of Directors is further responsible for selecting and applying
appropriate accounting policies and making accounting estimates that are reasonable in the circumstances.
Auditor’s responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We
conducted our audit in accordance with Swiss law and Swiss Auditing Standards as well as the International Standards on Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance
whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud
or error. In making those risk assessments, the auditor considers the internal control system relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control system. An audit also includes evaluating the appropriateness of theaccounting policies used and the reasonableness of accounting estimates made, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our audit opinion.
OpinionIn our opinion, the consolidated financial statements for the year ended December 31, 2014 give a true and fairview of the financial position, the results of operations and the cash flows in accordance with the International
Financial Reporting Standards (IFRS) and comply with Swiss law.

FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS 151

Report on other legal requirements
We confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act (AOA) andindependence (article 728 CO and article 11 AOA) and that there are no circumstances incompatible with our
independence.
In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that 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.
PricewaterhouseCoopers AG

Daniel Ketterer
Audit expert
Auditor in charge

Zurich, March 11, 2015

Reto Tognina
Audit expert

152 FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS

Consolidated income statements
2010 – 2014
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

2014

2013

2012

2011

2010

1,226.8– 765.8
461.0– 16.5– 196.6– 94.2– 13.2
8.9
149.4
5.9
– 1.0
154.3
– 30.9
123.4
0.2
123.6

1,199.7– 747.3
452.4– 16.4– 197.1– 90.7– 19.3
6.8
135.7
10.9
– 5.7
140.9
– 30.7
110.2
7.4
117.6

1,201.1– 761.2
439.9– 16.3– 194.0– 96.6– 25.3
63.8
171.5
5.7
– 11.2166.0– 35.9
130.1
83.2
213.3

1,203.8– 745.1
458.7– 16.0– 192.5– 96.6– 17.8
13.1
148.9
30.1
– 11.7167.3– 29.9
137.4
9.1
146.5

1,291.2– 785.6505.6– 17.6– 213.3– 103.9– 12.1
10.0
168.7
44.3
– 15.0198.0– 48.8
149.2
14.1
163.3

FORBO ANNUAL REPORT 2014 – CONSOLIDATED FINANCIAL STATEMENTS 153

Consolidated balance sheets
2010 – 2014
Assets
CHF m
Non-current assets
Property, plant, and equipment
Intangible assets
Deferred tax assets
Investments in associates and other non-current assets
Current assets
Assets held for sale
Inventories
Trade receivables
Other receivables
Deferred income and prepaid charges
Other current financial instruments
Cash and cash equivalents
Total assets

Shareholders’ equity and liabilities
CHF m
Shareholders’ equity
Share capital
Treasury shares
Reserves and retained earnings
Non-current liabilities
Non-current financial debt
Employee benefit obligations
Non-current provisions
Deferred tax liabilities
Current liabilities
Trade payables
Current provisions and accrued expenses
Current financial debt
Current tax liabilities
Other current liabilities
Liabilities directly associated with assets held for sale
Total liabilities
Total shareholders’ equity and liabilities

31.12.2014

31.12.2013

31.12.2012

31.12.2011

31.12.2010

418.5
234.9
146.1
37.2
0.3
677.1

408.2
232.3
146.4
29.3
0.2
718.8

410.4
233.8
149.2
27.2
0.2
802.9

743.9
450.2
270.4
17.6
5.7
750.3

230.6
150.6
24.0
17.3
49.5
205.1
1,095.6

213.4
148.8
29.2
18.3
68.1
241.0
1,127.0

218.6
150.2
28.9
11.8
142.1
251.3
1,213.3

536.4
359.8
153.5
21.9
1.2
965.5
361.4
219.6
159.2
24.8
8.0
0.1
192.4
1,501.9

260.9
220.8
28.4
21.4
47.4
171.4
1,494.2

31.12.2014

31.12.2013

31.12.2012

31.12.2011

31.12.2010

738.8
0.2
– 0.1
738.7
112.6
1.4
60.5
24.2
26.5
244.2
86.5
108.2
0.6
18.9
30.0

786.8
0.2
– 0.1
786.7
99.1
1.2
51.8
26.1
20.0
241.1
87.2
105.8
0.7
14.5
32.9

729.2
0.3
– 0.1
729.0
105.0
2.6
51.1
35.8
15.5
379.1
84.7
112.9
132.5
26.6
22.4

729.7
0.3
– 0.1
729.5
360.8
196.5
74.7
35.3
54.3
403.7
135.7
140.3
65.9
31.0
30.8

356.8
1,095.6

340.2
1,127.0484.1
1,213.3

815.3
0.3
– 0.1
815.1
276.2
144.5
42.7
39.5
49.5
410.4
86.1
125.0
47.5
27.6
26.6
97.6
686.6
1,501.9764.5
1,494.2

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

155
156
157
158
163
164

156 FORBO ANNUAL REPORT 2014 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY

Income statement for Forbo Holding Ltd

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

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

2014

2013

153,150,197
30,976
9,587,448
162,768,621

60,692,036
65,132
1,383,828
62,140,996

2014

2013

2,697,828
2,697,569
2,697,569
0– 56,399
5,338,998
157,429,623

4,715,876
8,790,210
7,685,713
1,104,497– 668,068
12,838,018
49,302,978

Note

2
3

Note

4
5

FORBO ANNUAL REPORT 2014 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY 157

Balance sheet for Forbo Holding Ltd(before appropriation of available earnings)
AssetsCHF
Non-current assets
Investments in Group companies
Advances to Group companies
Current assets
Other receivables from Group companies
Other receivables from third parties
Deferred income and prepaid expenses
Marketable securities
Cash and cash equivalents
Total assets

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

31.12.2014

31.12.2013

328,326,487
315,156,221
13,170,266
185,148,257
1,053,586
8,402
821,813
172,713,635
10,550,821
513,474,744

475,500,490
385,089,092
90,411,398
158,913,180
1,006,558
14,602
851,802
96,372,683
60,667,535
634,413,670

31.12.2014

31.12.2013

10475,781,440
215,000

418,574,519
225,000

13
13
12

15,600,000
73,636,128
186,616,651

15,600,000
102,225,080
117,957,511

14

42,284,038
157,429,623
37,693,304
30,571,400
20,4507,101,454
513,474,744

133,263,950
49,302,978215,839,151
204,694,758
20,422
11,123,971
634,413,670

Note

6
7

8
9

Note

158 FORBO ANNUAL REPORT 2014 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY

Notes to the financial statements
for Forbo Holding Ltd
1 Accounting
Applying the transitional provisions of the new accounting law, these financial statements have been
prepared in accordance with the provisions on accounting and financial reporting of the Swiss Code ofObligations effective until December 31, 2012.

4 Financial expenses from investments
in and advances from Group companies
The item financial expenses includes losses on foreign
currency accounts and interest expense for liabilities toGroup companies.

2 Financial income from investments inand advances to Group companies

5 Financial expenses from securities
and current investments

Income from investments in and advances to Group
companies amounting to CHF 153.2 million (2013:
CHF 60.7 million) consisted mainly of dividend income, which came to CHF 140.9 million (2013: CHF
56.6 million) as well as interest income and realized
price gains on loans.

In the previous year, the item ‘Financial expenses fromsecurities and current investments’ primarily consistedof an unrealized loss due to a change in valuation oftreasury shares.

3 Other income

In order to simplify the Group’s structure, some foreignsubsidiaries were transferred within the Group in theyear under review. In this connection, holdings in Forbo Finanz II AG, Forbo Floorcoverings Pty. Ltd., Forbo
Flooring AS, and Forbo Invest Ltd. were transferred tothe subsidiary Forbo Finanz AG in 2014.

The item ‘Other income’ includes the release of impairments on loans to subsidiaries in the reporting year,
since the loans were repaid in full. In the previous year,
this item included mainly proceeds from the sale ofshareholdings and brand rights belonging to the industrial adhesives activity, including synthetic polymers.

6 Investments in Group companies

As at December 31, 2014, Forbo Holding Ltd held thefollowing direct investments:

Investments in Group companies
Currency

Share capitalin 1,000

Equityinterest

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

USD
EUR
CHF
CHF
SEK
GBP
CHF
CHF

19,957
15,400100
10,0008,000
17,262
100
100

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

Holding/Services
Services
Sales

EUR
SEK
THB

5,000
50,000
9,000

100%
100%
99.8%

Company

Registered office

Activity

Forbo America Inc.
Forbo Beteiligungen GmbH
Forbo Financial Services AG
Forbo Finanz AG
Forbo Flooring AB
Forbo Floors UK Ltd.
Forbo-Giubiasco SA
Forbo International SA

US-Wilmington, DE
DE-Lörrach
CH-Baar
CH-BaarSE-Gothenburg
UK-Derbyshire
CH-Giubiasco
CH-BaarForbo Participations S.A.S.
Forbo Project Vinyl AB
Forbo Siegling (Thailand) Co. Ltd.

FR-Reims
SE-Gothenburg
TH-Bangkok

FORBO ANNUAL REPORT 2014 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY 159

7 Advances to Group companies
Advances to Group companies are denominated in
Swiss francs and foreign currencies.

8 Marketable securities
The item ‘Marketable securities’, amounting to CHF
172.7 million (2013: CHF 96.4 million), includes treasury
shares in Forbo Holding Ltd. This item is valued at costof acquisition since December 31, 2013. The change invaluation resulted in a loss in the previous year which
was recognized in ‘Financial expenses from securities
and current investments’.

9 Cash and cash equivalents
This item consists of bank deposits and cash equivalents with initial maturities of up to 3 months.

10 Share capital
As at December 31, 2014, the share capital of Forbo
Holding Ltd totaled CHF 215,000 (2013: CHF 225,000),
divided into 2,150,000 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
held on April 25, 2014, the shareholders approved acapital reduction from CHF 225,000 to CHF 215,000 bycancellation of the shares acquired in connection withthe share buyback program approved at the Ordinary
General Meeting of November 5, 2012, and the corresponding amendment to the Articles of Association.

Following the legally mandatory notice to creditors,
the capital reduction was entered in the Commercial
Register on July 4, 2014. The Board of Directors was
furthermore authorized to buy back the company’s
own shares, over a period of three years, for the purpose of subsequent cancellation of the share certificates, up to a maximum of 10% of the share capital.
In the framework of this new share buyback programapproved at the Ordinary general meeting of Forbo
Holding Ltd on April 25, 2014, 158,467 shares had
been repurchased by the end of the year under review.

11 Conditional capital
Originally, conditional capital of CHF 8,500,000 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,
2014, remained unchanged against the previous year
at CHF 16,645.

12 Reserve for treasury shares
The ‘Reserve for treasury shares’ in Forbo Holding Ltd
amounting to CHF 186.6 million on the balance sheet
date corresponds to the value of all treasury shares valued at cost. The treasury shares held by Forbo Holding
Ltd and its subsidiaries developed as follows over thereporting year:­
Treasury shares
As at January 1, 2014
Additions
Disposals
As at December 31, 2014

Cost
CHF
117,957,511
148,939,934– 80,280,794
186,616,651

Number ofregistered shares
217,297
158,997– 115,144
261,150

160 FORBO ANNUAL REPORT 2014 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY

13 General reserves

15 Contingent liabilities

General reserves totaled CHF 89.2 million (previous
year: CHF 117.8 million) and consist of general reserves(CHF 15.6 million) and general capital contribution reserves (CHF 73.6 million).

Guarantees and letters of support to third parties in favor of Group companies amounted to CHF 8.2 million
at year-end (2013: CHF 7.5 million), of which CHF 2.8
million (2013: CHF 2.6 million) was utilized.

14 Other liabilities to Group companies

16 Significant shareholders‘Other liabilities to Group companies’ as at December
31, 2014, included in particular advances from Forbo
Finanz AG in connection with its cash pool.

According to information available to the Board of Directors, the following shareholders or groups of shareholders with restricted voting rights constituted significant 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
Forbo Holding Ltd, Baar, together with its two subsidiaries
Forbo International SA, Baar, and Forbo Finanz AG, Baar

Number of shares
616,779
261,150

As percentage
28.69%
12.15%FORBO ANNUAL REPORT 2014 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY 161

Shareholdings
IN 2014
As at December 31, 2014, 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 2014
SharesName and function
This E. Schneider, Executive Chairman3)
Michael Pieper, Vice Chairman
Dr. Peter Altorfer, Vice Chairman4)
Claudia Coninx-Kaczynski5), member
Dr. Reto Müller, member
Vincent Studer, member
Total Board of Directors
Stephan Bauer, Chief Excecutive Officer
Matthias P. Huenerwadel, Executive Vice President Flooring Systems
Andreas Spreiter, Chief Financial Officer
Jean-Michel Wins, Executive Vice President Movement Systems
Total Executive Board

1) Following the amendment of the MIP, all the sums paid into it areinvested in shares of Forbo Holding Ltd starting as of January 1,
2013. As of the 2013 business year, no further options were issued
in connection with the MIP. However, there are still options outstanding within the MIP, which was launched in 2006 and revisedin 2012.
2) Subscription ratio.

Options1)
2012 series
1:12)

64,981
616,779
1,032
36
456
695
683,979
538
1,500
570
92
2,700

3,051

3,051

3) The share portion for the Executive Chairman of the Board of Directors amounts to 19,483 shares from the employment contract
for the period from May 1, 2013 to December 31, 2016. The shares
are subject to lock-up periods of three, four, and five years. The last
third of the shares will be available on May 1, 2018 at the earliest.
4) Vice Chairman since the 2014 Ordinary General Meeting (previously member).
5) New member of the Board of Directors since the 2014 Ordinary
General Meeting.

162 FORBO ANNUAL REPORT 2014 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY

IN 2013
As at December 31, 2013, the current and former
members of the Board of Directors and the Executive

Board (including related parties) held the following
number of shares in Forbo Holding Ltd:

Shareholdings 2013
SharesName and function
Dr. Albert Gnägi, Chairman
Michael Pieper, Vice Chairman
Dr. Peter Altorfer, member
Vincent Studer, member
Dr. Reto Müller, member
Non-executive members of the Board of Directors
This E. Schneider, Delegate of the Board of Directors and CEO2
Total Board of Directors
Matthias P. Huenerwadel, Executive Vice President Flooring Systems
Andreas Spreiter, Chief Financial Officer
Jean-Michel Wins, Executive Vice President Movement Systems
Total Executive Board

1) Subscription ratio.

5,162
681,719955
631
403
688,870
86,368775,238
2,310
56
0
2,366

Options3)
2012 series
1:11)

2011 series
1:11)

2010 series
1:11)

3,051

2,033

565

3,051

2,033

565

2) The compensation to the Delegate of the Board of Directors and
CEO is disclosed separately and shown in the line Board of Directors.

3) Following the amendment of the MIP, all the sums paid into it
will be fully invested in shares of Forbo Holding Ltd starting on
January 1, 2013. As of the 2013 business year, no further options
were issued in connection with the MIP. However, there are still
options outstanding within the MIP, which was launched in 2006
and revised in 2012.

17 Risk assessment

18 Events after the balance sheet dateWith respect to the risk management process conducted pursuant to Article 663b item 12 of the Swiss Codeof Obligations, please refer to the comments in note 35‘Risk assessment and financial risk management’ to theconsolidated financial statements.

On January 15, 2015, the Swiss National Bank announced that it was discontinuing its minimum exchange rate of CHF 1.20 per euro. The changes in theexchange rates after December 31, 2014 are not reflected in the present financial statements. A strengthening of the Swiss franc will mainly have a negativetranslation effect on the value of and income from investments in Group companies.
The changes in the exchange rates after December 31,
2014 did not cause any price gains or losses at thetime the annual financial statements were approved.

FORBO ANNUAL REPORT 2014 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY 163

Proposal for appropriation of available
earnings of Forbo Holding Ltd
The Board of Directors proposes to the Ordinary General Meeting that the available retained earnings, consisting of:

CHF
Net profit
Retained earnings
Release of general capital contribution reserves1)
Total at the shareholders’ meeting’s disposal

2014

2013

157,429,623
42,284,038
30,221,600
229,935,261

49,302,978
133,263,950
29,080,184
211,647,112

2014

2013

30,221,600
199,713,661
229,935,261

29,080,184
182,566,928
211,647,112

be appropriated as follows:

CHF
Withholding tax-free distribution2)
To be carried forward
Total at the shareholders’ meeting’s disposal

1) The definitive amount to be distributed depends on the amountof the tax-free distribution as described below in footnote 2).

2) At the Ordinary General Meeting of April 24, 2015, the Board of
Directors will propose a dividend payment of CHF 16 (2013: CHF
14) per registered share out of the capital contribution reserves,
with the exception of the treasury shares held by Forbo Holding
Ltd or a subsidiary thereof, for which no dividend is paid. The definitive amount may therefore still change.

164 FORBO ANNUAL REPORT 2014 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY

Report of the statutory auditor

Report of the statutory auditor to the General Meeting
Forbo Holding Ltd, Baar
Report of the statutory auditor on the financial statements
As statutory auditor, we have audited the financial statements of Forbo Holding Ltd, which comprise the income
statement, balance sheet and notes (pages 156 to 163), for the year ended December 31, 2014.
Board of Directors’ responsibility
The Board of Directors is responsible for the preparation of the financial statements in accordance with therequirements of Swiss law and the company’s articles of incorporation. This responsibility includes designing,
implementing and maintaining an internal control system relevant to the preparation of financial statements thatare free from material misstatement, whether due to fraud or error. The Board of Directors is further responsible
for selecting and applying appropriate accounting policies and making accounting estimates that are reasonable
in the circumstances.
Auditor’s responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our
audit in accordance with Swiss law and Swiss Auditing Standards. Those standards require that we plan andperform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in thefinancial statements. The procedures selected depend on the auditor’s judgment, including the assessment of
the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers the internal control system relevant to the entity’s preparation of the financial
statements in order to design audit procedures that are appropriate in the circumstances, but not for the purposeof expressing an opinion on the effectiveness of the entity’s internal control system. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates
made, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OpinionIn our opinion, the financial statements for the year ended December 31, 2014 comply with Swiss law and thecompany’s articles of incorporation.

FORBO ANNUAL REPORT 2014 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY 165

Report on other legal requirements
We confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act (AOA) andindependence (article 728 CO and article 11 AOA) and that there are no circumstances incompatible with our
independence.
In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that 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 the company’s articles of incorporation. We recommend that the financial statements submitted to you be approved.
PricewaterhouseCoopers AG

Daniel Ketterer
Audit expert
Auditor in charge

Zurich, March 11, 2015

Reto Tognina
Audit expert

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