Forbo Annual Report 2008

Forbo International SA
Lindenstrasse 8
CH-6340 Baar

P +41 58 787 25 25
F +41 58 787 20 25
info@forbo.com

flooring. bonding. movement.

flooring. bonding. movement.

Forbo Holding Ltd
Lindenstrasse 8
CH-6340 Baar

Forbo Annual Report 2008

flooring. bonding. movement.

Financial calendar
Ordinary General Meeting:

April 24, 2009

Letter to shareholders:August 18, 2009Media release on the results in the first half of 2009:

August 18, 2009

Publisher:
Forbo Holding Ltd, Baar
Concept and Design:
Gottschalk + Ash Int’l
Photos:Luxwerk, Zurich
Typesetting, Litho and Printing:
Neidhart + Schön AG, Zurich

Our Annual Report is publishedin German language and in
an English language translation.

Forbo at a GlanceStrengthened global Presence

Forbo is a leading producer of flooring systems, adhesives, as well as
power transmission and conveyor belt solutions. The company employs some 6,500 people and has an international network of 44 sites
with production and distribution as well as 51 pure sales organizations in a total of 35 countries worldwide. Forbo is headquartered in
Baar in the canton of Zug, Switzerland.
In 2008, Forbo strengthened its international market position
through two major acquisitions:– Bonar Floors in the Flooring Systems division– Transtex Belting, the lightweight PVC conveyor belt activities ofFenner Dunlop, in the Movement Systems division
Systems·F14looringproduction facilities in 7 countries andsales companies in over 20 countries
Systems·B20onding
production facilities in 12 countries andsales companies in over 20 countries
Systems·M10ovement
production facilities in 8 countries andsales companies in over 25 countries

Expanded product portfolio
Flooring Systems

FlotexFlotex is a vinyl flooring manufactured
by a unique electrostatic flocking technique.
It combines the best characteristics of acarpet with the features of a heavy-duty andlow-maintenance floor covering and has asmooth, velvety surface with the pleasantly
soft feel of a carpet. The Flotex collections
convince with their attractive designs suchas lively colors and shades as well as almost
three-dimensional visual appearance. The
Sottsass special collection is the result ofa creative cooperation with the Italian design
studio Sottsass Associati. Flotex products
are manufactured at the Ripley (UK) and
Château-Renault (F) sites and are usedmainly in public buildings, offices and hotels.

Coral & Nuway
Coral and Nuway are entrance matting
systems that take care of cleaning and drying
shoes of whoever enters a building.
CORAL textile floor covering systems catch

dirt and absorb moisture in the entrance
area. They are manufactured at Krommenie(NL).
NUWAY entrance matting systems are

systems for high-intensity entrance areas as
for example at airports, supermarkets
and shopping centers. Nuway systems are
manufactured at Telford (UK).

Chocflex
Chocflex is a vinyl floor covering providing
indentation resistance and excellent
sound insulation (19 dB); it is manufactured
at Château-Renault (FR).
Westbond & Tessera
Westbond and Tessera are carpet tiles fordemanding rooms and environments.
A perfect extension to the existing Forbo
product portfolio, they make an ideal fit
for Forbo commercial floorings, especiallyin offices, hotels, leisure centers andpublic buildings.
WESTBOND is a product line of uniquedesigner carpet tiles manufactured by aspecial process as fusion-bonded tiles.
They are available in a range of attractive
colors and can be individually designed
to the customer’s specifications. They are
manufactured at the Cottonwood (UK)
site.

Transtex Belting
The acquisition of the lightweight PVC
conveyor belting activities of Fenner Dunlop
in North America has enabled the Movement
Systems division to round off its productoffering for rip and tear-resistant conveyor
belts primarily used in the logistics andfood processing industry.
In connection with this acquisition, moreover, Forbo concluded a distributionagreement for lightweight rubber belting
products manufactured by Fenner
Dunlop.

Stronger market presence in the US
Movement Systems

The TESSERA product line consists ofhigh-performance carpet tiles for the mostdemanding commercial interiors; they
are manufactured at Bamber Bridge (UK).

Net sales by divisions
Change on previous year
CHF m

2008

in %

in local­currencies in %

in %

892.9

3.3

9.8

46.5

Bonding Systems

654.6– 14.3

– 8.8

34.1

Movement Systems

371.2

– 1.3

4.3

19.4

1,918.7

– 4.3

1.7

100.0

Flooring Systems

Total

Movement Systems

Flooring Systems

Bonding Systems

Employees by divisions
Number2008

Change on pre­vious year in %in %Flooring Systems

3,047

24.0

46.4

Bonding Systems

1,390

– 9.7

21.2

Movement Systems

2,085

4.1

31.8

Corporate Functions

41

0.0

0.6

6,563

8.7

100.0

Total

Corporate Functions

Movement Systems
Flooring Systems

Bonding Systems

Financial Overview Group

2008

2007

2008

2007

Income statement

CHF m

CHF m

EUR m2)

EUR m2)

Net sales

1,918.7

2,004.0

1,209.0

1,218.2

Flooring Systems

892.9

864.4

562.6

525.2

Bonding Systems

654.6

763.7

412.5

464.3

Movement Systems

371.2

375.9

233.9

228.5

EBITDA

205.8

221.9

129.7

134.9

EBIT

117.1

162.4

73.8

98.7

Group profit

16.0

110.7

10.1

67.3

Balance sheet

CHF m

CHF m

EUR m2)

EUR m2)

Total assets

1,837.8

1,405.2

1,158.0854.2

Operating assets

1,516.2

1,201.6

955.4

730.5

Shareholders’ equity

584.4

713.1

368.2

433.5

Net debt

404.5

41.6

254.9

25.3

Cash flow statement

CHF m

CHF m

EUR m2)

EUR m2)

Cash flow from operating activities

159.8

165.3

100.7

100.5

Cash flow from investing activities– 406.1

76.6– 255.9

46.6

Free cash flow

– 246.3

88.7– 155.2

53.9

Key ratios

%

%

10.7

11.1

EUR2)

EUR2)

ROS (EBITDA / net sales)
ROA (EBIT / operating assets)

7.7

13.5

Equity ratio (shareholders’ equity / total assets)

31.8

50.7

Gearing (net debt / shareholders’ equity)

69.2

5.8

NumberNumber

6,563

6,040

CHF

CHF

Employees (as of December 31)
Details per share

6.9

43.6

4.3

26.5

EquityEarnings (undiluted)

249.6

281.1

157.3

157.3

Par value reduction

3.91)

10.0

2.5

6.1

CHF m

CHF m

EUR m2)

EUR m2)435.0

1,717.0

274.1

1,043.8

Stock market capitalization (as of December 31)

1)	Proposal of the Board of Directors to the Ordinary General Meeting.
2)	EUR values translated at the annual average rate of CHF 1.587 / 1 EUR (2008) and CHF 1.645 / 1 EUR (2007).

Annual Report 2008

Contents Annual Report 20082

Forbo – the first 80 years

3

To our Shareholders

6

Forbo Group:
weaker demand and special charges depress earnings

11

Three divisions – three areas of competence

12

Flooring Systems:
strategic extension of the product portfolio

18

Bonding Systems:
a demanding year

24

Movement Systems:
market presence in the US strengthened

30Group Structure

31

Executive Board

35

Corporate Governance

56

The Forbo Share
Forbo Group Financial Report

60

Consolidated Income Statement

61

Consolidated Balance Sheet

62

Consolidated Cash Flow Statement

63

Consolidated Statement of
Recognized Income and Expenses

64

Group Accounting Policies

77

Notes

110

Group Companies

114

Report of the Statutory Auditor

116

Consolidated Income Statements 2004 – 2008

117

Consolidated Balance Sheets 2004 – 2008
Financial Statements of Forbo Holding Ltd

119

Income Statement

120

Balance Sheet

121

Notes to the Financial Statements

128

Proposal for Appropriation of Available Earnings

129

Report of the Statutory Auditor

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Following the diversification in the 1960s, the Annual General Meeting of May 3, 1974 decided to change the company’s name from Continentale Linoleum-Union to Forbo. It was an
excellent choice because the name is unique, sounds pleasant in all languages and is easy
to pronounce. Forbo was the designation used by the Swedish Group company for its walland roofing elements. Originally, the name came from a joint venture between the twocompanies Forshaga and Bofors.

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In the immediate wake of the merger, these continental linoleum manufacturers saw theirbusiness flourish. The measures to streamline the business bore fruit, and factory turnoverrose. But the world recession that began in 1929 very soon struck the European continent
with its full force. The company later experienced difficult times during World War Two,
especially when the French production plant was bombarded in 1944. Although there were
no fatalities among staff, the factory suffered considerable damage. Following the depression and war years, the company diversified, initially within the flooring business, adding
vinyl floor coverings and carpets to the range. In 1973, it started to build up a separate
adhesives division and in 1994 it acquired the Siegling Group, a globally operating businessin conveyor, processing and flat belts. As of the 1980s in particular, the company diversified further into areas such as wall coverings, coated textiles, laminates and windows. The
focus on the current three divisions was initiated in the late 1990s.

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In a milestone decision for industrial history, three firms, the Deutsche Linoleum-Werke AG
in Berlin, Germany, the Swedish company Linoleum-Aktiebolaget Forshaga in Gothenburg
and the Swiss company Linoleum AG in Giubiasco agreed in 1928 to establish a holding company. It was their response to the fast-changing market situation for linoleum floor coverings on the European continent. Two years after the new company was founded, two further
firms joined the Union: the French manufacturer Société Anonyme Rémoise du Linoléum in
Reims and the Dutch firm N.V. Nederlandsche Linoleumfabriek in Krommenie.

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The year 2008 marked an important anniversary for
Forbo. In February 1928, three of continental Europe’s
leading linoleum manufacturers founded the Continentale Linoleum-Union in the canton of Zurich, laying
the foundation for today’s globally operating ForboGroup.

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The picture shows the Forshaga factory in­Gothenburg in 1896 – one of the production
sites of the three founding companies.

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Forbo – the first 80 years

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3
To our Shareholders

Dear Ladies and Gentlemen,
Following an extraordinarily successful business year in 2007 with the best result ever in
Forbo’s history, the company continued to report prospering sales and strong earnings in thefirst half of 2008. As of the second half of the year and especially in the fourth quarter of
2008, however, the global financial crisis and the economic downturn impact­e d negatively
on a wide range of industries. Key markets for Forbo such as construction and the auto­
motive industry as well as the capital goods sector were particularly hard hit. Forbo has astrong presence in these industries directly or indirectly. Many of Forbo’s cus­tomers faced
vast problems in these difficult circumstances. The downturn has caused a huge global
slump in demand. The recession has particularly strong struck key Forbo markets such as
the United States. Despite the good results in the first three quarters, the economy’s tailspin had a negative impact on Forbo’s sales and earnings for 2008 as a whole.
Selective acquisitions strengthen market position
Outstanding enhancement of the product portfolio
Against this increasingly difficult environment, Forbo succeeded in making two importantacquisitions in 2008. The purchase of Bonar Floors enabled Forbo to complement its Flooring
Systems product portfolio in the strategically important commercial floorings business in
Europe. The second acquisition, Transtex Belting (the lightweight PVC conveyor belt activities
of Fenner Dunlop), strengthens and expands the market presence of Movement Systems
in strategically significant market segments in North America.
Currencies had a strong negative impact on sales
Sales almost at the previous year’s level despite a steep fall in the fourth quarter
Sales were stable on the whole until the third quarter of 2008, but fell considerably in thecourse of October and then slumped further as of November. The trend was exacerbatedin December when Forbo’s customers had to shut down factories and introduce forced
vacation and short-time work. Consolidated net sales converted into Swiss francs came to
CHF 1,918.7 million, just below the previous year’s level of CHF 2,004.0 million. Forbo’s ac­quisition-driven growth due to the takeover of Bonar Floors and Transtex Belting was 3.6 %.
The negative impact of currency translations was 6.0 %. Exchange rate trends especiallyin the high-volume US dollar and euro zones plus the weakening of the pound sterling caused
a sharp drop in sales reported in Swiss francs. Fortunately, despite this challenging envi­
ronment, Flooring Systems and Movement Systems managed to increase net sales in local
currencies after adjustment for acquisitions.

4

Operating profit impacted by sales development and extraordinary charges
Cost-cutting measures prevented further margin erosion
The sharp decline in sales as of the fourth quarter of 2008, combined with rising credit risks,
impairments as well as provisions for structural adjustments resulted in a lower EBIT thanthe previous year. The additional cost-cutting measures introduced towards the year-end
only went part way to compensating for the impact resulting from the decline in sales.
This led to an operating profit (EBIT ) of CHF 117.1 million (previous year: CHF 162.4 million).
The EBIT margin in 2008 thus came to 6.1 % (previous year: 8.1 %). Operating profit before
depreciations and amortizations (EBITDA) stood at CHF 205.8 million, below the 2007 figureof CHF 221.9 million.
Net income reduced by additional special charges
Impairments on securities and higher net financial expense additionally depress the result
Owing to the economic crisis, which has struck both Rieter divisions with full force, Forbo
has had to take an impairment charge on its industrial participation in Rieter, which was
acquired with a view to exploiting synergies resulting from a potential cooperation. Thisvalue adjustment has reduced net income by CHF 79.2 million before tax. Other net financial
expense increased owing to the higher debt and came to CHF 16.5 million (previous year:
CHF 7.6 million).
Consolidated net income came to CHF 16.0 million (previous year: CHF 110.7 million).
Strong balance sheet
Strategic investments
Various strategic investments and the buyback of the company’s own shares increased net
debt to CHF 404.5 million at year-end 2008.
Strengthening the balance sheet
For Forbo, a strong balance sheet in a prolonged economic downturn is a significant com­petit­i ve advantage. Selected asset categories were revalued at fair values in accordancewith the applicable IFRS accounting standards. The use of the revaluation model makes theactual asset situation of the Group more transparent.
Proposals to the Ordinary General Meeting
Par value repayment of CHF 3.90
In view of the decline in net income compared to the previous year as well as the tougheconomic conditions expected to prevail in 2009, the Board of Directors proposes to theOrdinary General Meeting a cash payout of CHF 3.90 per share. As in the previous year,
this distribution is to take the form of a reduction in par value.
Share buyback program
Owing to the deterioration in economic conditions and the uncertain future, the Board of
Directors proposes to the Ordinary General Meeting that the 213,152 shares of the company
which were bought back through the second trading line should not yet be destroyed.
Accordingly, the Board of Directors proposes that it should be authorized to resell theseshares or to use them either as a means of payment for acquisitions or as underlying
security for convertible and option rights.

5

Change in the Board of Directors
The period of office of Dr. Rudolf Huber ends on the date of the 2009 Ordinary General
Meeting. He has decided not to stand for re-election anymore. The Board of Directors
thanks him for the valuable contribution for the benefit of Forbo Group. The Board of
Directors will propose to the Ordinary General Meeting the election of Mr. Vincent Studer,member of the Executive Board of the auditing and accountancy company T & R AG
and former partner of Ernst & Young, in his place as a member of the Board of Directors.
Outlook for 2009
A challenging year
Forbo does not anticipate a soon recovery of the markets and believes that 2009 will besignificantly more challenging than 2008.
Given the uncertain outlook for the world economy and the difficult market conditions,
Forbo at this point in time refrains from making concrete forecasts regarding sales andearnings trends for the 2009 business year.
Thank you
Our thanks for your commitment and trust
On behalf of the Board of Directors and the Executive Board, we thank our employees fortheir great commitment, for their outstanding performance and for the necessary flexibility they have shown in their everyday work, with which they have contributed to thecompany’s success also in a difficult environment.
We thank all our partners for the close working relationship and the trust they show in
Forbo. In particular we would like to express our gratitude to our shareholders and our loyal
customers.

Baar, March 2009

Dr. Albert Gnägi
Chairman of the Board of Directors

This E. Schneider
Delegate of the Board of Directors and CEO

6Forbo Group: weaker demand andspecial charges depress earnings

After a record result in 2007, Forbo increased sales and earnings in
the first half of 2008 too. However, as of the third quarter of 2008
some markets were reporting weaker demand, which then slumped
strongly especially in the last months of the year, as the full forceof the global downturn made itself felt. Group net sales translated
into Swiss francs came to CHF 1,918.7 million, which fell just shortof the previous year’s level. Exchange rates had a negative impact of
6 % on sales. Forbo’s acquisition-driven growth due to the takeoverof Bonar Floors and Transtex Belting was 3.6 %. Despite these challenges in a tough environment, both Flooring Systems and Movement Systems managed to increase net sales in local currencies
without acquisitions. Raw material prices rose steeply again in theyear under review and eased off somewhat only towards the endof the year. Efficient margin management compensated these highcosts to some extent.
Net profit from ordinary business operations was slightly below
the year-ago level. However, special charges for structural adjustments to the economic environment and for an impairment on
the participation in Rieter were charged to income. Consolidated
net income came to CHF 16.0 million.

Currency fluctuations had a strong negative impact on sales
The Flooring Systems division increased net sales by CHF 28.5 million to CHF 892.9 million,
which is equivalent to an increase of 3.3 %. Although the acquisition of Bonar Floors
contributed 6.8 % to this growth, exchange rates lowered sales growth by 6.5 %. In local
currencies, sales growth was 9.8 %. The strategic focus on the commercial segment provided some stability in an uncertain economic environment. Especially the United States,
France and the Netherlands performed above average, even though overall a drop in
demand was also observed in the flooring business in the second half of 2008. In local
currencies, both linoleum and vinyl floorings once more drove solid sales growth.
The past business year was a very demanding one for the Bonding Systems division. Following the termination of the subsidies for the synthetic fuel program in the synthetic
polymers business as of the end of 2007, a demanding year in the United States had been
expected. The unexpectedly fierce economic crisis in the United States, which by the endof the year also affected Europe and Asia, caused net sales to contract by CHF 109.1 million
to CHF 654.6 million. This is equivalent to a decline of 14.3 %, of which exchange rates
accounted for 5.5 %. Operations in the US market in particular were responsible for this decline, but Spain and Germany also reported lower sales revenue. There was a huge slump
in demand especially in consumer durables such as automobiles, motor homes and furniture.
The building and construction adhesives business was a bright spot, performing well
despite the difficult economic circumstances.

7

Net sales by geographic areas
Change on previous year%in %North, Central and South America

22.4– 15.4

– 6.4

430.1

Benelux

12.7

+ 2.4

+ 6.2

243.1

in local currencies in %

CHF m

2008

France

12.2

+ 0.7

+ 4.5

234.8

Germany

11.8

– 1.0

+ 2.6

226.5

Asia / Australia / Africa

10.0

+ 2.6

+ 6.0

192.7

Southern Europe

8.6

– 6.8

– 3.3

165.0

Scandinavia

8.2

– 8.3

– 2.5

156.6

Great Britain / Ireland

6.1+ 14.5+ 34.0117.0

Eastern Europe

5.6

– 2.1

+ 1.6

108.3

Switzerland

2.3

– 7.1

– 7.1

44.6

50 100 150 200 250 300 350 400 450

The Movement Systems division generated net sales of CHF 371.2 million in the year underreview, which was CHF 4.7 million below the previous year’s figure, representing a slightdecline of 1.3 %. The acquisition of Transtex Belting contributed with 3.1 % to these sales, but
exchange rates again reduced this figure by 5.6 %. In local currencies, however, sales grewby 4.3 %. Although the main markets of Movement Systems were affected by the slump in demand as of the fourth quarter, some markets such as Scandinavia, Eastern Europe and Italy
performed very well. Orders that were part of larger projects generally remained at the previous year’s level. Despite the unfriendly economic environment, the logistics and foodprocessing segments reported gains, confirming the success due to product innovation undertaken in recent years.
Declines in sales and special charges depress operating profit
The sharp fall in sales as of the fourth quarter of 2008, combined with rising debtor risks, resulted in a lower EBIT figure. The cost-cutting measures that were initiated only partly offset this downtrend. The special charges that Forbo took to adjust structures to the changed
economic conditions had an additional negative impact on the result. On balance, Forbo
reported operating profit (EBIT ) of CHF 117.1 million (versus CHF 162.4 million the previousyear). The EBIT margin thus came to 6.1 %, compared with 8.1 % in the previous year.
Operating profit before depreciations and amortizations (EBITDA) came to CHF 205.8 million(previous year: CHF 221.9 million).
The Flooring Systems division increased its operating profit before depreciations and amorti­zations (EBITDA) to CHF 137.7 million, up 12.9 % compared to the previous year (CHF 122.0
million). Together with strict cost management, productivity gains more than offset the steep
rise in raw material prices for linseed oil and oil-based materials. The uptrend was also
supported by an improved product portfolio mix, a rationalization of the product range andselective price adjustments.

8

In the Bonding Systems division, the difficult market conditions in North America continued
to exert pressure on margins. The combination of declining sales and significant raw
material price increases up to the fourth quarter 2008 led to a significant drop in profit mar­gins. Operating profit before depreciations and amortizations (EBITDA) came to CHF 38.3
million, or CHF 31.1 million lower than the previous year (CHF 69.4 million). The good earnings
performance of construction adhesives could not offset the weak earnings trend in industrial adhesives, particularly in the automotive, wood-processing and textile industries.
The Movement Systems division achieved an operating profit before depreciations andamorti­z ations (EBITDA) of CHF 41.4 million, practically unchanged from the previous year
(CHF 41.8 million). Various factors such as higher raw material prices, margin pressureand exchange rate developments had a significantly negative impact on the result. Stablesales in the logistics and food-processing industries did not reach to offset these effects.

EBITDA by divisions
CHF m

2008

Change on pre­ – 25
vious year in %Flooring Systems

137.7+ 12.9Bonding Systems

38.3– 44.8

Movement Systems

41.4

– 1.0

Headquarters / Consolidation– 11.6

+ 2.7

0

25

50

75

100

125

150

Return on operating assets (ROA) declined from 13.5 % in 2007 to 7.7 %, mainly due to theoperating profit of CHF 117.1 million, which was CHF 45.3 million lower than the previous year (CHF 162.4 million). In addition, as at December 31, 2008, the operating assets ofBonar Floors, the acquired flooring business of Low & Bonar PLC , are included in the ROA ,whereas the EBIT figure covers only a three-month period.
Net financial expenses, excluding impairment on financial assets available-for-sale, rose
by CHF 8.9 million to CHF 16.5 million (previous year: CHF 7.6 million). This increase
resulted in particular from financing the acquisition of Bonar Floors, acquired on September 30, 2008, the Rieter shareholding as well as the share buyback program.

9Free cash flow 2008
CHF m

Cash flow from operating activities

159.8

Cash flow from investing activities– 406.1

Free cash flow

– 246.3

– 300

– 200

– 100

0

100

200

100

125

Free cash flow 2007
CHF m

Cash flow from operating activities

165.3

Cash flow from investing activities– 76.6

Free cash flow

88.7

0

25

50

75

150

175

200

Balance sheet: total assets increased
Total assets as per December 31, 2008 stood at CHF 1,837.8 million (previous year: CHF 1,405.2
million). The CHF 432.6 million increase in total assets compared with the previous year wasdue mainly to the acquisition of Bonar Floors as per September 30, 2008 and the purchase of
the Rieter shareholding.
Net debt at year-end thus rose to CHF 404.5 million. Shareholders’ equity reduced to
CHF 584.4 million, resulting in a lower equity ratio of 31.8 % (previous year: 50.7 %).
Gearing (net financial liabilities / equity) at the end of December 2008 stood at 69.2 %(previous year: 5.8 %).

10Continuing investments to sustainably improve margins
The Forbo Group invested CHF 58.0 million in fixed assets in 2008 (previous year: CHF 61.5
million). The funds were used primarily for projects to increase production capacity and formeasures designed to boost efficiency and reinforce Forbo’s presence in new markets.
Flooring Systems invested CHF 29.4 million in 2008, which was with CHF 3.8 million higher
than the previous year (CHF 25.6 million). Amongst others, these are investments madeto modernize production of vinyl floorings in France and Russia. Whereas in 2007 Bonding
Systems reported exceptionally high investments of CHF 21.2 million due to the expansionof production capacity and the buildup of a factory in Russia, capital spending in 2008
came to CHF 10.5 million. Investments at Movement Systems, including intangible assets
and the acquisition of Transtex Belting, came to CHF 17.1 million, a level above previous
year (CHF 13.5 million).

Capital investments 2004 – 2008
Flooring
Systems

Bonding
Systems

Movement
Systems

Corporate

Total

CHF m

CHF m

CHF m

29

11

17

1

58

CHF m

2008

CHF m

2007

26

21

14

1

62

2006

18

31

13

3

65

2005

15

19

14

1

49

2004

27

10

14

4

55

0

10

20

30

40

50

60

70

Headcount development
At the end of the year, the Forbo Group employed 6,563 people, or 523 people more than in
the previous year; the increase was due mainly to the acquisition of Bonar Floors. On theother hand, a reduction of staff has been caused by the closure of the parquet production in
Sweden.

Employees by geographic areas

Benelux%

Change on pre­vious year in %

2008

18.0

+ 4.6

1,181

North, Central and South America

14.4

– 1.0

944

Germany

12.8

+ 3.5

837

Great Britain / Ireland

12.3+ 128.2

808

Asia / Australia / Africa

11.5

– 2.7

755

France11.3+ 27.2743

Eastern Europe

6.3

+ 9.0

412

Scandinavia

4.9– 31.8319

Southern Europe

4.7

– 6.0

311

Switzerland

3.9

– 1.6

253

200

400

600

800

1,000

1,200

11
Three divisions –three areas of competence

Flooring Systems
The Flooring Systems division offers a broad and attractive range ofenvironmentally friendly linoleum, high-quality vinyl floorings, entrance matting systems that take care of cleaning and drying shoes, carpet tiles and needlefelt. Thanks to their excellent technical properties
and attractive design, these floorings are invariably the first choice forpublic buildings, department stores, hospitals, schools, libraries, commercial offices, leisure centers, hotels, restaurants and cafeterias as well
as for applications in the residential market. With a market share ofover 65 percent, Forbo is the world market leader in linoleum.
Bonding Systems
Bonding Systems is among the world’s leading suppliers of industrial
adhesives. Its high-performance products ensure stable and durable
bonding and are suitable for a wide range of applications in key markets
such as the paper processing industry, the packaging industry, theshoe and textile industries, the furniture industry, as well as for the
manufacturing of automotive and motor home interior trims. Bonding
Systems also provides ready-made adhesives for flooring installations and ceramic tiles as well as welding rods and leveling compounds
for the construction industry. The third business area is synthetic
polymers which are marketed as emulsion polymers to customers in
the ad­hesives, varnish, paint and construction industries.
Movement Systems
Movement Systems is a global industry leader providing top-quality
power transmission belts, sophisticated conveyor and processing belts
as well as plastic modular, 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 applications in industry, trade andthe service sector, e.g. as conveyor and processing belts in the foodindustry, as treadmill belts in fitness studios or as flat belts in maildistribution centers.

12
Forbo Flooring Systems:
strategic extension of the product portfolio‘Flooring Systems maintained its growth path in the past businessyear. A strong first half, though, was followed by a downturn.
An important event in the year under review was the acquisitionof Bonar Floors, a transaction that was closed on September 30,
2008. This acquisition reinforces Flooring Systems’ leading position as a system supplier of floor coverings for the commercial
segment and expands the product offering within the frameworkof its proven strategy.’

The Flooring Systems division generated net sales of CHF 892.9 million in2008. This is equivalent to an overall
growth of 3.3 % versus the previous
year; of which the acquisition of Bonar
Floors contributed 6.8 % to this expansion, whereas exchange rates had a marked negative effect of 6.5 %.
In local currencies, sales growth was at 9.8 %. Operations particularly in the US , France and the Netherlands reported a better-than-average performance. The division’s share of Group total net sales was
47 %. Operating profit (EBIT ) came to a gratifying CHF 111.6 million(previous year: CHF 94.9 million). Together with consistent cost management, productivity gains more than offset the strong raw material price increases for linseed oil and oil-based materials.

Tom Kaiser
Executive Vice President
Flooring Systems

Market situation: pleasant growth in a difficult economic environment
The division’s strategic focus on the commercial market segment is a major reason why
Flooring Systems has by a large been spared the effects of the economic downturn. Even
markets affected early on by the slowdown of the economy such as the UK , Spain andPortugal held up well, but overall demand in the flooring business declined in the second
half of 2008.
As part of the effort to streamline the range, the parquet production in Sweden was discontinued. Since the output was mainly for the local market, sales in Scandinavia also edged
down.
Measures and investments: optimized services for customers and expansion in
Eastern Europe
The vinyl flooring factory acquired at the end of 2007 in the Russian town of Kaluga, a city
southwest of Moscow, was completely refurbished in the year under review so it can now
produce high-quality floor coverings for the commercial market, a segment that is growing
continuously in Russia. The sales and distribution of the Smaragd product line will begin
in March 2009.
With the acquisition of Bonar Floors at the end of September 2008, Flooring Systems has
expanded and strengthened its range of high-end flooring products for the global commercial segment. Bonar Floors has a long standing and excellent reputation for innovative
commercial flooring applications in the segments healthcare, education and office environments.
Further investments to increase customer focus were made in 2008. In 2009, the newworldwide sales information system, designed to optimize the coordination of sales,
marketing and customer service in the commercial segment, will be launched in stepwise fashion.

13

Products: expansion of product portfolio
The acquisition of Bonar Floors highlights a targeted expansion in the product portfolioof Flooring Systems. The range today additionally includes a very special vinyl floor covering.
Manufactured by means of a unique electrostatic flocking method, it combines the best
characteristics of a carpet with the features of a heavy-duty and low maintenance floor cov­ering. The acquisition also adds entrance matting systems as well as carpet tiles, which are
an ideal fit with the existing product portfolio for commercial office environments, hotels,
leisure areas and public buildings.
Flooring Systems launched also new collections for both vinyl and linoleum floor coverings.
In April a vinyl collection for the commercial segment was launched, followed in Octoberby a special collection with outstanding sound insulation properties. In June, Flooring Systems launched a new design in the linoleum range which responds to the trend in archi­
tecture and interior design for the use of tactile natural materials. In addition, a new line
for furniture surfaces was launched in May.
Business trend: growth in linoleum and vinyl floorings
The linoleum product group reported net sales of CHF 415.4 million, corresponding to a
growth of well 3 % in local currencies. It thus accounted for 44 % of total divisional sales.
Demand for environmentally friendly floor coverings made of renewable materials rose
further especially in the US , the UK , France, in the Netherlands as well as in the Asia Pacificregion.
The vinyl flooring product group contributed in local currencies with 39 % to sales, representing CHF 365.4 million. This product group also increased sales revenue by well 4 %.
Southern Europe, Germany, UK and the Benelux countries all made a higher-than-averagecontribution to growth in vinyl flooring sales.
As the economic downturn has weakened demand in the private sector, sales of vinyl floor
coverings declined in the residential segment. Marmoleum Click, however, again reported
growth due to the growing trend to environmentally friendly products.
Outlook: integration of Bonar Floors
Efforts this year will focus on the rapid and complete integration of Bonar Floors by the endof 2009. The aim is to achieve a uniform market appearance for all target groups. As a lead­ing system provider, Flooring Systems intends to expand its portfolio by offering a broad andharmonized product program along with an expanded range of services.
At the beginning of 2009, the division unveiled the new Linoleum Global 3 collection – thecore of the Flooring Systems product portfolio and the most sustainable product in thearea of elastic floor coverings. This collection, available worldwide, includes new surface
struc­t ures and designs, as well as over 50 new colors. The collection, the largest in Forbo’s
history, will enforce the global market leadership of environmentally friendly linoleum.
The slowdown in the flooring business in the second half of 2008 will influence the businessactivity in 2009. The public investment programs in core markets will determine the futurebusiness trend to a large extent. Flooring Systems will keep a close look on these developments and take additional measures should the situation deteriorate further.

creating better
environments

Flooring
Systems

Flooring
Systems
Floors create spaces and determine the use these are put to, their ambienceand comfort. The more specialized the use, the higher the demands placedon the properties of the f looring. The appropriate choice transforms abstract space into a personalized ‘living’ room. This is the art of architecture
and interior design, an art in which the use of the right materials is essential. Forbo therefore works very closely together with professionals in theseareas. In designing its product collections, Forbo designers are also inspired by nature, art and the latest design trends.

When judging new buildings and renovations, decision-makers take design
and aesthetic aspects into account but are also increasingly influenced by
two key factors: maintenance costs, i.e. the best functionality for low costs,
as well as ecological sustainability.
Forbo satisfies these high product demands with its fund of manufacturing know-how, life cycle analyses and new and innovative trends andmaterials that match the most varying needs of its customers. Environmental compatibility plays an ever more important role here. Linoleum is apure natural product that is manufactured from linseed oil, resin, woodflour, limestone, jute and ecological pigments.

18
Forbo Bonding Systems:
a demanding year

‘After the termination of the synthetic fuel tax credits at the end of
2007, which impacted on our synthetic polymers business, we were
expecting a demanding year in the United States. However, thisturned out not to be our only challenge. The economic crisis in the
US , which also effected Europe and Asia by the end of the year,
and its direct effects on the automotive and textile industries plus
other sectors that are important for us, tested us in all areas ofthe organization. In addition, the price increases for raw materials,
which continued into the fourth quarter, caused further margin
erosion. The building and construction adhesives business defied
the demand downtrend and reached a positive performance despite the tougher economic conditions.’

The Bonding Systems division generated net sales of CHF 654.6 million
in 2008. This is equivalent to a 14.3 %decrease versus the previous year,of which exchange rates accounted for
5.5 %. The activities in the US market
in particular were responsible for thisdecline, but Spain and Germany also
reported lower turnover. The divisionaccounted for 34 % of Group total net
sales. The combination of declining sales and the significant increasein raw material prices into the fourth quarter as well as value adjustments and extraordinary charges for restructuring measures toadjust the structures to the economic environment led to a sharp
drop in operating profit (EBIT ) to CHF – 5.7 million (previous year:
CHF 53.7 million).

Michel Riva
Executive Vice President
Bonding Systems

Market situation: the US is the biggest challenge
Since the United States account for about one third of the division’s sales, Bonding Systems
is particularly exposed to any economic slowdown in this region. The decline in net sales
was due in particular to the termination of tax credits for the synfuel business at the end 2007
in the synthetic polymers business. Since these products are used primarily as a raw mate­rial for the production of adhesives as well as of materials used in the construction industry,
the sales level could not be maintained, despite intensified sales initiatives.
In the wake of the economic slump in the United States, also the industrial adhesives business found it significantly more difficult to maintain its sales volume. Since customer
segments that are important for Bonding Systems such as durable consumer goods (automobiles, motor homes and furniture) were especially hard hit, a sharp drop in sales wasreported particularly towards the end of the year. Sales to the packaging and graphic arts
industries more or less matched the previous year’s level.
Sales development in Europe and Asia was generally satisfying for Bonding Systems until
October. As of November, however, the decrease was recognized strongly here too. By
contrast, the packaging industry and the entire non-woven area (applications for outdoor
and medical wear, hygienic products, etc.) continued to perform well. The automotive,
wood-processing and textile industries felt the downturn as of mid-year.
Measures and investments: new capacity responds to demand
In the past year, Bonding Systems invested in various measures to increase efficiency. One
such measure was the centralization of responsibilities for water-based adhesives in
Pirmasens, Germany. Generally speaking, structures and processes were adjusted to conform to lean manufacturing criteria, marking an important step in efforts to counteract
the declining volumes and contracting margins the division is facing.
In the industrial adhesives area, investments were made primarily in fast-growing markets
such as Russia, Vietnam and India as well as in marketing efforts in strategic segments. In
the building and construction adhesives business, the sales network in Eastern Europe was
expanded in order to ensure maximum capacity utilization of the new production plantin Russia.

19

In France and Greece, capacity for the production of thermoplastic hotmelts was expanded
in order to meet the growing demand in the packaging industry. In China, capacity forthe production of thermoplastic hotmelts was increased for applications in the wood-processing industry.
Products: innovations for the paper and packaging industries
Bonding Systems has switched over completely to adhesives formulations with ecologicalplasticizers for its products for the packaging industry. In this way, Bonding Systems supports the voluntary commitment of the paper and packaging industry to eliminate criticalplasticizers from the paper cycle.
For bottle labels, Bonding Systems has introduced new synthetic adhesives with improved
overall benefits for customers. They are less expensive, have a better yield and better
cleaning properties. In the automotive industry, new PUR hotmelts with improved formulations are reducing both investment costs and adhesives consumption for our manufacturing customers.
Business trend: construction adhesives were a bright spot
In the Bonding Systems divison the building and construction adhesives business has performed very well despite the difficult economic conditions. Growth was driven primarily by
the markets in Germany and the Benelux countries as well as by the expansion in recent
years of the local production in Russia for the Eastern European markets.
The industrial adhesives business performed well in Europe and Asia until the beginning of
the fourth quarter and showed signs of weakness in the last months of the year. Expansion
especially in Russia, Vietnam and India enabled these markets to make a larger contribution
to sales, albeit still at a low level. However, seen on a global scale for the entire year, sales
trended downwards.
In the synthetic polymers business, the entire year was characterized by a struggle for market
shares owing to the termination of the synfuel business and overcapacity. The businesscould not reach the previous year’s sales level despite gaining new customers for various applications.
Outlook: structures will be adapted to the changed economic conditions
Since the world economy is not expected to recover during the 2009 business year, Bonding
Systems will further adapt its structures to the changed environment. Measures to boost
efficiency and cut costs have been introduced in recent months. The synthetic polymer business, but also the US and European markets in the industrial adhesives business will continue to face major challenges. As things stand now, the industrial adhesives business in Asia
will probably be rather flat on the whole. Altough sales of the building and construction
adhesives have held up well until now, Bonding Systems believes that they will be flat in 2009
owing to the deepening recession.
Raw material prices currently show a declining trend which could lead to a normalization of
the margin situation. Nevertheless, 2009 will be a difficult business year. However, Bonding
Systems is confident that it can contribute to positive earnings thanks to new products it haslaunched, an increased key account customer support as well as a tight cost management.

creating lasting­c onnections

Bonding
Systems

Flooring
Systems
Adhesives are an age-old human invention that have developed into complex systems. Nowadays, adhesive systems are present everywhere, unseen,in everyday life. They provide stability and comfort to sports shoes; they
impart stability to furniture and water-tightness to textiles; they join pages
together to make a book; they ensure reliable and durable bonds for wooden elements in bridges and prefabricated houses; they bond tiles to thewall; they fix flooring; they join diverse materials in vehicle interiors; they
ensure odor-free packaging; and they help the packaging remain stable.
Synthetic polymer emulsions are raw materials that are used in the adhesives, varnish, paint and construction industries.

Forbo is a long-standing business partner of many manufacturers withwhom it works together to improve the quality of existing products anddevelop new ones. The worldwide success of Forbo adhesives is based on
the technological sophistication of the processes and products and thelongevity of the adhesive systems. Dynamic and globally operating cus­
tomers depend on a partner that has a global reach, many years of knowhow, understands what customers need and works together with themto develop new approaches and solutions. The wide range of applications
is the result of intensive research and development and is the basis ofForbo’s technology leadership.

24
Forbo Movement Systems:
market presence in the US strengthened‘Movement Systems got off to a good start in 2008. The expansion
undertaken in the previous year delivered a positive contribution
to performance. As of mid-year, signs of a growth slowdown madethemselves felt in some markets. Performance was good until the
beginning of the fourth quarter, when sales suddenly slumped, atrend that by year-end had spread from the United States to Europe
and Asia. The acquisition of Transtex Belting helped to balanceout the general downturn in demand to some extent. This acqui­sition strengthens our market presence in the United States, opens
up new and additional customer potential in Europe and Asia.’

The Movement Systems division
generated net sales of CHF 371.2 million
in the year under review. This isequivalent to an overall slight decreaseof 1.3 % versus the previous year.
The acquisition of Transtex Belting
contributed with 3.1 % to sales,
whereas exchange rates had a strong
negative effect of 5.6 %. However, in local currencies sales growth
was at 4.3 %. Certain markets such as Scandinavia, Eastern Europe
and Italy performed very well. Sales in other markets such as the UK
and Spain were down in comparison with the previous year. The
division’s share of Group total net sales was 19 %. Operating profit(EBIT ) came to CHF 24.6 million (previous year: CHF 28.0 million).
Various factors such as higher raw material prices, margin pressureand exchange rate developments impacted negatively on the
result.

Matthias P. Huenerwadel
Executive Vice President
Movement Systems

Market situation: sales trend firm until fall 2008
The gratifying sales and earnings trend in 2007 continued until the end of the third quarterof 2008. As of October, sales declined significantly, which wiped out a good part of thegains made in the first nine months of the year. All the major markets important for Movement Systems were affected by this fourth quarter trend. United States, Western Europe,
Japan and China, too, lost momentum, even though the US business began to flatten out asearly as the summer of 2008.
Orders that were part of larger projects remained at the previous year’s level. Foremost
among these are the airports in Helsinki, Fuerteventura, Seoul and Sochi, the Russian site of
the Winter Olympics in 2014, which are all being equipped with Siegling belts. The divisionalso supplied major orders to the international courier service companies like FedEx, DHL andUPS .
Measures and investments: substantial strengthening of market presence in US
Movement Systems further strengthened its market presence in the US by acquiring Transtex
Belting, the lightweight PVC conveyor belting activities of Fenner Dunlop, in July 2008.
The expanded product range features rip and tear-resistant lightweight PVC conveyor belts
which are used primarily for special applications in logistics, agriculture and the foodprocessing industry. In addition, Movement Systems has signed a distribution agreementwith Fenner Dunlop, giving it access to the lightweight rubber belting products manu­
factured by Fenner Dunlop. For Movement Systems, this marks a further step towards becoming a total belting solutions provider.
A fabrication and logistics center for the Asia Pacific region was opened in Shanghai. Since
December 2008, this center has been providing manufacturing services such as cutting
and finishing power transmission and conveyor belts for the markets and customers in thisregion. The Shanghai center also warehouses the belting material manufactured in Europe
and the US and then distributes it to the Movement Systems companies as well as distribution partners in Asia Pacific.

25

The strategic expansion of sales activities in markets where the division is still under­r epresented was supported by selective, small-scale acquisitions made in 2007 in Denmark,Italy and the Czech Republic.
Products: innovation for the food and packaging industries
In the year under review a large number of product innovations were launched that are ofgreat significance for certain customer segments. For the food and packaging industries,
a belt-edge seal was developed and launched. This seal prevents contamination of the belts
by sealing the edges against bacteria, oils and fats. The technology is new being used also
for single-layer belts, which was not previously possible with traditional methods.
The Propipe products of the Italian acquisition made in 2007 have been further developed
and have caught on with customers. These products are offered in two specialized lines: asa feeder belt for wide-belt sanders, planing and brushing machines or as a haul-off belt
for conveying cables, extruded profiles, steel cables, tubes and hoses.
Business trend: stable growth in the segments food-processing and logistics
After the successful strategic reorganization in 2007, the expansion in certain under­r epresented geographic markets in 2008 as well as diverse product innovations for various
customers segments, Movement Systems is today well positioned.
Despite the unfriendly economic environment, the food-processing industry made a positive
contribution to sales volume over the entire year under review. This confirms the successof the innovations in this area. Sales to the logistics industry were also stable, owing to thedivision’s involvement in a number of major projects. As a direct result of the current downturn, the industrial manufacturing segment and treadmill belts for fitness studios showed adecline in turnover.
Outlook: quality, innovation and service focus are paying off
The past two years have been a preparatory phase for further growth. The focal point in2009 is the implementation of the measures already initiated to increase efficiency andoptimize costs so as to counteract the impact of the economic downturn on the division.
At present, it is difficult to make any forecast about general market trends. However, Forbo
expects markets to remain weak, and this will affect net sales of Movement Systems in 2009.
Despite the difficult circumstances, Movement Systems is sticking to its strategy and isbanking on its strong roots in the markets and its long-standing cooperation with equipment manufacturers and end customers in all relevant markets and segments.

Siegling – bestin belting

Movement
Systems

Global markets today require maximum mobility and f lexibility in allareas of business. Though not always visible, Forbo is present almost everywhere, ensuring optimum process reliability.
High-quality conveyor and processing belts in the food industry ensurethat fresh products are processed efficiently and under hygienic conditions.
Treadmill belts in fitness centers keep sports enthusiasts on the move.
Conveyor belts and f lat belts are key components in paper manufacturing
and processing machines. They are crucial for printing daily newspapers,
magazines and journals. Conveyor belts provide smooth baggage handlingat airports and an efficient flow in the distribution of letters and packages
in logistics centers with state-of-the-art equipment. Forbo’s timing belts

are very widely used as a component in modern drive and handling­t ech­nology and are synonymous with cost-effectiveness, precision andrelia­b ility.
As markets become more global, industry needs innovative concepts for
production, material flows and logistics, in which conveyor, processing andflat belts often play a crucial role. Leading industrial companies the world
over therefore depend on the know-how of Movement Systems as a professional partner in developing sector-specific, forward-looking solutions
for drives, transport and manufacturing.

30
Group StructureThis E. Schneider
Delegate of the Board of Directors and CEO

Tom
KaiserMichelRiva

Matthias P.
Huenerwadel

Jörg
RiboniDanielKeist

Flooring Systems

Bonding Systems

Movement Systems

Corporate FinanceCorporate Center

Sales and Marketing

North America

Americas

Controlling

Mergers & Acquisitions

Treasury

Human Resources

Tax

Pensions

IT

Switzerland

Pensions

Communications

international

Legal Services

Investor Relations

Internal Audit

Supply Chain

Europe 1

EuropeManagement
Services

Europe 2

Asia | Pacific

Buildingand ­Construction­A dhesives

Asia | Pacific31
Executive BoardTom

MichelMatthias P.

This E.

Jörg

DanielKaiserRiva

Huenerwadel

Schneider

RiboniKeist

Flooring Systems

Bonding Systems

Movement Systems Delegate of the

Corporate FinanceCorporate Center

Board of Directors
and CEO

32
Executive Board

This E. Schneider
Delegate of the Board of Directors and CEO
This E. Schneider, born 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 CEO of the 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 wasDelegate and Vice President of the Board of Directors of Selecta Group. This
E. Schneider has been Delegate of the Board of Directors and CEO of the ForboGroup since March 2004. In addition, he is a member of the Board of Directorsof Galenica SA and Selecta AG .

Tom Kaiser
Executive Vice President Flooring Systems
Tom Kaiser, born 1956, is a German citizen. He completed his commercial apprenticeship in wholesale and export sales at Stahlwerke Süwestfalen in 1978. In
1992, he completed the International Executive Program INSEAD, Fontainebleau.
From 1979 to 1988 he worked for Krupp Handel GmbH in North and SouthAmerica as well as in other locations. From 1988 to 1998 he held various man­agement positions with Vaillant GmbH. In 1998, he joined the Wolf Groupas ­M anaging Director. In March 2004, Tom Kaiser was appointed Executive Vice
President Flooring Systems and member of the Executive Board of Forbo.

Michel Riva
Executive Vice President Bonding Systems
Michel Riva, born 1964, is a Swiss citizen. He studied economics at the Universityof Applied Sciences Basel and the IMD Lausanne, where he completed his MBA .
From 1989 to 1994 he held various positions in finance at Hoffmann-La Roche.
Subsequently, he headed Strapex Corporation, Charlotte, NC , USA . From 1998
to 2004, he held various Managing Director positions for the chemical company
DuPont, latterly as Business Director Europe, Middle East and Africa for the DuPont
Powder Coatings business unit. In October 2004, Michel Riva was appointed
Executive Vice President Bonding Systems and member of the Executive Board of
Forbo.

33

Matthias P. Huenerwadel
Executive Vice President Movement Systems
Matthias P. Huenerwadel, born 1968, is a Swiss citizen. He studied engineering at
the Federal Institute of Technology, specializing in manufacturing technologies
and technology management. He began his professional career as assistant to the
Executive Board of Franke Holding AG . In 1997, he moved to the USA , where he
was responsible for logistics, information technology and customer service with
Federal Home Products, Ruston, LA . From 1999, he held various managerial positions for Franke Foodservice Systems and managed its European operations from2002 to 2005. Matthias P. Huenerwadel assumed management of the Movement
Systems division in October 2005 and is a member of the Executive Boardof Forbo.

Jörg Riboni
Chief Financial Officer, Executive Vice President
Jörg Riboni, born 1957, is a Swiss citizen. He studied economics at the Universityof St. Gallen (lic. oec. HSG) and is a Swiss certified public accountant. After various
positions in the auditing and consultancy sector, Jörg Riboni joined the Cosa
Liebermann Group where he was Head of Controlling and Finances for the European Division. In 1995, he was appointed Chief Financial Officer of Jelmoli AG ,which was sold at the end of 1996. From 1997 to December 2005, he was Chief
Financial Officer of Sarna Kunststoff Holding AG in Sarnen. Jörg Riboni joined
the Forbo Group in January 2006. He is a member of the Executive Board andChief Financial Officer.

Daniel Keist
Head Corporate Center, Executive Vice President
Daniel Keist, born 1957, is a Swiss citizen. He studied economics at the Universityof St. Gallen (lic. oec. HSG) and joined UBS in Zurich in 1984, where he wasManaging Director and Co-Head of the Corporate Finance Equity Advisory unit.
From 1998 to 2001 he was a member of the Executive Committee and CFO of
the Selecta Group. He was then a partner at Ernst & Young Corporate Finance in
Zurich until 2003, where he was responsible for various M & A, restructuring
and financing transactions. Until the summer of 2007, he was a member of the
Executive Committee of SIX Swiss Exchange and headed the Admissions division.
Daniel Keist has been a member of the Executive Board since August 2007 as
Head Corporate Center.

34

Division: Flooring Systems, Netherlands
Operational Area: Production and Warehouse

35
Corporate GovernanceAt Forbo, the concept of corporate governance encompasses theentire set of principles and rules on organization, conduct andtransparency designed to protect shareholders’ interests. Forbo’s
aim is to strike a careful balance between management and control. The central rules are contained in the Articles of Association,
the Organizational Regulations, and the regulations of the com­mittees of the Board of Directors. The following information is set
out in line with the Directive on Information relating to Corporate
Governance (Corporate Governance Directive ‘ DCG’ ) and therelevant 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 Swisslaw. The holding company holds all companies, directly or indirectly, that belong to the
Forbo Group. The operational structure of the Group is shown in the organizational chart on
page 30. The scope of consolidation of Forbo Holding Ltd does not include any listedcompanies. The unlisted companies within the scope of consolidation of Forbo Holding Ltd
are listed under 'Group companies' starting on page 110 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 companies to the Group’s businesses can also
be found in this list.
Significant changes and developments in 2008
On September 30, 2008, Forbo Holding Ltd completed the takeover of Bonar Floors, theflooring division of the UK company Low & Bonar PLC , which had been announced at
the end of July 2008. The eleven Bonar Floors companies were acquired by Forbo Holding
Ltd and its subsidiaries Forbo Participations SAS , Forbo Beteiligungen GmbH and Forbo
NL Holding B.V.
Significant shareholders
As of December 31, 2008, 1,905 shareholders were listed in the share register of Forbo
Holding Ltd, or 19 (1 %) fewer than in the previous year. At December 31, 2008, Forbo
Holding Ltd knew of the following significant shareholders with a holding of more than
3 %:31.12.2008

Michael Pieper1)

in (%)
31.45

Forbo Holding AG2)

17.78

This E. Schneider
Tweedy, Browne Company LLC

5.24
3.00 – 5.00

1) Michael Pieper holds his stake directly and indirectly through Artemis Beteiligungen I AG2) 1st trading line: 9.93 %; 2nd trading line 7.86 %The disclosure of significant shareholders and significant groups of shareholders is effectedin accordance with Article 20 of the Federal Stock Exchange and Securities Trading Act(SESTA) and the provisions of the Ordinance of the Federal Banking Commission (FBC Ordinance) on stock exchanges and securities trading. According to reports received by Forbo
Holding Ltd, in 2008 the following significant shareholders or shareholder groups haveexceeded or fallen below the thresholds set out in Article 20 SESTA and the FBC Ordinance:

36

Tweedy, Browne Company LLC reported on January 16, 2008, that it had fallen below thethreshold of 5 % and now held 122,873 registered shares, corresponding to 4.53 % of thevoting rights. The beneficiaries of these shares are the various funds of the asset manager
Tweedy, Browne Company LLC . Tweedy, Browne Fund Inc., one of these funds, reported
on January 16, 2008, that it held a total of 82,113 registered shares, corresponding to 3.03 %of the voting rights. Tweedy, Browne Fund Inc. then reported on September 23, 2008,
that it had fallen below the threshold of 3 %, while Tweedy, Browne Company LLC still held
over 3 % of the voting rights of Forbo Holding Ltd.
Focus Capital Investors, LLC , New York, reported on January 17, 2008, that it had exceeded
the 10 % threshold (new 10.71 %). On February 22, 2008, it reported that its holding had
fallen below the threshold of 5 % (new 3.51 %) and on February 27, 2008, it reported that its
holding had fallen below 3 %.
Deutsche Bank AG reported several changes in the composition of the shareholders’ groupon January 17, 2008, and on February 1, 2008. According to the latest report, the corporategroup consists of Deutsche Bank AG , Frankfurt am Main (D), and Deutsche Bank Securities
Inc., New York (USA). The group holds its stake directly and indirectly through Deutsche Bank
AG , Frankfurt am Main (D), Taunus Corporation, Wilmington (USA), and DB U.S. Financial Markets Holding Corporation, Wilmington (USA). On February 25 and 26, 2008, Deutsche Bank AG
announced that it held 167,663 (and 156,445) registered shares, corresponding to 6.18 %(and 5.766 %) of the voting rights, plus 82,856,379 (and 37,896,309) convertible and purchaserights for 386,765 (and 161,970) registered shares, corresponding to 14.255 % (and 5.97 %)of the voting rights. Finally, on March 25, 2008, the group reported that its holding had
fallen below the 3 % threshold for both purchase and selling positions.
Artemis Beteiligungen I AG , through which Michael Pieper indirectly holds part of his stakein Forbo Holding Ltd, reported on February 11, 2008, that Michael Pieper and Artemis
Beteiligungen I AG held 814,894 registered shares of Forbo Holding Ltd directly and indirectly as per December 1, 2007, corresponding to 30.035 % of the voting rights.
Gartmore Investment Limited reported on February 27, 2008, that it had exceeded the 5 %threshold (new 8.382 %). On June 30, 2008, it reported that its holding had fallen below thethreshold of 3 %.
Goldman Sachs Group Inc. reported on February 29, 2008, that its holding had fallen below
the 3 % threshold as per December 1, 2007, and that it held its interest through Goldman
Sachs International, London (UK ), Goldman Sachs Asset Management, Wilmington (USA), andGoldman Sachs Asset Management International, London (UK ). It also reported, first, thatit had exceeded the 5 % threshold as per February 20, 2008 (new 5.05 %); second, that it had
written convertible and purchase rights for 136,082 registered shares of Forbo Holding Ltd,
corresponding to 5.02 % of the voting rights; and, third, that the group now consisted ofGoldman Sachs International, London (UK ), and Goldman Sachs Asset Management, Wilmington (USA). Lastly, it reported on February 29, 2008, that it had fallen below the 3 % thresholdfor both purchase and selling positions as per February 27, 2008.
Forbo Holding Ltd reported on July 2, 2008, that, as a result of acquiring its own shares
via the second trading line, it had exceeded the threshold of 10 % as per June 26, 2008, andthe threshold of 15 % as per July 1, 2008, and that, directly or indirectly, via Forbo International SA , Baar (CH), and Forbo Finanz AG , Baar (CH), it held 425,665 registered shares, corresponding to 15.689 % of the voting rights. In addition, the Forbo Group has granted (written)
25,256 convertible and purchase rights for 26,256 registered shares of Forbo Holding Ltd,
corresponding to 0.968 % of the voting rights.

37

For further information on significant shareholders or shareholder groups, we refer thereader to page 35 (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, 2008, Forbo Holding Ltd had a fully paid up share capital of CHF
10,852,608, which was divided into 2,713,152 listed registered shares, each with a par valueof CHF 4. Of this amount:– 61.94 % were registered in the name of 1,859 shareholders with voting rights– 26.81 % were shares of banks and SIS (SegaInterSettle AG) pending registration of transfer– 11.25 % were registered in the share register without voting rights
The shares of Forbo Holding Ltd (security number 000354151 / ISIN CH 0003541510) are listedon SIX Swiss Exchange. No different categories of shares exist; each share entitles theshareholder to one vote. Further information on the Forbo share can be found on pages 56
and 57. Further information on the rights of participation associated with the share canbe found on page 53.
At the Ordinary General Meeting of Shareholders of Forbo Holding Ltd of April 25, 2008, theBoard of Directors was authorized to buy back the company’s own shares up to a maximumof 10 % of the share capital over a period of three years through a second trading line withthe purpose to extinguish them at a later stage. By December 31, 2008, Forbo Holding Ltd
had repurchased 213,152 shares (7.856 % of the voting rights) via the second trading line.
Conditional and authorized capital
Pursuant to §6 of the Articles of Association, Forbo Holding Ltd has a maximum conditional
capital of CHF 665,800, corresponding to 166,450 registered shares to be paid up in full witha par value of CHF 4 each. The capital increase takes place in accordance with the Articles
of Association through the exercise of option and convertible rights which are granted inconnection with bonds issued by the company or one of its subsidiaries or through the exercise of option rights which are granted to the shareholders. Except for shareholder options,shareholders have no right of subscription. Holders of option or convertible rights areentitled to subscribe to new share issues. The registration of the new shares is subject to thegeneral restriction set out in §4 of the Articles of Association, which stipulates that shareholders are entered in the share register with voting rights only if they declare expressly thatthey have acquired the shares in their own name and for their own account.
There is no authorized capital.

38

Changes in capital
The Ordinary General Meeting of Forbo Holding Ltd on April 25, 2008 decided, based on
the audit report of an accredited expert auditor, to reduce the ordinary share capital of thecompany by CHF 27,131,520 from CHF 37,984,128 to CHF 10,852,608 by reducing the parvalue of the shares from CHF 14 to CHF 4. It was further decided to pay out the difference of
CHF 10 per share to the shareholders and to amend the Articles of Association accordingly.
The Ordinary General Meeting of Forbo Holding Ltd on April 27, 2007 decided, based on
the special audit report of a specially qualified auditor, to reduce the ordinary share capital of
the company by CHF 16,278,912 from CHF 54,263,040 to CHF 37,984,128 by reducing the parvalue of the shares from CHF 20 to CHF 14. It was further decided to pay out the difference of
CHF 6 per share to the shareholders and to amend the Articles of Association accordingly.
The share capital of Forbo Holding Ltd did not change in 2006.
Participation certificates and 'Genussscheine' (non-voting equity securities)
Forbo Holding Ltd has 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 Boardof Directors may only refuse registering in the share register if the acquirer of the stock does
not expressly declare at the company’s request that he has acquired the shares in his own
name and for his own account.
Pursuant to §4 of the Articles of Association, nominees may be entered in the share registerwith voting rights for up to a maximum of 0.3 % of the registered share capital enteredin the Commercial Register. Over and above this limit, nominees are only entered provided
the name, address and shareholding of those persons are disclosed for whose accountthe nominee holds a total of 0.3 % or more of the registered share capital entered in the Commercial Register.
Resolutions on the amendment or abrogation of the clause on the registration of registeredshares require a majority of two thirds of the votes represented at the General Meeting andthe absolute majority of the par value of the shares represented.
No statutory privileges exist, and, with the exception of the above-mentioned requirementof making the beneficiary known, there is no restriction on the transferability of the sharesof Forbo Holding Ltd.
Convertible bonds and warrants / options
Forbo Holding Ltd has no outstanding convertible bonds nor has it issued any marketablewarrants / options. Information on the option program available to the Executive Board canbe found on pages 50 and 51 of this Annual Report.

39

Board of Directors
Members of the Board of Directors
The cutoff date for the following information is December 31, 2008.
With the exception of This E. Schneider, Delegate of the Board of Directors and CEO, noneof the members of the Board of Directors listed below has or has had any operational
management tasks for Forbo Holding Ltd or its Group companies. With the exception ofThis 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 three business years preceding the period under review. There are no essential business relationships between the members of the Board of Directors and Forbo Holding Ltd or its Group
companies.
Dr. Albert Gnägi, Chairman
Albert Gnägi, born in 1944, is a Swiss citizen. He studied law at the Universities of Zurich
and Rome and holds a doctorate in law (Dr. iur.). He practices law in Zurich, specializingin commercial, company and inheritance law. He was Chairman of the Board of SelectaGroup from the IPO in 1997 until the takeover by the British company Compass Group inearly 2001. From 1982 to 1997, he was a member and Chairman of the Board of Directorsof Immuno International AG , a manufacturer of biological pharmaceuticals, which went
public in Zurich in 1989. Since 1980, Albert Gnägi has been a member of the Board of­Trustees of the Sanitas Hospital in Kilchberg, and its president since 2002. Since 2007 he is
Chairman of the Board of Directors of the SAM Group Holding AG in Zurich. He holds
additional board memberships in other companies and foundations. He has been Chairmanof the Board of Directors of Forbo Holding Ltd since March 2005.
Michael Pieper, Vice Chairman
Michael Pieper, born 1946, is a Swiss citizen. He took a degree in economics (lic. oec. HSG)
at the University of St. Gallen. Michael Pieper has been with the Franke Group since 1988
and its owner and CEO since 1989. He is a member of the Board of Directors of Hero AG ,advalTech Holding AG , Feintool International Holding AG and of the Supervisory Board ofThyssenKrupp Stainless AG (Germany). He was first elected to the Board of Directors ofForbo Holding Ltd in 2000.
This E. Schneider, Delegate and CEO
For the curriculum vitae of This E. Schneider, please see page 32 of this Report.
Dr. Peter AltorferPeter Altorfer, born 1953, is a Swiss citizen. He studied law at the University of Zurich andholds 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 and company law. Peter Altorfer is amember of the Board of Directors of various companies, including Huber + Suhner AG ,Herisau, agta record ag, Fehraltorf, and Abegg Holding AG , Zurich, and of several privateand foreign banks in Switzerland. He has been a member of the Board of Directors ofForbo Holding Ltd since March 2005.

Division: Movement Systems, North America
Operational Area: Production

41Elected until OGM

AFC

HRC

Board of Directors Forbo Holding Ltd
as of December 31, 2008

First elected

Dr. Rudolf Huber
Rudolf Huber, born 1955, is a Swiss citizen. He studied at the University of Zurich, where hetook his doctorate (Dr. oec. publ.). From 1987 to 1992 he led the Finance and Information
Technology departments of Bucher Guyer AG and was head of Corporate Finance at Bucher
Holding AG . In 1992, he moved to the Geberit Group, where he was a member of the
Executive Board and CFO until 2004. He currently works as an independent consultant.
Rudolf Huber is a member of the Board of Directors of several companies, including Georg
Fischer AG , Swiss Prime Site AG and Looser Holding AG . He is a part-time lecturer at the
University of Lucerne and lecturer at the University of St. Gallen. Since 2006 he has also
been President of the CFO Forum Schweiz – CFO s. He has been a member of the Board of
Directors of Forbo Holding Ltd since March 2005.

2005

2010

M

C

2000

2010

–

M

2004

2011

–

–

2005

2011

M

M

2005

2009

C

–

Chairman
Dr. Albert Gnägi
Non-executive member
Vice Chairman
Michael Pieper
Non-executive member
Members
This E. Schneider
Delegate of the Board of Directors and executive member
Dr. Peter Altorfer
Non-executive member
Dr. Rudolf Huber
Non-executive member
Secretary of the Board of Directors
Nicole Häfeli
Non-member

AFC: Audit and Finance Committee
HRC: Committee for Human Resources and Remuneration
C: Chair
M: Member42

Elections and terms of office
The members are elected by the General Meeting for a term of three years. A year is definedas the period between two Ordinary General Meetings. The first term of office after the
first election of a member of the Board of Directors is designed so that every year about one
third of all members have to be elected or re-elected. Members may be re-elected several
times. At the Ordinary General Meeting on April 25, 2008, This E. Schneider was re-elected
for a further three-year term. Dr. Peter Altorfer was re-elected for a three year-term in anelection that had been brought forward. Further details on the terms of office of the othermembers of the Board of Directors are contained in the table on page 41. In accordancewith the Organizational Regulations of Forbo Holding AG , members who have reached theage of 70 resign from the Board of Directors at the Ordinary General Meeting of the following year. The average age of the incumbent members of the Board is around 58. In determining the composition of 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.
Internal organizational structure
The allocation of tasks within the Board of Directors and the composition of the two Board
committees are shown in the table on page 41.
Decisions are as a general rule taken by the full Board of Directors. The Board constitutes
two standing committees from its own ranks – the Audit and Finance Committee (AFC) andthe Committee for Human Resources and Remuneration (HRC) – to deal with clearly defined
subject areas of overriding importance. These two committees have mainly advisory andcontrol functions. In addition, the HRC is empowered to determine the compensation paid
to members of the Executive Board. The remuneration of the Delegate of the Board of
Directors and CEO is determined by the full Board of Directors. The members of these twocommittees are elected by the Board of Directors on an annual basis and can be dismissed
at any time.
As a rule, the Chairman of the Board of the Directors chairs the meetings of the Board andthe General Meeting. He plans and conducts the meetings of the Board and the General
Meeting. The meetings of the Board and the relevant items on the agenda are prepared by
the Chairman in consultation with the CEO. The Chairman monitors the execution of themeasures adopted by the Board and is in regular contact with the CEO for this purpose. He
is the direct superior of the CEO. In addition, the Chairman, in consultation with the CEO,represents the Board vis-à-vis the public, the authorities and the shareholders.
The Vice Chairman is tasked with deputizing for the Chairman should the latter be prevented
for any reason whatever. In accordance with the Organizational Regulations and actual
practice, the Vice Chairman has no further duties.
The Delegate of the Board of Directors is also CEO and as such is responsible for the operational management of the company and for the tasks delegated to him by the Boardof Directors. The members of the Executive Board report to him for the exercise of thisfunction.
The Chairman, Vice Chairman and Delegate (CEO) are elected by the Board of Directors.

43

The Board of Directors meets on being convened by the Chairman, as often as business
requires but at least four times a year. When the Board is convened, the items on the agenda
must be notified at least five working days before the day of the meeting. This notification
period may be shortened in urgent cases. In 2008, the Board of Directors met eight times, themeetings usually lasting a whole day.
After mutual consultation, the Chairman and the CEO may invite members of the Executive
Board or other senior employees to attend Board meetings for individual items. Regularuse is made of this option. External consultants participate in the meetings of the Board of
Directors, the AFC or the HRC only in exceptional circumstances to deal with particular items.
In principle, 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 the company in the areas of financial reporting, the accounting standards
and systems used, and significant financial decisions. The AFC establishes the audit programof the Internal Auditing and selects the external auditors for the attention of the Ordinary
General Meeting and proposes the external auditors to the General Meeting respectively.
The CEO, CFO, and Head Corporate Center are regularly requested to attend meetings in anadvisory 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 2008
business year, two meetings were held, each lasting about half a day.
Committee for Human Resources and Remuneration
The Committee for Human Resources and Remuneration (HRC) advises the Board of Directors in respect of its human resources duties on behalf of the Group, in particular as regards
the Board itself and senior management personnel. The HRC prepares human resources
policy proposals for the attention of the Board of Directors regarding the selection of themembers of the Board and of the CEO, and it assesses and approves the proposals of the
CEO regarding the employment of the Executive Board members. It prepares recommendations for the Board of Directors regarding the remuneration of the Board, the Chairman,
the Committee members and the CEO. The CEO is regularly involved in an advisory capacity.
Agenda items and matters affecting the function or the person of the CEO are deliberated
in his absence.
The HRC convenes as often as business requires. In 2008, two meetings were convened, eachlasting about half a day.

Division: Bonding Systems, China
Operational Area: Warehouse and Logistics

45

Areas of responsibility
The Board of Directors bears ultimate responsibility for the management of Forbo Holding
Ltd. The main duties of the Board are the following non-transferable and indefeasible tasks
pursuant to the Swiss Code of Obligations and the Articles of Association:– ultimate management of the company and issuing the necessary directives– defining the organization– organization of financial controlling, auditing and financial planning– appointment and dismissal of persons entrusted with management of the company– p reparation of the Annual Report and of the General Meeting and implementation of
its resolutions– notification of the court in the event of overindebtedness
The Board of Directors bears ultimate responsibility for supervising and monitoring man­a­g ement 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 , HRC , ad hoc committees or individual members, depending on the subject, forreview or an opinion. With the exception of its non-transferable and indefeasible tasks, theBoard of Directors may transfer tasks and responsibilities in full or in part to individual
members of the Board or to non-Board members.
The Board of Directors is empowered to take decisions on all matters which are not reservedor transferred to the General Meeting or another body of Forbo by law, the Articles of
Association or regulations.
Management of the company has been delegated entirely to the CEO. Accordingly, the CEO
is responsible for the operational management of the company.
In carrying out his tasks, the CEO is supported by the members of the Executive Board, whoreport to him directly. The Executive Board comprises the CEO, CFO, Head Corporate Center,and the Executive Vice Presidents of the three divisions. It is responsible for the long-term
success and market-driven management of the Forbo Group. This involves preparing thebases for decision-making for the Board of Directors regarding:– corporate strategy, corporate targets, business policy, medium-term plans and budgets– corporate organization– organization of financial planning, auditing and financial controlling– financing and treasury principles– human resources and compensation policy
The members of the Executive Board are responsible for their particular area of activity andalso bear responsibility for safeguarding the interests of the company and the Group result.

46

Information and control instruments vis-à-vis management
The Executive Board meets as often as business requires, normally once a month. In the2008 business year, twelve meetings were held, each lasting between half a day and a fullday.
At the meetings of the Board of Directors, any member may request information about
all matters concerning the Forbo Group. Outside the meetings, such requests for information are to be addressed to the Chairman. The CEO and the other members of the Executive Board inform the Board of Directors at each regular meeting about the current stateof business, important business events and significant deviations from the budget.
The Chairmen of the AFC and HRC report at the Board meetings on the activities of theircommittees and express their opinions and recommendations 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 and HRC meetings. The Executive Board reports to the AFC throughthe CFO in consultation with the CEO; it reports to the HRC through the CEO.
The Board is also regularly briefed outside meetings about events and challenges facing
the Group and the general performance of the businesses. In addition, the Chairman, Vice
Chairman and CEO are in continuous contact when essential business policy issues are
involved. For important, particularly urgent events, the CEO informs the Chairman and theother members of the Board immediately.
The Delegate of the Board, who is at the same time 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 internalorganization, the AFC and the HRC on pages 42 and 43 of this report.
The Board of Directors furthermore fulfils supervisory and monitoring obligations as regards
financial reporting and its role in the planning cycle. The internal and external auditors
also assist the Board in this task.
As part of financial reporting, the Board of Directors is informed as a rule once a month inwriting about the company’s current business performance and earnings situation by meansof annotated income statements, key ratios and deviation analyses.
The Board of Directors is, moreover, involved in the company’s planning cycle. In the firsthalf of the year, the existing strategy is subjected to a thorough review by the Board. The
revised strategy is quantified in the three-year medium-term plan, which is approved at midyear by the Board. 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 thedetailed budget, which is approved and adopted by the Board of Directors in the fourth
quarter.

47

The current business year is assessed in an initial appraisal at the end of April and in a second
appraisal at the end of September. On completion of the business year, the extent to which
the budget has been reached is checked and deviations are analyzed. This analysis is used
to derive appropriate measures, which are then implemented in the next planning cycle.
Internal Auditing is administratively subordinated to the Head Corporate Center and isfunctionally independent. It reports to the AFC . Since March 2008, internal audits are nolonger carried out with internal resources but are effected by Ernst & Young, which has
been commissioned for this purpose.
The audits are conducted in accordance with an annual plan approved by the AFC . The
following types of audit are distinguished: full scope audits, limited reviews, follow-up
reviews, compliance audits und special engagements.
The risks and weaknesses identified in these audits are, where necessary, minimized oreliminated by measures adopted by management and are constantly monitored.
Prior to the transfer of Internal Auditing to Ernst & Young, the internal audit department
had two auditors. In 2008 a total of eight full scope audits and one special engagement wereconducted. The full scope audits were limited to individual business processes. Internal
Auditing included in its review of audited Group companies any issues that had been defined in the framework of the internal control system (ICS). Internal audits, furthermore,
involve various compliance reviews that focus on these processes. Lastly, additional risks
and controls in connection with the above-mentioned business processes are analyzed
in the audit. In each division at least one Group company was audited in the course of thefull scope audits.
In compliance with Article 728a Swiss Code of Obligations, which came into force on
January 1, 2008, the internal audit department and external consultants provided local management of various Group companies with support in introducing a uniform internal
control system (ICS). As part of the introduction of the ICS , the key control mechanisms invarious business processes were documented and adjusted or completed where necessary.
The necessary adjustments were made by local management on the basis of an action
plan. By means of walk-through tests, the implementation and reliability of the controls
were examined through random testing.

Division: Bonding Systems, France
Operational Area: Quality Control / Research and Development

49

Risk management
The ongoing and systematic evaluation of current and future risks invariably involves
identifying and capitalizing on opportunities. Forbo regards risk management as a managerial and working tool designed to safeguard the tangible and intangible assets of thecompany.
Forbo has a risk-based insurance coverage in line with industry practice and has insured
in particular operational risks such as property damage, business interruption, and statutory
liability. The risks specifically in the areas of property damage, business interruption andstatutory liability are examined in the context of periodic risk engineering reports by 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 the risks identified. These risk engineering reports have been
prepared since 1990.
As regards business risks, Forbo addresses both strategic risks and market and financial
risks. In the area of market risks, interest and currency risks are monitored centrally andhedged in certain cases (see pages 105 until 109 of the financial report). The liquidity andfinancing of subsidiaries are also monitored centrally.
With respect to the risk management process introduced at the beginning of 2008 in con­nection with Article 663b, section 12, Swiss Code of Obligations, which came into force on
January 1, 2008, please refer to the comments on page 105 of the financial report; note 33'risk assessment and financial risk management '.
Executive Board
Members of the Executive Board, activities and vested interests
The members of the Executive Board, their nationality, function, training and professional
career as well as other activities and vested interests are set out on page 32 and 33 of thisreport.
Management contracts
Forbo Holding Ltd has concluded no management contracts with third parties.
Compensations, shareholdings and loans
Content and method of determining the compensation and the shareholding programs
Board of Directors
The amount of compensation paid to the Board of Directors is worked out by the HRC inthe spring for the current year and submitted to the full Board of Directors at its April
meeting for approval. In order to determine the remuneration, the compensation paid to
Board members of Forbo Holding Ltd is compared with that paid to Board members ofcomparable industrial companies based on information that is available from publicly
accessible sources or is known to Board members from their experience of office in similar
companies. No external consultants are co-opted for determining the remuneration.

50

The members of the Board of Directors receive a fixed remuneration, the amount of whichis gradated according to whether the member is Chairman or a simple member of the Board
and whether he is a member of the AFC or HRC . 40 % of the consideration is distributed to
the Board of Directors as Forbo stock. These shares have a vesting period of three years. The
shares are valued by taking the average price in the ten stock market days after distributionof a dividend or repayment of par value. If no dividend is distributed or no repayment of parvalue is made, the average price during the first ten stock market days in June of the relevantbusiness year applies. Payment or the distribution of the shares takes place in December.
The amount of the remuneration for each Board member in the year under review, alongwith the details of the valuation of the shares, can be found on page 124 of the financial
report.
Executive Board
The amount of the fixed remuneration and the target bonus for the Executive Board is set
by the HRC in the fall for the following year; members of the Executive Board are excluded
from the deliberations. In order to determine the remuneration, the compensation paid to
Forbo Executive Board members is compared with that paid to Executive Board members
in comparable industrial companies based on information that is available from publicly
accessible sources or is known to the members from their experience of office in similar
companies. No external consultants are co-opted for determining the remuneration.
The compensation of the members of the Executive Board consists of a fixed base salaryplus a performance-dependent bonus, which is determined in March, on completion of thebusiness year, on the basis of individual and company target achievement.
The variable (performance-related) component is tied to financial (quantitative) and qualitative targets which are defined in accordance with the operational responsibility of the
Executive Board member in question. The qualitative targets are geared to the company’s
long-term sustainable development and may account for between 15 % and 40 % of thetotal variable component; the remaining portion of the variable component depends on theachievement of the financial (quantitative) targets. Depending on the function of therespective Executive Board member, these may be Group or Division objectives and refer inparticular to net sales, EBITDA , EBIT, net working capital and net income. The variable
component may be as much as 120 % of the fixed remuneration, depending on the indi­vidual’s target achievement.
Payment of a bonus is linked with the Management Investment Plan (MIP) launched in 2006.
According to this plan, at least 50 % of the annual bonus of Executive Board members ischanneled into the MIP. 25 % of these sums in the MIP are invested in options and 75 % inshares. Shares and options are subject to a three-year vesting period; the options have amaturity of five years.

51

Of special note with regard to the MIP is the treatment of options in the event of termination of the employment contract, invalidity or retirement. If notice is given terminating theemployment contract during the vesting period, the options are repurchased; the repurchase price corresponds to 100 % of the theoretical average value of the option based on
the share value during the last 14 trading days for the share before the employment contract was terminated. In the event of invalidity or retirement (including early retirement),
the options – regardless of whether or not they are still subject to a vesting period – may besold during the entire remaining period to maturity from the moment the invalidity or
retirement begins.
As per balance-sheet date December 31, 2008, the Board of Directors and Executive Board
held the following options:

Allocation
year

Term

Vested until

Ratio

Strike pricein CHF

0

Board of Directors
Executive Board

Number2005* 3,150

15.06.2005 – 14.06.2010

14.06.2008

1:1

235.00

2006

6,294

19.04.2006 – 19.04.2011

20.04.2009

1:1

370.00

2007

5,250

15.03.2007 – 15.03.2012

15.03.2010

1:1

564.69

2008

5,446

19.03.2008 – 19.03.2013

19.03.2011

1:1

822.00* Including the options held by the Delegate of the Board of Directors and CEO.

The amount of the remuneration for the Executive Board in the year under review, alongwith the details of the valuation and distribution of the shares, can be found on pages 124
and 126 of the financial report. This compensation consists of the base salary, a performance-related bonus, private use of the company car, employer contributions to the pension
funds, AHV / ALV (old-age and unemployment insurance) and accident and company sickpayment insurance.
With the exception of the severance payment for the Delegate of the Board of Directors andCEO mentioned below, no severance payments have been agreed with Executive Board

members.
Delegate of the Board of Directors and CEO
The Delegate of the Board of Directors and CEO has a separate remuneration model which is
independent of that of the Board of Directors and Executive Board; he is also not a participant in the Management Investment Plan (MIP).
In fall 2005, it was agreed with the Delegate of the Board of Directors and CEO that part ofhis compensation for 2005 and the compensation for the following five years (from 2006 up
to and including 2010) would be paid largely in stock. In lieu of salary payments for thecontractual period of employment until December 31, 2010, he was allocated a number ofshares for the entire five-year term of the agreement (i.e. 2006 – 2010). These shares aretime-vested until December 31, 2010 and freely available only as of January 1, 2011. Should
he leave the company before this date, the shares must be returned on a pro rata basis.
Under the terms of this model, the Delegate of the Board of Directors and CEO is entitled toa severance payment amounting to a maximum of 18 monthly salaries in the event of
notice being given for which he was not at fault. This right lapses without compensation on
expiry of the vesting period on December 31, 2010.

Division: Movement Systems, North America
Operational Area: Fabrication

53

In addition to the share package, the Delegate of the Board of Directors and CEO draws anannual cash compensation, which is used for settlement of employee contributions to
the pension fund and for social insurance payments. With the share package and the cash
remuneration, all compensations such as bonuses, inflation, adjustments, options, etc.
are settled. The corresponding personnel expenditure is charged to the income statement
over the entire contractual period on a pro rata basis.
The relevant figures for this compensation model are found on page 124 in the financereport.
In December 2008, the employment contract with the Delegate of the Board of Directors
and CEO was extended to encompass the period from January 1, 2011, to April 30, 2013.
The bulk of the remuneration will again be in shares. The modalities are to a large degree
similar to the provisions of the first contract; the shares are time-vested until December 31,
2013.
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 has acquired and is holding the shares in his own name and for his 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 capital enteredin 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 theamendment or abrogation of the clause on the registration of registered shares requires
a majority of two thirds of the votes represented at the General Meeting and the absolutemajority of the par value of shares represented.
Deviating from Article 689, paragraph 2, Swiss Code of Obligations, shareholders who areunable to attend the General Meeting in person may not be represented by any third
party of their choosing. They may only be represented by a member of a corporate body ofthe company, the independent proxy or another shareholder who is registered in theshare register.
Statutory quorums
Pursuant to §13 of the Articles of Association, resolutions on the amendment or abrogationof the provisions regarding the moving of the company’s domicile, conversion of registered shares into bearer shares, registration of registered shares, representation of shares at
the General Meeting, the dissolution or merger of the company, and amendment of §13
paragraph 4 of the Articles of Association require the approval of two thirds of the votes
represented at the General Meeting and the absolute majority of the par value of theshares represented.
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 CHF 1,000,000 or 1 % of theshare 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
Pursuant to the Articles of Association, shareholders’ rights of participation and represen­tation at the General Meeting are determined by the status of the share register on the
fourth day before the General Meeting.

54

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 oran opting-out clause pursuant to Article 32 respectively 22 SESTA . However, as regards thedetermination of the minimum price, the Articles of Association deviate from Article 32,
paragraph 4 SESTA in that, in the event of a compulsory offer, the offer price must at least
correspond to the share price and may not be lower than the highest price which thebidder paid in the last twelve months for shares of the company.
Clause in changes of control
As per December 31, 2008, one member of the Executive Board is entitled to claim aseverance payment in the event that certain conditions arise due to a change in the controlling shareholder. This severance payment corresponds to one annual salary at most.
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 current
head auditor, Stefan Räbsamen, took over this function in 2002. The auditors are elected
every year by the Ordinary General Meeting.
Auditing fees
The auditing fees levied by the Group’s auditors for auditing the consolidated financial
statements, including the statutory audit of the individual financial statements of theholding company and the consolidated subsidiaries, amounted to CHF 1.6 million in theyear under review.
Additional fees
Total additional consultancy fees (e.g. for tax and legal advice, advice in connection withacquisitions, mergers and divestments), as invoiced by the auditing company, amount to
CHF 2.1 million for 2008.
Information instruments of the external auditors
The Audit and Finance Committee ( AFC) of Forbo Holding Ltd assesses and evaluates
the proposals and statements of the internal and external auditors. The AFC also obtains
additional remarks in the form of Management Letters from the internal and external
auditors and assesses the 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 AFC’s activities at the meetings of the Board of Directors
and states the opinion of the AFC on business items of decisive importance. On request,
each member of the Board of Directors may inspect the minutes of the AFC meetings. The
external auditors were not invited to any meetings of the Board of Directors in 2008 as
there were no special incidents or discoveries. However, the external auditors were present
at the meeting of the AFC on the financial statements, while the Ernst & Young represen­tatives responsible for internal auditing attended the discussion on the internal audit
reports.

55

Information policy
Investors must be able to have a clear idea of the company
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 for the company. Both the Chairman of the Board of Directors and the CEO can becontacted directly for such information.
Shareholders receive summary reports on the business year as well as half-year reports.
The Annual Report, like all other published documents, is available in printed form as well ason the Internet at www.forbo.com. The Ordinary General Meeting is an additional sourceof information. Periodic publication of media releases and the annual media and analysts’
conference are further information instruments for the capital market and the media.
Ad hoc communication
The push and pull links for the dissemination of ad hoc releases in accordance with the
Directive on Ad hoc publicity of the SIX Swiss Exchange are available at the following
addresses:
www.forbo.com � Media Center � Media Releases � Subscription Service
www.forbo.com � Medien Center � Medienmitteilungen � Subscription Service
Communications to registered shareholders are sent by ordinary mail to the addresses
stated in the share register. The company’s official publication is the Swiss Commercial
Gazette.
A financial calendar with the key dates and further information on the share can be foundon the inside cover of this report. Further information on the share is found on pages 56 and
57 of this report.
Publications may be ordered by email, 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
Jörg Riboni, CFO
Lindenstrasse 8
Postfach 1041
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
Postfach 1041
CH -6341 Baar
Phone: +41 58 787 25 25

56
The Forbo Share2008 will go down in financial and economic history as an exceptionally poor year. The
financial markets have not suffered such a rout as in 2008 since the crash of October 1929
and the Great Depression that followed on its heels.
With hindsight, it can now be seen that the main factor leading to the turmoil on the financial markets was the absence of two elements essential to smoothly functioning markets:
liquidity and confidence. As a result of the lack of liquidity, some hedge funds and otherinvestment vehicles were no longer able to obtain the necessary financing for their leverageand had to dispose of share positions, in some cases suffering very high price losses as partof a 'de-leveraging'. The Forbo share was dragged down amid the general turmoil at the endof February when a hedge fund unloaded its large Forbo shareholding, causing the priceto plunge by more than 20 % within a few days. During the rest of the first half of 2008, theForbo share underperformed the Swiss Performance Index (SPI), closing the first six-month
period some 35 % below the year-ago level. In the same period, the SPI fell by about 15 %.
The trend in the second half was shaped mainly by the events on the financial markets in
September and October. In September, a leading US investment bank, Lehman Brothers,
filed for bankruptcy – a painful proof for market players that even large financial institutions
can fail. This realization led to the money and capital markets seizing up widely. The totalcollapse of the global financial system was only prevented by the massive intervention of
governments and central banks.
By this time, the financial crisis had started spilling over into the real economy. The gloomier growth prospects were reflected in share valuations as of October 2008, and prices
for cyclical and consumer related stocks in particular began a downward plunge. But evensubcontractor companies, for instance companies such as Forbo that supply the automotive industry and capital goods sector, suffered significant price losses on their shares. The
downtrend visible throughout the year was exacerbated towards the year-end. The Forboshare closed the year at CHF 195, which is about 72 % below the year-end price in 2007,
whereas the SPI was down by about 34 % in 2008.

The Forbo share in comparison to the SPIForbo share
CHF

SPI

750

200 %

700
650

160 %

600
550

120 %

500
450

80 %

400
350

40 %

300
250

0%

200
150
Dec. 31, 2004

– 40 %
Dec. 31, 2005

Dec. 31, 2006

Dec. 31, 2007

Dec. 31, 2008

57

Share capital
Issued registered shares1)

2008
Number

2007
Number

2006
Number

2005
Number

2004
Number2,713,152

2,713,152

2,713,152

2,713,152

2,713,152

Thereof:2,230,729

2,453,379

2,577,198

2,634,849

2,633,897

Share buyback second line

213,152

-

-

-

-

Other treasury shares

247,852

238,354

114,535

56,884

57,836

Reserve shares (without dividend rights)

21,41921,41921,41921,41921,419

CHF

CHF

CHF

CHF

CHF

10,852,608

37,984,128

54,263,040

54,263,040

54,263,040

8,922,916

34,347,306

51,543,960

52,696,980

52,677,940

Shares outstanding

Issued nominal capital
Total
Thereof:
Shares outstanding
Share buyback second line

852,608

-

-

-

-

Other treasury shares

991,408

3,336,956

2,290,700

1,137,680

1,156,720

Reserve shares (without dividend rights)

85,676

299,866

428,380

428,380

428,380

Data per share

CHF

CHF

CHF

CHF

CHF

Shareholders’ equity Group2)

250

281

246

212

206

Group profit3)

6.9

44

24

– 17

– 107

Gross dividend and cash distribution

3.94)

10

6

0

0

High

0.65)

1.45)

1.25)

0

0

Low

2.1

2.2

2.1

5)

Gross dividend yield (in %)00Payout ratio6) (in %)

57

23

25

0

0

Stock market statistics

CHF

CHF

CHF

CHF

CHF

High

705

721.5

490

285

301

Low

188.4

447

291

233

155

195

700

486

285

248

Share prices7)

Year-end
Market capitalization (m)

8)

5)

5)

High

1,573

1,770

1,263

751

794

Low

420

1 097

750

614

408

Year-end

435

1,717

1,253

751

653

1)	Nominal value per share 2008: CHF 4; 2007: CHF 14; 2004 – 2006: CHF 20.
2)	Adjustment from 2004 as per IAS 19 for actuarial profits / losses.
3)	See the financial report on page 83, 'earnings per share'.
4)	Proposal of the Board of Directors to the Ordinary General Meeting.
5)	Calculated on the basis of a cash distribution in the form of a reduction in par value.
6)	Gross cash distribution as a percentage of Group profit.
7) 2004 adjusted for the capital increase.
8)	Based on shares outstanding.

59
Financial Report

Content

Forbo Group Financial Report
60

Consolidated Income Statement

61

Consolidated Balance Sheet

62

Consolidated Cash Flow Statement

63

Consolidated Statement of
Recognized Income and Expenses

64

Group Accounting Policies

77

Notes

110

Group Companies

114

Report of the Statutory Auditor

116

Consolidated Income Statements 2004 – 2008

117

Consolidated Balance Sheets 2004 – 2008
Financial Statements of Forbo Holding Ltd

119

Income Statement

120

Balance Sheet

121

Notes to the Financial Statements

128

Proposal for Appropriation of Available Earnings

129

Report of the Statutory Auditor

60
Consolidated Income Statement

2008
CHF m

2007

Note

1

Net sales
Cost of goods sold1)
Gross profit
Development costs

2

1,918.7

2,004.0– 1,325.0– 1,361.2

593.7

642.8

– 29.9– 31.6– 282.7– 296.6

Administrative costs

3– 137.9– 137.7

Other operating expenses

4– 50.0– 33.9Other operating profit

5

23.9

19.4

Marketing and distribution costs

117.1

162.4

Financial income

7

9.2

11.7

Financial expenses

8– 104.9– 19.3

21.4

154.8

Operating profit

1)

Group profit before taxes
Income taxes

9Group profit for the year

– 5.4

– 44.1

16.0

110.7

CHF

Basic earnings per share

10

6.86

43.64

Diluted earnings per share

10

6.84

43.45

1) In the period under review, sales commissions and logistics costs are shown for the first time as part of cost of goods sold(previous year: operating expenditures) and costs of sample books as operating expenditures (previous year: cost of
goods sold). To ensure comparability, the previous year’s report has been restated accordingly (effect: increase of cost of
goods sold by CHF 29.3 million; decrease of operating expenditures by CHF 29.3 million).

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

61
Consolidated Balance Sheet

31.12.2008

31.12.2007

Assets
CHF m

Note

928.7

601.7

Property, plant and equipment

11

586.3

423.7

Intangible assets

12

311.7

151.9

Deferred income tax assets

9

28.8

20.7

Employee benefit assets

23

-

3.1

Investments in associates and other non-current assets

13

1.9

2.3

Non-current assets

909.1

803.5

Inventories

14

298.3

286.3

Trade receivables

15

265.8

287.7

32.2

29.5

23.6

22.5

73.6

-

Current assets

Other receivables
Prepaid expenses and deferred charges
Marketable securities

16

Cash and cash equivalents

17

Total assets

215.6

177.5

1,837.8

1,405.2

584.4

713.1

Shareholders’ equity and liabilities
Shareholders’ equity
Share capital

21
19, 2110.9

38.0

Treasury shares

21

– 2.0

– 4.0

Reserves and retained earnings

21

Non-current liabilities

575.5

679.1

676.6

254.7

Non-current financial debt

22

512.4

194.9

Employee benefit obligations

23

58.6

-

Non-current provisions

24

37.0

42.3

Deferred income tax liabilities

9

68.6

17.5

576.8

437.4

144.5

138.1

Current liabilities
Trade payables

25

Current provisions

24

18.6

7.4

Accrued expenses

26

130.4

160.2

Current financial debt

27

181.3

24.2

25.3

29.8

Current tax liabilities

76.7

77.7

Total liabilities

1,253.4

692.1

Total shareholders’ equity and liabilities

1,837.8

1,405.2

Other current liabilities

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

62
Consolidated Cash Flow Statement

2008

2007

Group profit for the year

16.0

110.7

Tax expense

5.4

44.1

Cash flow from operating activities
CHF mGroup profit before income tax

21.4

154.8

Financial expense, net

16.5

7.6

Depreciation and impairment charges on property, plant and equipment

81.5

58.2

Amortization and impairment charges on intangible assets

7.2

1.3

Impairment on available-for-sale financial assets

79.2

-

Profit on disposal of property, plant and equipment

– 7.0

-

5.0

5.2

Income tax paid

– 37.2– 34.6(Decrease) / increase in provisions and employee benefit obligations– 12.7

1.2

Decrease in short-term debt

– 12.9– 25.6

Share-based payments

18.8

– 2.8

159.8

165.3

Acquisition of subsidiaries, net of cash acquired– 212.8– 21.9Purchase of property, plant and equipment– 55.4– 61.5

Proceeds from sale of property, plant and equipment

12.1

6.8

– 237.2

-

83.8

-

Decrease / (increase) in working capital1)
Net cash generated from operating activites
Cash flow from investing activities

Purchase of available-for-sale financial assets
Sale of available-for-sale financial assets2)
Dividends received
Net cash used in investing activities

3.4-– 406.1– 76.60.9– 98.5

Cash flow from financing activities
Increase / (decrease) in current debt
Proceeds from non-current debt

496.6

-

Repayment of debt of the acquiree to the seller– 43.0-Interest paid

– 22.4– 22.55.3

9.9– 105.6– 83.10.3

2.0Interest received
Purchase of treasury shares
Proceeds from sale of treasury shares
Reduction of par value– 22.4– 15.3

Net cash generated / (used) from financing activities

309.7– 207.5

Net increase / (decrease) in cash and cash equivalents

63.4– 118.8

Change in cash and cash equivalents

Exchange (losses) / gains on cash and cash equivalents– 25.3

2.2

Cash and cash equivalents at beginning of year

177.5

294.1

Cash and cash equivalents at end of year

215.6

177.5

1) Excluding cash and marketable securities.
2) This item includes the cash flow according to Note 32 'Related party transactions'.

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

63
Consolidated Statement of
Recognized Income and Expenses

2008

2007

Cash flow hedges

– 1.1

2.4

Net investment hedges

8.1

1.5

– 46.649.6– 79.2

-

CHF m

Note

Actuarial (loss) / profit on defined benefit plans, net
Fair value change of available-for-sale financial assets

16

Impairment on available-for-sale financial assets

16

79.2

-

Revaluation of land and buildings

11

143.3

-

3.8

-

Release of provision directly recognized in the equity
related to the revaluation of land and buildings
Currency translation difference– 129.5

1.5

Net (expense) / income recognized directly in equity (net)– 22.055.0Group profit for the year

16.0

110.7

Total recognized (expense) / income for the year

– 6.0

165.7

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

64Group Accounting Policies

Methods Underlying Accounting Policies
General information
The consolidated financial statements of Forbo Holding Ltd were prepared in accordancewith the International Financial Reporting Standards (IFRS) and in compliance with Swiss law.
They were drawn up on the basis of the audited financial statements of the subsidiaries
prepared according to uniform corporate accounting policies. The balance sheet date for all
subsidiaries is December 31. These financial statements were approved by the Board of
Directors on March 11, 2009 and released for publication on March 17, 2009. The Report issubject to approval by the Annual General Meeting on April 24, 2009.
The consolidated statements have been prepared in accordance with the principle ofhistorical purchase and manufacturing costs with the exception of securities, non-consolidated investments in associates, land and buildings, and derivative financial instruments,
which are valued at fair value. The preparation of the consolidated financial statements re­quires management to make estimates and assumptions 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 the date of the consolidated financial statements to the best of their knowledge differ from the actual circumstances, the original estimates and assumptions will be adjusted in the reporting year inwhich the circumstances have changed. The comparable data from the consolidated financial
statements of the previous year were, where necessary, restated and supplemented andthe presentation adjusted.
Scope and principles of consolidation
The scope of consolidation includes Forbo Holding Ltd and all domestic and foreign compa­nies in which the parent company holds, directly or indirectly, more than 50 percent ofvoting rights or in which it bears managerial responsibility for their operations and financial
policies. These companies are fully consolidated. Assets and liabilities as well as revenues
and expenses are fully consolidated, while intra-group balances (receivables and payables,
revenues and expenses) are eliminated upon consolidation. Minority interests in theequity and net income of consolidated companies are reported separately but as part ofGroup equity capital and profit / loss. Inter-company profits on intra-group transactions
and balances are eliminated in full. Capital consolidation is based on the purchase method.
The purchase cost of an acquired company is offset against the fair value of the net assets
acquired, assessed at the time of acquisition on the basis of uniform Group principles.
Companies acquired are consolidated from the date on which control is obtained, while companies disposed of in the course of the year are excluded from the scope of consolidation
as from the date on which control is relinquished. The subsidiaries included in the scope of
consolidation are listed under 'Group Companies'.
Joint ventures in which Forbo Holding Ltd holds, directly or indirectly, a 50 percent interest
or in which the Forbo Group exercises joint control are included in the consolidated financial
statements using the proportionate consolidation method.

65

Companies in which the Forbo Group has at least 20 percent of the voting rights but lessthan a 50 percent interest or in which it exercises a significant influence in some other way
are treated according to the equity method. Interests of less than 20 percent are stated atfair value and are carried on the balance sheet under 'Other investments'. Unrealized profits
and losses are included and reported in 'Reserves and retained earnings'. In the event ofdivestment or impairment, the related accumulated profit or loss is transferred to the income
statement.
In the year under review, the scope of consolidation was increased by the acquisition of Bonar
Floors (UK ), the flooring business division of Low & Bonar PLC . In addition, the lightweight
PVC conveyor belt operations of Fenner Dunlop (Charlotte) Inc., Transtex Belting, were acquired as an asset deal.
Foreign currency translation
The individual companies generally prepare their financial statements in the local currency.
The local currency (functional currency) as a rule corresponds to the currency of the primaryeconomic environment in which the company operates. Transactions in foreign currencies
are translated at the current rate at the time of the transaction. Exchange gains and losses
from transactions in foreign currencies and from adjustment of foreign currency balances on
the balance sheet date are taken to the income statement.
The consolidated financial statements are prepared and presented in Swiss francs. Unlessotherwise noted all sums are stated in millions of Swiss francs (CHF m). The annual statements of foreign Group companies stated in foreign currencies are translated into Swiss
francs as follows: balance sheet at year-end exchange rates, income statement and cash
flow statement at average exchange rates for the year under review. Currency translationdifferences arising from the different translation of balance sheets and income statements
and from equity capital transactions are offset against consolidated shareholders’ equity
and taken to the income statement in the event the company is divested. Foreign exchange
gains on certain equity-like loans, which form part of net investment in a company, arelikewise taken to shareholders’ equity provided no repayment of these loans is planned orintended in the foreseeable future.
The following exchange rates have been applied for the most important currencies
concerned:
Income statement(Average exchange rates)

2008

2007

Balance sheet(Year-end exchange rates)

2008

2007

Currency
CHF

Euro countries

EUR

1

1.59

1.65

1.50

1.66

Sweden

SEK

100

16.52

17.76

13.75

17.57

United Kingdom

GBP

1

2.00

2.40

1.57

2.27

USA

USD

1

1.08

1.20

1.07

1.14

Canada

CAD

1

1.02

1.12

0.88

1.16

Japan

JPY

100

1.05

1.02

1.19

1.01

66

Maturities
Assets are designated current assets if they are realized or consumed in the Group’s
ordinary business cycle within one year or 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 balance sheet date areassigned to current liabilities. All other obligations are assigned to non-current liabilities.
Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity anda financial liability or equity instrument of another entity. Financial instruments are generally
recognized as soon as Forbo becomes a party to the contractual regulations of the financial
instrument. In the case of regular purchases or sales (purchases or sales under a contract
whose terms require delivery of the asset within the timeframe generally established by regulation or convention in the marketplace concerned), the settlement date is relevant for
the initial recognition and derecognition. This is the day on which the asset is delivered toor by Forbo. As a general rule, financial assets and financial liabilities are offset and the
net amount presented only when the entity has a right to offset the recognized amounts
and intends to settle on a net basis.
Financial assets and liabilities are divided into the following valuation categories:– Financial assets and liabilities that are measured at fair value and recognized in income
include derivatives that form not part of a highly effective hedge relationship and othertrading instruments.
– Loans and receivables comprise financial assets with fixed or determinable payments,
which are not quoted on an active market and are not derivatives or classified as available-for-sale. Interest-free and low-interest long-term loans and receivables are recordedat actual cash value. Subsequent valuations are generally done at amortized cost, taking
account of the effective interest method.
– Held-to-maturity financial instruments consist of non-derivative financial assets with
fixed or determinable payments, and a fixed term, which the company has the ability andintent to hold until maturity, and which do not fall under any other valuation categories.
Initial valuation is done at fair value, which generally matches the nominal value. Subsequent valuations are generally done at the amortized cost, taking account of the effective
interest method.
– Available-for-sale financial instruments comprise financial assets which are not derivatives
and do not fall under any of the previously stated valuation categories. Initial valuation
is done at fair value, taking account of transaction costs directly attributable to the acquisition. Changes in the fair value are booked to equity (reserves) and are only recordedin the income statement when they are disposed of or have an impairment in value. Management regards an asset held-for-sale as impaired if its fair value falls considerably or
persistently below the acquisitions cost less any impairments previously recognized inincome.
– Financial liabilities that are not derivatives are initially valued at fair value. This normally corresponds to the amount received. Subsequent valuations are generally doneat the amortized cost, applying the effective interest method.
There were no reclassifications between the valuation categories either in 2008 or in 2007.

67

The fair value of a financial instrument is the amount that two independent parties entering
into the contract would agree to pay for this instrument. If prices are quoted on an active
market (e.g. share prices), they are used as the basis for the valuation. Otherwise, internalvaluation models are used, taking current market parameters into account.
Derivative financial instruments, which the Group uses solely to manage financial risks andnot for speculation, are recognized at their fair value the first time they are reported on
the balance sheet. The fair value of traded derivative financial instruments corresponds tothe market value, which may be positive or negative. All derivative financial instrumentswith a positive fair value are reported as 'Other receivables', and all derivative financial instruments with a negative fair value are reported as 'Other current liabilities'. If no market
value can be determined, the fair value must be calculated using recognized valuation models. In determining changes in fair values, it is decisive to know whether the hedging relationship of the derivative financial instrument is highly effective or not. If the hedging relationship is not highly effective, hedge accounting is not possible, and the fair values ofthe financial instruments are immediately recognized in the income statement. However, if
the hedging relationship is highly effective, the hedge is recognized as such. The Forbo Group
employs hedge accounting in connection with the hedging of periodic interest payments
and the repayment of the nominal amount of the US private placement. Part of the derivatives
employed are recognized as cash flow hedges in order to hedge the future cash flows fromthe US private placement against fluctuations. The effective portion of the change in market
value of the hedging instrument is recognized in equity, with no effect on the income statement, until the gain or loss on the hedged item is realized; the ineffective portion of thechange in market value of the hedging instrument is recognized in the income statement.
The cumulative changes in market value are reported in the income statement when futurefirm commitments are recognized in the income statement.
Furthermore, the Group hedges certain net investments in foreign subsidiaries with foreign
currency borrowings. All gains and losses from the currency translation of these loans arerecognized in equity and reported in the cumulative translation differences. Only if and when
the subsidiary is divested are the cumulative valuation changes of the foreign currency loans
and the valuation change of the hedged item recognized in the income statement.
Financial assets, for instance trade receivables and assets held for sale, are tested annuallyfor signs of impairment. If such signs are found, an impairment test is conducted. The realizable value of the financial assets held by the Forbo Group corresponds to the cash value ofthe expected future cash flows. The original effective interest rate is used as the discountrate. Short-term financial assets are not discounted. Any impairment loss is recognized in theincome statement.
An impairment on financial assets is generally reversed in whole or in part if the recovery of
the recoverable value can be related to an event occurring after the impairment loss wasrecognized. Reversals of impairment losses are recognized in the income statement. Reversals of impairment losses on available-for-sale financial assets are recognized directly inequity with no effect on the income statement.

68

Segment information
A segment is a discrete activity of the Group, either providing particular products and services (divisions) or offering products and services in a particular economic environment(geographic segment), where they are subject to various opportunities and risks. The primary
segmentation at Forbo consists of the three divisions Flooring Systems, Bonding Systems
und Movement Systems. It corresponds to the Group’s management structure. The geographic regions constitute the secondary segmentation.
Segment accounting is prepared to include operating profit (EBIT ). Allocation of interestand taxes to the individual divisions and Corporate does not make sense owing to the highly
centralized functions Finances and Taxes.
The divisions apply the same accounting principles as the Group. All operating activities andliabilities that can be allocated either directly or reasonably to the segments are reported
in the different divisions or geographic regions. Sales between the divisions are effected atmarket prices.
Net sales and revenue recognition
Invoices for goods and services are booked as net sales when the service is provided or whenownership is transferred. Net sales are reported without any sales or valued-added tax andafter deduction of any credits and discounts. Appropriate provisions are made for expected
warranty claims.
Research and development
All research costs are charged directly to the income statement in the period in which they
are incurred. Development costs have to be capitalized if all the recognition criteria havebeen met, the research phase can be clearly distinguished from the development phase andcosts can be clearly allocated to individual project phases without any overlap. Given the
numerous interdependencies within development projects and in view of the uncertainty as
to which products will ultimately reach the market, all development expenditures are currently charged to the income statement.
Share-based compensation
Equity-settled share-based payments to employees are valued at the fair value of the equity
instrument at the grant date. The fair value of the share options is determined by the BlackScholes model. The anticipated maturity used in the model has been adjusted on the basisof best estimates with regard to the effects of non-transferability, restrictions on exercise
and conduct. Further information on determining the fair value of the share options isprovided in note 20. The fair value determined on granting equity-settled share-based payments is charged over the vesting period to the income statement and is included inpersonnel expenditure.

69

Income taxes
Income taxes constitute the total of current and deferred income taxes.
Current income taxes are determined on the basis of profits on which taxes are to be paid
and the applicable tax laws of the individual countries. They are carried as an expense in
the accounting period in which the profits are made. The profit on which taxes are to be paid
differs from the profit or loss for the year in the income statement since it excludes expenses
and revenues which in subsequent years are never taxable or deductible from taxes. The
Group’s liability for current income taxes is calculated on the basis of applicable tax rates.
Deferred tax liabilities are recognized for temporary differences between assets and liabilities in the balance sheet and the amounts as measured for tax purposes if they result intaxable income in future. Deferred tax assets are reported for temporary differences thatwill result in deductible amounts in future periods and for tax effects from fiscally offsettable losses but only insofar as it is likely that sufficient taxable profits will be available
against which these differences can be offset. Deferred taxes are not reported if the temporary differences arise from the recognition of goodwill or from the initial recognition ofother assets or liabilities which relate to events not affecting taxable income or the profit
for the year.
Deferred tax liabilities and tax claims are measured at the tax rates that are expected to apply
in the period in which the asset will be realized or the liability will be settled based onenacted 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 are intended to be settled net or realized simultaneously.
The book value of the deferred tax claims is checked each year on the balance sheet dateand reduced if it is no longer likely that sufficient taxable profits are available to realize theclaim either wholly or in part.
Current and deferred income taxes are recognized as an income tax benefit or expensein the income statement, except for net gains or losses directly recognized in equity. In thiscase, the corresponding tax effect is also to be recognized directly in equity.
Property, plant and equipment
Land and buildings (including property mainly rented out or held for the purpose of obtaining rental income and / or of increasing the property’s value) are carried on the balance
sheet at their revaluation amount, which corresponds to the fair value at the date of revaluation less previously accumulated depreciations and impairment losses. However, therevaluations are conducted regularly, but at least every five years, by independent external
valuers to ensure that the carrying amount does not differ materially from the carrying
amounts determined on the basis of the fair value at the balance sheet date.

70

All accumulated depreciations are offset against the gross carrying amounts of the assets
at the time the revaluation model is applied for the first time. The net amount is adjusted to
the revalued amount.
An increase in the asset’s value that results from the revaluation of land and buildings iscredited to equity under the heading of revaluation reserve. This does not apply if the revaluation reserve represents a reversal of a revaluation decrease of the same asset. In thiscase, the increase is recognized as income in the amount of the impairment made previously.
A decrease in the carrying amount arising from the revaluation of property or buildings
is recognized as an expense to the extent that the decrease exceeds the amount previously
credited to the revaluation reserve relating to the same asset.
Depreciations on revalued buildings are recognized in the income statement. If the revalued
land or buildings are subsequently sold or closed, the revaluation excess attributable to
the revaluation reserve is transferred directly to reserves. There are no transfers from the revaluation reserve to reserves unless land and buildings are charged out.
Land is not depreciated.
Investments in construction for manufacturing or administrative purposes are carriedon the balance sheet at cost less recognized impairments. The depreciation of these assets
begins on the same basis as for other land and buildings, i.e. when they are ready for
operation.
Machinery and equipment and other operational assets are reported at cost less accumulated depreciations and recognized impairments.
They are depreciated so that the costs or the revaluation amount of assets (with the exception of assets under construction) are depreciated on a straight-line basis over their estimated useful life. The estimated useful life is usually 33 years for buildings used in operations
and 5 – 10 years for plant and equipment. Other operational assets are depreciated over
3 to 10 years. Where components of larger systems have different useful lives, they are depreciated as separate items. Useful lives and residual values are reviewed annually atthe balance sheet date and any necessary changes are taken into account prospectively.
Assets which are held in financial leasing arrangements are depreciated over their estimated useful life in the same way as assets belonging to the company or, if this is shorter,
over the life of the underlying leasing agreement.
The profit or loss arising from the sale or closure of property, plant or equipment is defined as the difference between the sale proceeds and the carrying amount of the asset
and is recognized in income.
Maintenance costs are capitalized if this prolongs the useful life or increases production
capacity. Maintenance and repair costs that do not increase value are charged directly tothe income statement.

71

Intangible assets and goodwill
The goodwill generated on the acquisition of a subsidiary, associate or a jointly managed
company represents the excess of the cost of an acquisition over the fair value of theGroup’s share of net identifiable assets, debts and contingent debts of the subsidiary, associate or jointly managed company at the date of acquisition. Goodwill and other intangible
assets such as acquired trademarks, similar rights and technologies are initially carried in
the balance sheet at the date of acquisition at cost. Goodwill and intangible assets with anindefinite useful life are not subject to amortization but are tested for impairment at least
annually. An impairment loss is recognized as expense in the income statement, and goodwill
is not recovered in subsequent periods. Intangible assets are capitalized and amortized ona straight-line basis over the estimated useful life, if they produce a future economic benefit.
The following useful lives are used: 20 years for trademark rights, between 5 and 25 years
for customer relations and 3 years for software.
Gains or losses on the disposal of a subsidiary, associate or jointly managed company include
the carrying amount of goodwill relating to the entity sold.
Inventories
Inventories are stated at the lower of cost and net realizable value. Cost includes direct material and, if applicable, 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
cost of inventories is assigned for the most part by using an average cost formula.
The net realizable value constitutes the estimated sales price less all estimated costs up
to completion and the costs of marketing, sales and distribution. Adjustment is made forunsaleable inventories and inventories with insufficient turnover.
Trade receivables
Current trade receivables are stated at amortized cost, which generally corresponds to nominal value. Allowances for doubtful risks are established based on the maturity structure
and identifiable solvency risks. In addition to individual allowances for specific identifiable
risks, allowances are also made on the basis of statistically determined credit risks.
Marketable securities
Securities include securities held for trading and financial assets available-for-sale. The securities held for trading are valued at their fair value, with unrealized gains and losses being
recognized in the income statement and reported in the financial result. Securities, classified as available-for-sale are valued at their fair value. Changes in the fair value are booked
to equity (reserves) and are only recorded in the income statement when they are disposedof or have an impairment in value.
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 an original maturity of up to 90 days.

72

Shareholders’ equity
Treasury shares are deducted at their par value from share capital. The acquisition costs inexcess of par value arising on the acquisition of treasury shares are deducted from reserves.
Gains or losses from the sale of treasury shares are credited to or deducted from reserves.
The reserves constitute the payments from shareholder over and above the par value. The
reserves likewise include realized gains and losses from the sale of treasury shares, the fairvalue of options from the stock option plan at the date of the grant, actuarial gains andlosses in connection with defined benefit plans, gains and losses from the translation of theannual results of subsidiaries into the corporate currency, the effects of hedging future
payment streams and net investments, and fluctuations in the fair value of securities classified as 'available-for-sale'. The profit carried forward is the Group’s reinvested profit.
Dividends are debited to equity in the period in which they are decided on.
Current and non-current financial debt
Current and non-current financial debt consists mainly of private placements, leasing debt,
and bank loans. They are stated at amortized cost (less transaction costs). Borrowing costs
are recognized in the income statement, using the effective interest method.
Financial debt is assigned to current assets, except if the Group enjoys unlimited right to postpone payment of the debt by at least twelve months after the balance sheet date.
Employee pension plans
Forbo maintains various pension plans designed as defined contribution and defined benefit plans. These pension plans are established in accordance with the local conditions ineach country. The plans are funded either by contributions to legally autonomous pension
funds / insurance plans or by recognition of the pension plan liabilities in the financial
statements of the respective companies.
For defined contribution plans, the costs incurred in the relevant period correspond to theagreed employer contributions.
For defined benefit plans, the pension liabilities are assessed annually by independent ac­tuaries according to the projected unit credit method. They correspond to the cash value ofthe 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 expenditure in the income statement. Past service costs resulting from changes in pension
plans are recognized in the income statement on a straight-line basis over the remaining average period until an active employee has a vested pension right, or they are immediately
charged to the income statement in case the employee has already retired. Profits resulting
from pension plan reductions or compensations are immediately taken to the income
statement.
Actuarial gains and losses are stated in equity with no effect on the income statement, butwith due regard to deferred taxes.

73

Provisions
Provisions are recognized if the Group has a legal or constructive obligation as a result of
past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. No provisions are made for future
operating losses. The provision is the best estimate on the balance sheet date required tomeet the current obligation, taking into account the risks and uncertainties underlying theobligation.
A provision for restructuring expenses is reported if the Group has defined a detailed, formal
restructuring plan which has created a justified expectation among those affected that the
restructuring will be carried out as a result of the plan’s implementation being initiated or essential parts being announced. In the evaluation of a restructuring provision, only direct
expenses for the restructuring are considered. Only those expenses are included, therefore,
which are caused by the restructuring and are not connected with the ongoing businessactivities of the company.
Trade payables
Trade payables are non-interest-bearing and are disclosed at nominal value.
Other current liabilities
Other current liabilities include amongst others derivative financial instruments at market
value in connection with hedging the payment streams from the US private placement.
Changes in accounting principles
In the current year, the following new and revised standards and interpretations of theInternational Accounting Standards Board (IASB) and International Financial Reporting Interpretations Committee (IFRIC) came into force:
IFRIC 11 – Group and Treasury Share Transaction applying IFRS 2IFRIC 12 – Service Concession Arrangements
IFRIC 14 – T he Limit on a Defined Benefit Asset, Minimum Funding Requirements

and their Interaction
These standards and interpretations have been applied provided they are relevant for theGroup’s business activities. The application of these standards has no significant effect on
the Group’s equity, profits or cash flows.
In its review of accounting principles, management has decided to carry land and buildingson the balance sheet in accordance with the revaluation model. Before, the company has
used the cost model. The revaluation model gives persons interested in the company’s financial statements a more transparent view of the actual value of its assets. The change in theaccounting method was applied prospectively in accordance with IAS 8 and IAS 16 for the firsttime as per July 1, 2008. Owing to the application of the revaluation method, the reported
value of land and buildings increased by CHF 184.5 million as per July 1, 2008, which is equivalent to the difference between the fair value and the net carrying amount at the balance
sheet date. In line with this, there was a net effect of CHF 143.3 million in the revaluation
reserve for land and buildings. The deferred tax effect in the balance sheet came to CHF 41.2
million. In the second half of 2008, the change resulted in an increase in depreciation of
CHF 2.0 million compared to the cost model previously used. Earnings per share were reduced by CHF 0.85 by this effect.

74Management assumptions and estimates
Critical accounting methods and assumptions
The application of the accounting principles requires that circumstances and estimates beassessed and assumptions be made with respect to the book values of assets and debts.
The estimates and the underlying assumptions are based on past experience and on factors
deemed to be relevant. The actual values may deviate from the estimates.
In the following, the main areas are indicated in which such a risk may result from the uncertainty of estimates that a significant restatement of the reported assets and debts becomes
necessary within the next business year.
Impairment of non-financial assets
Along with the regular periodic review of goodwill, the carrying amounts of fixed and intangible assets are also always reviewed if these amounts can potentially no longer be realized
due to changed circumstances or events. If such a situation occurs, the recoverable amountis determined based on expected future revenues.
This corresponds to either the expected discounted future free cash flow or expected net
sales price. If these values are less than the current carrying amount, the value is impaired to
the newly calculated figure. This impairment is recognized in expenses in the income statement. If the asset itself does not generate any independent cash flow, the impairment test
for a cash-generating unit is to be performed. As a rule, the Group defines the cash-generating units on the basis of geographically cohesive markets, i.e. generally speaking an individual country. Important assumptions in these calculations include growth rates, margins,
estimates of the future development of net current assets and discount rates. The actual
cash flows may deviate significantly from the discounted future values. Likewise, the useful
lives may be shortened or investment assets impaired in the event of a change in the useof buildings, machinery and facilities, change or abandonment of locations or lower than
expected revenues over the medium term. The book values of the capital and intangible
assets in question are shown in notes 11 and 12.
Employee pension obligations
Various employee pension plans and schemes exist for employees at Forbo. In order to measure liabilities and costs, it is first of all necessary to determine whether a plan is a defined
contribution or a defined benefit plan by applying the principle of substance over form. 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 expected return on plan assets in individual countries, and future wage trends. In their actuarial
calculations for determining employee benefit obligations, the actuaries also use statisticalinformation such as mortality tables and staff turnover rates. If these parameters change
owing to a change in the economic situation or market conditions, the subsequent results
may deviate considerably from the actuarial reports and calculations. These deviations may
have a significant medium-term effect on expenses and revenues from the employee pension schemes and on equity. The carrying amounts of the plan assets and liabilities are set
out in note 23.

75

Provisions
In the conduct of ordinary business activities, a liability of uncertain timing and / or amount
may arise. Provisions are determined using available information based on reasonably expected cash outflows. Depending on the outcome, claims against the Group may arise that
may not be covered, or covered only in part, by provisions or insurance benefits. The carrying amounts of such provisions are shown in note 24.
Income taxes
The measurement of current tax liabilities is subject to the interpretation of tax regulationsin the relevant countries. The adequateness of this interpretation is assessed by the tax
authorities in the course of the final assessment or tax audits. This may result in materialchanges to tax expense. Furthermore, in order to determine whether tax losses carriedforward can be capitalized requires a critical estimate of the probability that they can beoffset against future profits. This assessment depends on a number of different factors
and developments. An analysis of the income taxes is set out in note 9.

76Standards approved but not yet applied
The following new and revised standards and interpretations had been published, though
they had not yet become compulsory by the time the consolidated financial statements
were authorized by the Board of Directors: since their impact on the consolidated financial
statements of the Forbo Group has not yet been systematically analyzed, the anticipatedeffects shown in the notes to the table below represent an initial estimate by management.
Standard / Interpretation

Effective date

Planned application

IAS 1 (expanded) – Presentation of Financial­Statements*

January 1, 20092009 business year

IAS 23 (expanded) – Borrowing Costs*

January 1, 20092009 business year

IAS 27 (revised) – Consolidated and Separate ­Financial Statements*

July 1, 20092010 business year

IAS 28 (expanded) – Investments in Associates*

January 1, 20092009 business year

IAS 32 (revised) – Puttable Instruments and Obligations
Arising on Liquidation*

January 1, 20092009 business year

IFRS 2 (expanded) – Share-Based Payment*

January 1, 20092009 business year

IFRS 3 (revised) – Business Combinations***

July 1, 20092010 business year

and Discontinued Operations*

July 1, 20092010 business year

IFRS 8 – Operating Segments**

January 1, 20092009 business year

IFRIC 13 – Customer Loyalty Programs*

July 1, 20082009 business year

IFRS 5 (expanded) – Non-Current Assets Held-for-Sale   * No significant impact on the consolidated financial statements of the Forbo Group is expected.
  ** Mainly, additional disclosures in the consolidated financial statements of the Forbo Group are anticipated.
*** The impact on the consolidated financial statements of the Forbo Group cannot yet be determined with
sufficient certainty.

Various adjustments of the standards have been published as part of the Annual Improvement Project. Since they have only a minor influence on the financial statements, we haverefrained from listing these changes in detail.

77
Notes

1

Segment information
Forbo is a global producer of Flooring Systems, Bonding Systems and Movement Systems.
The divisions have their own management structure and are run separately because theproducts that they manufacture, distribute and sell differ in terms of production, distribution
and marketing. Flooring Systems develops, produces and sells linoleum, vinyl floorings, entrance matting systems and carpet tiles as well as the various accessory products required
for laying, processing, cleaning, and care. Bonding Systems develops, manufactures and distributes adhesives for industrial applications and the construction industry as well as synthetic polymers. Movement Systems develops, produces and sells high quality belts made ofsynthetics for use in power transmission or as conveyor and process belts. Corporate includes
the costs of the Group headquarters and certain items of income and expenses which are
not directly attributable to a specific business.
Sales between the divisions are effected at market prices. The divisions apply the same accounting principles as the Group.
The divisional results for the financial years 2008 and 2007 are:
2008
CHF m

Net sales to third parties

Flooring
Systems

Bonding
Systems

Movement
Systems

Corporate

Total

892.9

654.6

371.2

-

1,918.7

Inter-segment sales

0.7

23.2

-

– 23.9-Total net sales

893.6

677.8

371.2

– 23.91,918.7

Operating profit (EBIT)

111.6

– 5.7

24.6

– 13.4

117.1

Financial income

9.2– 104.9

Financial expenses

21.4

Group profit before taxes
Income taxes– 5.4

Group profit for the year

16.0

2007
CHF m

Net sales to third parties

Flooring
Systems

Bonding
Systems

Movement
Systems

Corporate

Total

864.4

763.7

375.9

-

2,004.0

Inter-segment sales

0.3

24.4

0.1

– 24.8-

Total net sales

864.7

788.1

376.0

– 24.82,004.0

Operating profit (EBIT)

94.9

53.7

28.0

– 14.2

162.4

Financial income

11.7

Financial expenses– 19.3

Group profit before taxes

154.8

Income taxes– 44.1

Group profit for the year

110.7

78

Additional divisional information from the income statement and balance sheet:
Depreciation, amortization and impairment charges
2008
Flooring
Systems

Bonding
Systems

Movement
Systems

Corporate

Total

Depreciation and amortization

28.6

14.8

14.3

1.8

59.5

Impairments, net

– 2.5

29.2

2.5

-

29.2

Flooring
Systems

Bonding
Systems

Movement
Systems

Corporate

Total

Depreciation and amortization

26.7

15.7

13.8

2.9

59.1

Impairments

0.4

-

-

-

0.4

Flooring
Systems

Bonding
Systems

Movement
Systems

Corporate

Total

Operating assets

779.1

403.6

290.1

43.4

1,516.2

Operating liabilities

196.1

104.3

65.3

94.0

459.7

Investments

29.4

10.5

17.1

1.0

58.0

Flooring
Systems

Bonding
Systems

Movement
Systems

Corporate

Total

Operating assets

440.2

468.5

265.6

27.3

1,201.6

Operating liabilities

193.6

118.8

65.0

78.2

455.6

Investments

25.6

21.2

13.5

1.2

61.5

CHF m

2007
CHF m

Assets, liabilities and investments
2008
CHF m

2007
CHF m

79

Geographic segments
2008
CHF m

Europe(Euro zone) Switzerland

Rest ofEuropeAmerica

Asia /
AfricaTotal

Net sales

869.4

44.6

381.9

430.1

192.7

1,918.7

Operating assets

731.1

68.1

282.4

312.5

122.1

1,516.2

Investments

36.9

2.7

12.0

3.0

3.4

58.0

Number of employees (December 31)

3,072

253

1,539

944

755

6,563

Europe(Euro zone) Switzerland

Rest ofEuropeAmerica

Asia /
Africa

Total

2007
CHF m

Net sales

876.4

48.0

383.6

508.1

187.9

2,004.0

Operating assets

619.0

117.0

168.4

217.5

79.7

1,201.6

Investments

35.6

3.1

10.5

7.1

5.2

61.5

Number of employees (December 31)

2,853

257

1,200

955

775

6,040

2

Development costs
Development costs, which mainly include product development, amounted to CHF 29.9
million (2007: CHF 31.6 million).

3

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

4

Other operating expenses'Other operating expenses' includes expenditure in connection with impairment on goodwill (see Note 12 'Intangible assets') and tangible assets (see Note 11 'Property, plant andequipment'), deferrals for bonus programs, extraordinary maintenance costs, warranties,
costs for consulting and auditing and insurance costs.

5

Other operating profit'Other operating profit' consists mainly of profits arising from the sale of two properties, insurance benefits received and the proceeds from the sale of waste.

80

6Personnel expenses

2008

2007

CHF m

Salaries and wages

387.4

387.1

Social security contributions

94.2

104.1

Total personnel expenses

481.6

491.2

At December 31, 2008, the Group had 6,563 employees (2007: 6,040). The average headcount over the year was 6,092 (2007: 5,891). Salaries and wages include share-based payments worth CHF 5.1 million.
About 120 managers participate in a bonus plan, which is linked to the achievement offinancial targets of the Group, the divisions and individually determined objectives.

7

Financial income

2008

2007

CHF m

Dividend income

3.4-Interest income1)

5.4

9.8

Gains on financial assets or liabilities at fair value through profit or loss

0.4

1.9

Total financial income

9.2

11.7

2008

2007

79.2

-

1) This consists particularly of interest income from cash and cash equivalents.

8

Financial expenses
CHF m

Impairment on available-for-sale financial assets
Loss on sale of available-for-sale financial assets

1.2-Interest expenditure from financial liabilities valued at amortized cost

23.5

21.8

Gains from derivative financial instruments used in hedging

– 2.8

– 4.0

Amortization of issuance costs for private placements

0.3

0.6

Foreign exchange losses / (gains), net

7.1– 15.1

Foreign exchange (gains) / losses from derivative financial instruments
used in hedging

– 1.3

8.6

(Gains) / losses on financial assets or liabilities at fair value throughprofit or loss

– 2.3

7.4

Total financial expenses

104.9

19.3

The item 'Impairment on available-for-sale financial assets' contains the impairment of theshareholding in Rieter Holding AG , Winterthur, reported under 'Marketable securities'. Rieter
has been particularly hard hit by the current global economic crisis, and this is reflected in
the company’s share price. Since it is not likely that Rieter’s profitability will recover any timesoon, an impairment charge of CHF 79.2 million has been recognized in financial expenses
as at year-end.

81

The impairment corresponds to the difference between the acquisition price of the shareholding and its fair value at December 31, 2008.
The average interest rate on interest-bearing debt (private placements as well as long- andshort-term bank loans) in 2008 was 4.5 % (2007: 5.6 %)9Income taxes

2008

2007

CHF m

Current income taxes

24.7

40.5

Deferred income taxes– 19.3

3.6

Total income taxes

5.4

44.1

Analysis of tax expense
The following elements explain the difference between the expected and the actual tax
expense.
2008

2007

CHF m

Group profit before taxes

21.4

154.8

Tax expense at the expected tax rate

– 2.2

– 45.2

Non-tax-deductible expenses and tax-exempt income

– 1.1

– 1.0

Recognition of tax-effective positions with no impact on income statement

22.8

-

tax assets have been recognized– 31.1– 7.5

Write-off of deferred tax assets

-

– 0.6

Tax effects of:

Tax losses and temporary differences for which no deferred

Recognition / utilization of tax losses not capitalized in prior years

8.1

7.3

Changes of applicable deferred tax rates

– 0.2

– 0.5

Prior-year and other positions
Total income taxes

– 1.7

3.4

– 5.4

– 44.1

82

Since the Group operates around the world, it is subject to income taxes in many different
tax jurisdictions. Consequently, the expected and the actual tax expense will vary from year
to year according to the origin of earnings or losses by country. The expected tax expense
is the sum of the expected, individual tax incomes / tax expenses of all foreign subsidiaries.
The expected, individual tax income / tax expense in a single country results from the multiplication of the individual profit / loss by the tax rate applicable in the country concerned.
The expected tax rate in the financial year 2008 amounted to around 10.5 % (2007: 29.2 %).
The gross value of unused tax loss carry forwards which have, or have not, been capitalized
as deferred tax assets, with their maturities, is as follows:
2008
CHF m

Not capitalized

Capitalized

Total

1 year

2.7

-

2.7

2 years

1.7

-

1.7

3 years

118.0

-

118.0

4 years

0.4

-

0.4

Expiry after:

0.5

-

0.5

304.2

86.1

390.3

427.6

86.1

513.7

Not capitalized

Capitalized

Total

1 year

2.8

-

2.8

2 years

3.1

-

3.1

3 years

3.8

-

3.8

4 years

119.5

-

119.5

5 years

3.6

-

3.6

5 years
More than 5 years
Total
2007
CHF m

Expiry after:

More than 5 years
Total

205.7

21.0

226.7

338.5

21.0

359.5

In 2008, CHF 2.7 million (2007: CHF 0 million) of unused operating tax loss carry forwards
expired.
Deferred income tax assets and liabilities are offset when they relate to the same fiscal
authority, the legal right to offset exists, and they are intended to be settled net or realized
simultaneously. The following amounts are shown in the balance sheet:
31.12.2008

31.12.2007

28.8

20.7

Deferred tax liabilities– 68.6– 17.5

Deferred tax (liabilities) / assets, net– 39.83.2

CHF m

Deferred tax assets

83

Deferred tax assets and liabilities and deferred tax charges and credits are attributed to thefollowing items:
Deferred tax assets
CHF m

At December 31, 2007

Property,plant
andInventories equipment

14.4

7.2

Provisions

Loss carryforwards

Other

Total

20.9

6.2

7.5

56.2

Increase / (decrease) deferred tax assets

– 1.7

9.1

12.7

12.5

1.8

34.4

At December 31, 2008

12.7

16.3

33.6

18.7

9.3

90.6

Property,plant
andInventories equipment

Provisions

Loss carryforwards

Deferred tax liabilities
CHF m

Other

Total

At December 31, 2007

– 2.7

– 13.9– 11.8-– 24.6– 53.0(Increase) / decrease deferred
tax liabilities– 0.2– 55.3– 0.5-– 21.4– 77.4

At December 31, 2008

– 2.9

– 69.2– 12.3-– 46.0– 130.4

Deferred tax assets / (liabilities),
net at December 31, 2007

11.7

– 6.7

9.1

6.2

– 17.1

3.2

Deferred tax assets / (liabilities),
net at December 31, 2008

9.8

– 52.921.3

18.7– 36.7– 39.8Change in deferred tax
assets / (liabilities), net

10

43.0

Of which addition to scopeof consolidation– 24.9Of which recognised in equity– 37.4

Of which recognisedin the income statement

19.3

Earnings per share
Undiluted earnings per share is calculated by dividing the net profit or loss for the year attributable to registered shareholders by the weighted average number of registered sharesissued during the year or outstanding, less the average number of treasury shares held.
Diluted earnings per share in addition takes into account the potential dilution effects which
would result if all share options in the money were exercised.

Group profit for the year (CHF m)

2008

2007

16.0

110.7

2,341,187

2,536,699

Undiluted earnings per share (CHF)

6.86

43.64

Adjustment for stock option plans

4,597

10,773

2,345,784

2,547,472

6.84

43.45

Weighted average number of outstanding shares

Weighted average number of outstanding shares used
to calculate the diluted profit / loss
Diluted earnings per share (CHF)

84

11

Property, plant and equipment
Cost or valuation
MachineryLand andandbuildings equipment

CHF m

At December 31, 2006

488.0

944.0

Other
tangible
assetsAssetsunderconstruction

Totaltangible
assets

168.4

38.7

1,639.1

Additions

9.6

12.1

4.0

34.6

60.3

Disposals– 3.0– 16.3– 9.4-– 28.7

Change in scope of consolidation

2.8

0.1

0.1

-

3.0

Transfers

7.8

37.0

2.2

– 47.3

– 0.3

2.6

4.8

3.0

– 0.2

10.2

At December 31, 2007

507.8

981.7

168.3

25.8

1,683.6

Net effects of the introduction of therevaluation model1)– 94.6---– 94.6

Exchange differences

Additions

6.7

20.9

5.0

25.4

58.0

Disposals– 4.6– 10.8– 6.7-– 22.1

Change in scope of consolidation

19.0

17.7

0.5

9.5

46.7

Transfers

5.7

20.9

0.1

– 34.3– 7.6

Exchange differences– 35.1– 126.0– 16.1– 3.0– 180.2

At December 31, 2008

404.9

904.4

151.1

23.4

1,483.8

MachineryLand andandbuildings equipment

Other
tangible
assetsAssetsunderconstruction

Totaltangible
assets

Accumulated depreciationand impairments
CHF m

At December 31, 2006
Depreciation
Impairments
Disposals

271.4

800.4

145.3

0.5

1,217.6

12.7

34.5

10.6

-

57.8

-

0.4

-

-

0.4

– 1.8

– 13.9– 8.7-– 24.4

-

-

0.4

– 0.5

– 0.1

2.0

3.8

2.8

-

8.6

At December 31, 2007

284.3

825.2

150.4

-

1,259.9

Net effects of the introduction of the revaluation
model for land and buildings– 284.3---– 284.3

8.1

34.5

7.9

0.5

51.0

Transfers
Exchange differences

Depreciation

-

21.2

-

-

21.2

– 7.7

-

-

-

– 7.7

Disposals-– 10.5– 6.3-– 16.8Transfers

-

– 2.1

– 2.4

1.3

– 3.2

Impairments
Reversal of impairments-– 107.7– 14.6– 0.3– 122.6

0.4

760.6

135.0

1.5

897.5

At December 31, 2007

223.5

156.5

17.9

25.8

423.7

At December 31, 2008

404.5

143.8

16.1

21.9

586.3

Exchange differences
At December 31, 2008
Net book value

1) The item 'Net effects of the introduction of the revaluation model for land and buildings' includes all effects arising outof the revaluation. The item at cost is made up as follows: value increase of CHF 184.5 million less the accumulated depreciations and impairments as at January 1, 2008 of CHF 284.3 million and the accumulated depreciations for the first halfof 2008 amounting to CHF 6.1 million plus the exchange rate effects in the first half of 2008 amounting to CHF 11.3 million.

85

The item 'Additions' includes the property, plant and equipment acquired from Fenner
Dunlop (Charlotte) Inc. in the amount of CHF 3.8 million (see Note 31 'Acquisition of subsidiaries'). Property, plant and equipment also includes leased assets with a net book valueof CHF 0.5 million (2007: CHF 1.1 million) as well as non-operating investment property witha fair value of CHF 3.9 million (2007: CHF 2.3 million).
The insured value of the insurance for buildings, machinery, equipment and inventories is
CHF 2,321 million (2007: CHF 2,197 million).
Maintenance and repair costs amounted to CHF 35.5 million (2007: CHF 31.6 million). The depreciation expense of CHF 57.1 million is included in the items 'Cost of goods sold', 'Development costs', 'Marketing and distribution costs', and 'Administrative costs'.
In the second half of the year, the Group examined the recoverable value of its machineryand equipment. It was found that owing to the changed economic circumstances the actual
recoverable free cash flows from the use of certain assets were significantly poorer thanoriginally planned. The review resulted in an impairment charge of CHF 21.2 million, which
was recognized in the income statement. These assets are used in the Bonding Systems
division, more specifically in production plants in the United States (CHF 20.0 million) andRussia (CHF 1.2 million). The recoverable value of the assets involved was determined on
the basis of their value in use. These impairment tests were conducted over a planning periodof five years by means of discounted free cash flows expected in future. The discount rateused to determine the value in use was 9 % per annum.
The impairments and appreciation in value are carried in the income statement under 'Other
operating expenses'.

86

12

Intangible assets
Cost
Goodwill

Trademarks /patents /Technology

Other
intangible
assets

Total

134.1

54.6

14.5

203.2

Additions

0.6

-

0.7

1.3

Disposals

– 1.6

-

– 0.4

– 2.0

Change in scope of consolidation

7.1

-

-

7.1

CHF m

At December 31, 2006

-

-

0.3

0.3

Exchange differences

– 2.6

0.1

0.3

– 2.2

At December 31, 2007

137.6

54.7

15.4

207.7

1.2

-

2.3

3.5

-

-

– 1.8

– 1.8

89.7

51.9

59.8

201.4

Transfers

Additions
Disposals
Change in scope of consolidation
Transfers

– 0.1

– 0.1

7.8

7.6

Exchange differences– 19.4– 11.4– 14.4– 45.2At December 31, 2008

209.0

95.1

69.1

373.2

Goodwill

Trademarks /patents /Technology

Other
intangible
assets

Total

10.5

33.0

10.5

54.0

Amortization

-

-

1.3

1.3

Disposals

-

-

– 0.4

– 0.4

Accumulated amortizationand impairment
CHF m

At December 31, 2006

Transfers
Exchange differences

-

-

0.1

0.1

0.4

-

0.4

0.8

10.9

33.0

11.9

55.8

Amortization

-

-

2.3

2.3

Impairment

3.7

-

1.2

4.9

Disposals

-

-

– 1.8

– 1.8

At December 31, 2007

-

-

3.1

3.1

Exchange differences

– 1.2

– 0.2

– 1.4

– 2.8

At December 31, 2008

13.4

32.8

15.3

61.5

At December 31, 2007

126.7

21.7

3.5

151.9

At December 31, 2008

195.6

62.3

53.8

311.7

Transfers

Net book value

The acquisition of Transtex Belting, the lightweight PVC conveyor belt operations of Fenner
Dunlop (Charlotte) Inc. led to a CHF 1.2 million increase in goodwill. The item 'Additions'to intangible assets includes the customer list acquired in connection with this acquisition
with a fair value of CHF 1.2 million. See Note 31 'Acquisition of subsidiaries'.
The intangible assets with an indefinite useful life are subject to an impairment test every
year on the basis of the cash-generating unit. The test is carried out using a standardized
method with discounted cash flow for calculating the value in use. The cash flows for the
first 5 years are estimated by management. Growth ranging from 0 % to 3 % is assumed
for the following years. The discount rate corresponds to the weighted cost of capital before
taxes plus an extra risk charge estimated by management and is between 8 % and 15 %.

87

The goodwill item as at January 1, 2008 includes mainly goodwill from the Swift acquisitionin 2002. The addition of goodwill under 'Change in the scope of consolidation' includes
the goodwill acquired in connection with the acquisition of Bonar Floors (see Note 31 'Acquisition of subsidiaries').
As a result of the impairment test made at the balance sheet date, it was found that the valueof the goodwill recognized in connection with the acquisition of Victa Holding and the customer list no longer exists. Impairment charges in the amount of CHF 3.7 million and CHF 1.2
million, respectively, were taken. This results from the fact that the original business plan
could not be implemented as rapidly as possible owing to the decline in demand.
The impairment test for goodwill and intangible assets (mainly technologies, trademarks
and customer relationships) of Bonar Floors, acquired during the year under review, yieldeda value in use that was significantly higher than the carrying amount. The discount rateapplied was 10 %. The value of the intangible assets were also tested by means of sensitivity
analyses.
The impairment test of the goodwill and intangible assets from the Swift acquisition in 2002
yielded a value in use which was higher than the carrying amount. The discount rate applied
was 8 %. The intangible assets items were also tested by means of sensitivity analyses. Even
if the discount rate were increased to 10 % and a defensive business plan with a permanent
yield of 1 % were applied, the value of the intangible assets would not be impaired.

13

Investments in associates
and other non-current assets

31.12.2008

31.12.2007

1.5

1.9

CHF m

Other investments

14

Other non-current assets

0.4

0.4

Total investments in associates and other non-current assets

1.9

2.3

31.12.2008

31.12.2007

87.8

74.0

Inventories
CHF m

Raw materials and supplies
Work in progress

79.2

97.5

Finished goods

161.7

144.8

Allowance for product risks– 30.4– 30.0Total inventories

298.3

286.3

The inventory allowance amounts to CHF 30.4 million (2007: CHF 30.0 million). Allowances
totaling CHF 1.6 million (2007: CHF 1.4 million) are recognized in 'Cost of goods sold' in theincome statement.

88

15

Trade receivables

31.12.2008

31.12.2007

Accounts receivable

248.9

276.6

Notes receivable

37.2

29.6

CHF m

Allowance for doubtful trade receivables– 20.3– 18.5

Total trade receivables

265.8

287.7

Trade receivables after deduction of the allowance for doubtful receivables amounting to
CHF 20.3 million (2007: CHF 18.5 million) came to CHF 265.8 million (2007: CHF 287.7 million).
As a rule, no default interest is charged for receivables past due. As regards the trade receivables for which no allowance has been made or which are past due, there is no indication,
as of the reporting date, to suggest that the debtors will not meet their payment obligations.
Allowances are made in the form of a specific allowance for losses. The need for a specificallowance arises in the event the debtor is unable to pay, the debt is more than 90 days oldor the debtor has made it known that it is encountering payment difficulties. Allowancestake sufficient account of default risks. In addition to the specific allowance, a portfolio allowance may be made. For this purpose, trade receivables for which an additional allowance
may potentially be necessary are grouped together on the basis of similar risk characteristics
and reviewed to determine an allowance. Where appropriate, such an allowance is made.
The decision whether to make a portfolio allowance in addition to a specific allowance depends on whether past loss experience supports a potential valuation allowance.
The table below shows trade receivables for which no allowance has been made on thereporting date:
31.12.2008

31.12.2007

Total trade receivables, gross

286.1

306.2

Of which not overdue

224.6

244.0

Less than 30 days

31.8

36.9

Between 31 and 90 days

14.4

14.0

Between 91 and 180 days

6.6

5.3

Between 181 and 1 year

5.8

4.0

CHF m

Of which past due in the following time frames:

2.9

2.0

Allowance for doubtful trade receivables– 20.3– 18.5

Total trade receivables

265.8

287.7

Over 1 year

89

Trade receivables at their gross value are recorded in the following currencies:
31.12.2008

31.12.2007

CHF m
CHF

0.9

3.2

EUR

165.7

183.6

GBP

20.7

11.7

JPY

18.8

16.0

SEK

8.3

13.1

USD

30.6

43.8

Other

41.1

34.8

286.1

306.2

Total trade receivables, gross

The following table shows the movements of allowances on trade receivables during thefinancial year:

CHF m

At January 1

2008

2007

– 18.5– 13.2

Additions

– 7.1

– 8.7

Release

3.8

1.3

Use

1.0

2.2

Change in scope of consolidation

– 0.9

-

Exchange differences

1.4

– 0.1

– 20.3– 18.5At December 31

The setup and release of allowances on trade receivables are contained in the item 'Marketingand distribution costs' in the income statement.
16

Marketable securities
The item 'Marketable securities' includes mainly registered shares of Rieter Holding AG ,valued at the closing price as of the last day of trading on SIX Swiss Exchange in the 2008
business year.

90

17

Cash and cash equivalents

31.12.2008

31.12.2007

CHF m

Cash
Bank accounts
Short-term deposits with credit institutions
Total cash and cash equivalents

0.3

0.2

201.8

142.0

13.5

35.3

215.6

177.5

The development of cash and cash equivalents can be found in the corporate cash flow
statement.
18

Pledged or assigned assets
There are no pledged or assigned assets.

19

Share capital
After the reduction in par value of CHF 10 from CHF 14 to CHF 4 per registered share, theshare capital of Forbo Holding Ltd stood at CHF 10,852,608 on December 31, 2008 (2007:
CHF 37,984,128) and is divided into 2,713,152 registered shares with a par value of CHF 4
each. Of these, 21,419 registered shares without voting or dividend rights are at the disposal of the Board of Directors. Consequently, 2,691,733 registered shares were eligible fordividends at December 31, 2008. The changes in shares in circulation were as follows:

Total number of shares outstanding

31.12.2008

Change31.12.2007

NumberNumberNumber2,713,152-

2,713,152

Treasury shares
Shares with dividend rights
Treasury shares

247,852

9,498

238,354

Share buyback 2008

213,152

213,152-

Shares with no dividend rights
Total number of treasury shares
Total number of shares in circulation

20

21,419-21,419482,423

222,650

259,7732,230,729– 222,650

2,453,379

Stock Option Plan
Members of the Board of Directors (until 2004) and of management were granted options aspart of the Group’s Stock Option Plan (SOP). The stock options are in recognition of past
performance and are intended as a stimulus for future performance. The grant or strike pricerelevant for the allocation of the stock options is determined by the closing price on thefifth trading day after payment of the dividend. The options issued usually have a term of
five years and a vesting period of three years.

91

With effect from March 15, 2006, the Board of Directors approved the introduction of theManagement Investment Plan (MIP). The SOP was discontinued after the introduction of the
MIP. The Board of Directors does not participate in the MIP. Within the framework of the MIP,
participants receive at least 50 % of the variable component of their compensation in theform of shares and options. The shares are issued at the average market price of the first 14
trading days in January of the current year. The options are issued on the basis of a valuation prepared by an independent bank. The valuation is based on the average market priceof the shares in the first 14 trading days in January of the current year. Equities and options are subject to a three-year vesting period. The term of the options is 5 years. The sharesand options issued within the framework of the MIP are equity-settled.
Options
The changes in the number of outstanding equity-settled options and their weighted
average strike price are as follows:
2008
Weighted
averagestrike price

Options outstanding on January 1

2007
Numberof options

Weighted
averagestrike price

Numberof options

383

19,212295

15,804

Granted

822

6,044

565

5,768

Forfeited

-

-

-

-

Exercised235– 1,050233– 2,360

Expired

-

-

-

-

499

24,206383

19,212

Options outstanding on December 31

Of the 24,206 options outstanding (2007: 19,212) 5,200 were exercisable as per December 31,
2008 (2007: 1,000). The exercise of the 1,050 options (2007: 2,360) resulted in the issue of the
1,050 Forbo Holding shares (2007: 4,720) at a weighted average issue price of CHF 235 (2007:
CHF 233). The weighted average share price on the exercise days was CHF 466 (2007: CHF 655).
The expense for equity-settled options charged to the income statement in application of
IFRS 2 amounted to CHF 0,6 million (2007: CHF 0.7 million).

92

The following table summarizes information about the options outstanding at December 31,
2008:

Series(CHF)

Number ofoutstanding
options

2004

212

1,000

0.6

1,000

2005

235

4,200

1.5

4,200

2006

370

7,194

2.3

-

2007

565

5,768

3.3

-

2008

822

6,044

4.3

-

24,2062.8

5,200

Strike price

Total

Averageremainingterm (years)

Number of
exercisable
options

In the year under review, a total of 6,044 equity-settled options (2007: 5,768) were granted
under the MIP. The fair value of these options was CHF 43.20 (2007: CHF 75.60). The options
were valued in accordance with the Black-Scholes model using the following input factors:
share price at issue date CHF 520 (2007: CHF 475), strike price CHF 822 (2007: CHF 565), volatility 27.4 % (2007: 27.4 %), expected life of the financial instrument 4.1 years (2007: 4.1 years),
dividend yield 1.5 % (2007: 1.5 %) and risk-free interest rate 2.8 % (2007: 2.6 %). The expectedvolatility is based on adjusted historical market data over a period comparable to the expected life of the options. The expected useful life applied in the calculation model has been
adapted, using the best possible estimate, to the limitation of exercise rights and to assessment of possible behavior.
SharesThe number of shares of Forbo Holding Ltd issued as part of the MIP in the year under review
was 1,283 (2007: 1,455). The share price at measurement date was CHF 520 (2007: CHF 475).
The Delegate of the Board of Directors and CEO is remunerated primarily with shares. Basedon an employment contract signed in 2005, 47,395 shares were issued in 2006 at a market
value of CHF 270 each for the entire five-year contract term (2006 - 2010). These shares are
vested until December 31, 2010. The corresponding personnel expenditure is charged tothe income statement over the entire contractual period on a pro rata basis.
In the year under review, the amount charged to the income statement in application of
IFRS 2 for shares issued came to CHF 4.5 million (2007: CHF 4.5 million).

93

21

Consolidated statement of changes in equity
2008

Net
Revalu- Cash flow investment Exchange
ation
hedge
differhedge
reserve
reserveences
reserve

Share Treasury
capitalsharesReserves

At December 31, 2007

38.0

– 4.0

821.3

-

– 5.9

– 7.7 – 128.6

713.1

Total income and expenses
recognized in equity--– 26.8

143.3

– 1.1

8.1 – 129.5– 6.0

Share-based compensation

-

0.1

4.9

-

-

-

-

Treasury shares-– 2.8 – 102.5

-

-

-

- – 105.3--– 22.4

0.4 – 258.1

584.4

CHF m

Total

5.0

Reduction in par value– 27.1

4.7

-

-

-

At December 31, 2008

10.9

– 2.0

696.9

143.3

– 7.0

Share Treasury
capitalsharesReserves

Net
Revalu- Cash flow investment Exchange
ation
hedge
differhedge
reserve
reserveences
reserve

At December 31, 2006

54.3

– 3.5

735.4

-

– 8.3

Total income and expenses
recognized in equity

-

-

160.3

-

2.4

Share-based compensation

-

0.2

5.0

-

-

-

-

5.2

Treasury shares

-

– 1.7

– 79.4----– 81.1--– 15.3– 7.7 – 128.6

713.1

2007
CHF m

Reduction in par value– 16.3

1.0

-

-

-

At December 31, 2007

38.0

– 4.0

821.3

-

– 5.9

– 9.2 – 130.1
1.5

1.5

Total

638.6
165.7

94

22

Non-current financial debt

31.12.2008

31.12.2007

CHF m

Outstanding private placements

184.7

195.2

Unamortized issuance cost

– 0.5

– 0.8

Total outstanding bonds and private placements

184.2

194.4

Bank debt

458.8

-

1.7

0.9

Less current portion– 132.3– 0.4

Total non-current financial debt

512.4

194.9

31.12.2008

31.12.2007

Lease obligations

Maturities of non-current financial debt
CHF m

After 1 year

349.0

138.7

After 2 years

110.2

0.2

After 3 years

53.7

-

After 4 years

-

56.8

-

-

Unamortized cost

– 0.5

– 0.8

Total

512.4

194.9

After 5 and more years

The following derivatives were used in connection with hedging the private placements:
Financial derivatives
Numberof contracts

Gross value
hedgedUnrealized
gain / loss

CHF m

CHF m

Derivative financial instruments at December 31, 2007

3

120.3

– 45.5Derivative financial instruments at December 31, 2008

15

132.0

– 42.2

Valued at fair value in accordance with IAS 39. The net fair value (total of all positive andnegative fair values) at December 31, 2008 was CHF 42.2 million (2007: CHF 45.5 million). It is
contained in the item 'Other current liabilities'.
The cost of private placements is amortized over the respective terms.

95

Total outstanding private placements at 31.12.2008
Term

Interest
rate

USD

122.0 2002 – 20095.79 %

USD

50.0 2002 – 20126.29 %

Company
Forbo NL Holding B.V. (guaranteed by Forbo Holding AG)

Currency

Forbo NL Holding B.V. (guaranteed by Forbo Holding AG)m

Covenants related to financial debt
The private placements (USD 172.0 million) as well as bank debt contain general covenantscustomary for such facilities. The private placements and certain bank debt also containfinancial covenants, i.e. defined maximum debt coverage (the ratio of consolidated net debt
to consolidated EBITDA may not be greater than 3 to 1), a defined minimum interest coverage (the ratio of consolidated EBITDA to consolidated net interest payable may not be lessthan 4 to 1) and a consolidated net worth test (shareholders’ equity on the consolidatedbalance sheet may not fall below CHF 535.5 million).
The private placements and part of the financing from banks include events of default
customary for such facilities. All facilities are unsecured (with the exception of guarantees
provided by Forbo Holding Ltd for obligations of its subsidiaries).
23

Employee benefit obligations
The Group has established several pension plans on the basis of the specific requirementsof the countries in which it operates. It has both defined contribution and defined benefit
plans. The obligations and assets under all the essential defined benefit plans are assessedannually by independent actuaries in accordance with the 'projected unit credit method'.
Details of the pension costs related to the major defined benefit plans are as follows:
2008

2007

CHF m

Current service cost, net

12.4

14.4

Interest costs on employment benefit obligations

35.2

37.3

Expected return on plan assets– 37.9– 38.3Curtailment loss

– 0.2

– 1.2

Net periodic pension cost

9.5

12.2

The actual expense from plan assets came to CHF 59.1 million (2007: revenue of CHF 11.7
million).

96

The movements in liabilities under the defined benefit plans are as follows:
2008

2007

734.9

807.2

Total pension costs, gross

17.2

19.9

Interest costs on employment benefit obligations

35.2

37.3

Benefits paid

– 35.3– 34.4

Actuarial gains– 23.6– 91.6

CHF m

At January 1

1.1

6.3

Plan curtailments and compensations– 33.2– 5.1

Exchange difference– 121.2– 4.7

At December 31

575.1

734.9

2008

2007

750.5

761.4

Expected return on plan assets

37.9

38.3

Employer contributions

16.6

14.0

Inclusion of new pension plans

The movements of plan assets at fair value are as follows:

CHF m

At January 1

4.8

5.5

Actuarial losses– 96.9– 26.6

Benefits paid

– 35.3– 34.4-

3.4

Plan curtailments and compensations– 33.0– 4.0

Exchange differences– 128.1– 7.1

At December 31

516.5

750.5

Employee contributions

Inclusion of new pension plans

The present values of pension liabilities and fair value of plan assets at year-end were as
follows:
31.12.2008

31.12.2007 31.12.2006 31.12.2005

CHF m

Present value of defined benefit obligation

575.1

734.9

807.2

789.6

Fair value of plan assets– 516.5– 750.5– 761.4– 688.5

58.6– 15.6

45.8

101.1

-

12.5

-

-

58.6

– 3.1

45.8

101.1

Net liabilities / (assets)
Net assets not recognized in the balance sheet
Net liabilities / (assets) recognizedin the balance sheet

97

2008

2007

2006

2005

Actuarial gains

0.6

0.3

15.5

26.2

Percentage of plan obligation

0%

0%

2.0 %

3.7 %

Actuarial (losses) / gains– 96.9– 26.66.6

55.3

Percentage of plan assets– 12.9 %– 3.5 %

1.0 %

9.3 %

Experience adjustments
CHF m

Arising on the plan obligations

Arising on the plan assets

In 2005, actuarial gains and losses and adjustments in light of past experience, which areused for valuing assets and liabilities, were recognized in the balance sheet for the first time
under pension liabilities and charged directly to equity.
Most of the pension plans are financed in whole or in part via outsourced funds. Pension obligations amounting to CHF 38.7 million (2007: CHF 35.8 million) of a total of CHF 575.1
million (2007: CHF 734.9 million) are not financed via a fund.
The movements in the net liabilities recognized in the balance sheet are as follows:

CHF m(Net asset) / liabilities at January 1
Total pension expenses included in personnel expenses

2008

2007

– 3.1

45.8

9.5

12.2

Employer contributions– 16.6– 14.0

Actuarial losses / (gains)

61.4– 52.5

Inclusion of new pension plans

1.1

2.9

Translation differences
Net liabilities / (assets) at December 31

6.3

2.5

58.6

– 3.1

98

The gains and losses charged to shareholders’ equity are as follows:
2008

2007

Actuarial gains at January 1

67.4

15.6

Actuarial losses / (gains) in the current period– 61.4

52.5

Exchange differences

– 6.6

– 0.7

Total actuarial gains at December 31

– 0.6

67.4

Cumulative recognized gains and losses
CHF m

The actuarial gain in 2008 is made of losses of CHF 93.6 million (2007: CHF 26,3 million)
due to experience adjustments and a gain of CHF 23.0 million (2007: CHF 91.3 million) due
to changes in assumptions.
The principal actuarial assumptions used for accounting purposes were as follows (expressed
as weighted averages):
2008

2007

%
Discount rate

5.9

5.3

Expected return on plan assets

5.0

5.0

Future salary increases

3.0

2.8

The expected return on plan assets is derived from long-term government bonds in the respective currency zones.
The weighted average distribution of the plan assets as at December 31, 2008 and 2007 isshown below by investment category:
2008

2007

%
Shares23.0

28.0

Fixed-interest bonds

76.0

68.0

Real estate

1.0

1.0

-

3.0

100.0

100.0

Cash and other investments
Total

The pension plans do not hold any Forbo shares.
Future contributions to defined benefit plans are estimated in the following year on thebasis of the period under review.
The expense for the contributions to defined contribution plans, which is included in personnel expenses, amounted to CHF 5.4 million in 2008 (2007: CHF 5.4 million).

99

24

Provisions
EnvironWarranty
mentalprovisions provisions

CHF m

Provisions
for
Other
legal Personnel
claims provisions provisions

Total
2008

Total
2007

6.8

6.2

18.7

1.2

16.8

49.7

41.7

-

-

-

-

-

-

8.6

At January 1

6.8

6.2

18.7

1.2

16.8

49.7

50.3

Additions

3.1

0.3

2.5

8.6

6.5

21.0

9.1

Used during the year

– 2.9

-

– 1.0

– 0.4

– 2.2

– 6.5

– 8.0

At January 1
Reclassification1)

Reversed during the year

– 1.4

– 5.1

– 0.1

-

– 3.3

– 9.9

– 2.1

Change in scope of consolidation

1.4

-

-

2.3

-

3.7

-

Exchange differences

– 1.2

– 0.9

– 0.3

– 0.2

0.2

– 2.4

0.4
49.7

At December 31

5.8

0.5

19.8

11.5

18.0

55.6

thereof current provisions

3.9

-

0.2

7.8

6.7

18.6

7.4

thereof non-current provisions

1.9

0.5

19.6

3.7

11.3

37.0

42.3

1) C
 urrent provisions in the amount of CHF 8.6 million from the previous year were reclassified from the item 'Current
provisions and accrued expenses'. Of this amount, CHF 1.2 million was used in 2007. In the year under review the current
provisions are part of the schedule of provisions. The previous year has been adjusted accordingly.

Warranty provisions are made in connection with the sale of products and are based on pastexperience. Experience shows that cash outflows are spread evenly over the warranty period of 5 to 10 years. The environmental provisions cover the anticipated remediation costs
related to operations in previous years. The provisions for legal claims relate mainly to
product liability claims in which the Group is involved in the course of its normal conduct ofbusiness.

25

Trade payables

31.12.2008

31.12.2007

141.4

132.2

3.1

5.9

144.5

138.1

31.12.2008

31.12.2007

65.8

64.9

CHF m

Accounts payable
Notes payable
Total trade payables

26

Accrued expenses
CHF m

Accrued expenses for compensation and benefits to employees
Other accrued expenses
Total accrued expenses1)

64.6

95.3

130.4

160.2

1) Current provisions in the amount of CHF 7.4 million from the previous year were reclassified from the item 'Current­provisions and accrued expenses' to the item 'Provisions'.

100

Accrued expenses for compensation and benefits to employees mainly include holidays andovertime accruals as well as bonus provisions. Other accrued expenses include accrued
volume rebates, commissions, premiums, interest and accrued warranty costs, and similar
items.

27

Current financial debt

31.12.2008

31.12.2007

CHF m

Current bank loans and overdrafts

49.0

23.8

Current portion of non-current debt

132.3

0.4

Total current financial debt

181.3

24.2

Regarding covenants please refer to Note 22 'Non-current financial debt'.

28

Commitments and contingent liabilities

31.12.2008

31.12.2007

0.5

0.9

CHF m

Commitments and contingent liabilities

Contingent liabilities relate to sureties and guarantees in favor of third parties.

29

Leasing
Operational leasing

CHF m

Leasing obligation up to 1 year

2008
9.7

2007
10.4

Leasing obligation 2 – 5 years

18.0

16.1

Leasing obligations of more than 5 years

4.1

0.6

31.8

27.1

Total

The expense for operational leasing charged to the 2008 income statement came to
CHF 28.7 million in 2008 (2007: CHF 25.5 million). The Group has no significant operational
leasing contracts. The liability from financial leasing stood at CHF 1.7 million at year-end(2007: CHF 0.9 million) and is included in 'Non-current financial debt'.

101

30

Additional information on financial instruments
The financial instruments held on the balance sheet date can be allocated to the following
categories:
31.12.2008
CHF m

Derivatives
Financial asused sets availablefor hedging
for-saleCash and cash
equivalents

Loans andreceivables

-

297.9

-

215.6

-

-

-

-

-

-

73.3

AssetsTrade receivables and other receivables
Cash and cash equivalents
Marketable securities
Financial derivatives
Total

-

-

-

1.7

-

215.6

297.9

1.7

73.3

Financialliabilities atamortized
costs

Derivatives
usedfor hedging

Financial
instruments
heldfor trading

693.2

-

-

CHF m

Liabilities
Interest-yielding debt

-

35.1

8.8

Trade payables and other payables1)

168.6

-

-

Total

861.8

35.1

8.8

Financial derivatives

31.12.2007
CHF m

Derivatives
Financial asused sets availablefor hedging
for-saleCash and cash
equivalents

Loans andreceivables

-

317.2

-

-

177.5

-

-

-

AssetsTrade receivables and other receivables
Cash and cash equivalents
Financial derivatives
Total

CHF m

-

-

-

-

177.5

317.2

-

-

Financialliabilities atamortized
costs

Derivatives
usedfor hedging

Financial
instruments
heldfor trading

Liabilities
Interest-yielding debt

219.1

-

-

Financial derivatives

-

34.1

11.7

Trade payables and other payables1)

170.3

-

-

Total

389.4

34.1

11.7

1) Excluding sales tax

102

31

Acquisition of subsidiaries
On July 11, 2008, the Group acquired Transtex Belting, the lightweight PVC conveyor belt
operations of Fenner Dunlop (Charlotte) Inc. The acquired activities were integrated in
Forbo Siegling LLC , Huntersville, USA , and are reported as part of the Movement Systems
division.
On September 30, 2008, the Group acquired the Bonar Floors division of Low & Bonar PLC ,a company listed on the London Stock Exchange. Bonar Floors is a leading European manu­facturer of floorings for the commercial segment. By broadening the division’s productportfolio, the acquisition has strengthened the position of Flooring Systems as a system supplier of elastic floorcoverings for the commercial market.
Bonar Floors Transtex Belting

Total

CHF m
Total purchase consideration,
including transaction costs

222.0

11.1

233.1

Fair value of net assets– 132.3– 9.9– 142.3

89.7

1.2

90.9

Goodwill

The goodwill stems from the anticipated synergies which can be generated from the existing
Flooring Systems and Movement Systems divisions. Bonar Floors products are distributedin the same markets as those in which Forbo Flooring Systems operates. The product portfolio of Bonar Floors is an ideal addition to the Forbo offering of linoleum and vinyl floorings. The acquisition of Bonar Floors has significantly strengthened the market position of
Flooring Systems as a provider of floorcoverings for the commercial segment. With theacquisition of Transtex Belting products, Movement Systems strengthens its position in the
US market.

103

The provisional fair values of the identifiable assets and liabilities and the corresponding
carrying amounts at the date of acquisition are as follows:
Bonar Floors

Transtex Belting

as of 30.09.2008

as of 11.07.2008

Total

Fair value

Aquiree’s
carrying
amountFair value

Aquiree’s
carrying
amountProperty, plant and equipment (Note 11)

46.7

40.6

3.8

3.4

Intangible assets (Note 12)

111.7

38.4

1.2

-

Inventories

42.3

41.9

4.9

4.9

Trade receivables

36.5

36.5

-

-

Cash and cash equivalents

20.3

20.3

-

-

CHF m

2.6

2.6

-

-

Deferred tax liabilities– 37.8

– 6.9

-

-

Trade payables– 25.8– 25.8--Provisions (Note 24)

– 3.7

– 3.7

-

-

Other liabilities– 60.5– 60.5--

Fair value of net assets acquired

132.3

83.4

9.9

8.3

Purchase consideration settled in cash

– 219.3– 10.5– 229.8

Directly attributable transaction costs

– 2.7

– 0.6

– 3.3

Cash and cash equivalents in subsidiaries acquired

20.3

-

20.3

– 201.7– 11.1– 212.8

Other assets

Cash outflow on acquisition, net

Since the date of acquisition, Bonar Floors has made a positive contribution of CHF 2,1
million to net income. Had the acquisition taken place as per January 1, 2008, Group sales
would have been CHF 179 million higher and the net income attributable to shareholders
would have been CHF 17 million higher. Since the date of acquisition, the negative contribution (loss) of Transtex Belting to net income has been CHF 0.3 million. Had the acquisition
taken place as per January 1, 2008, Group sales would have been CHF 9 million higher andthe net income attributable to shareholders would have been CHF 0.3 million lower.

104

32

Related party transactions
Executive
Board

CHF m
Remuneration

Membersof the Board of Directors

Total

Total

2008
2.2

2007
2.0

2008
0.8

2007
0.7

2008
3.0

2007
2.7

Employer contributions
to the pension scheme

0.4

0.3

0.2

0.2

0.6

0.5

Other long-term benefits

-

-

-

-

-

-

Termination benefits

-

-

-

-

-

-

Share-based payments

2.0

2.0

2.8

2.8

4.8

4.8

Total

4.6

4.3

3.8

3.7

8.4

8.0

In order to ensure comparability with the information provided in connection with thetransparency law (see Note 18 'Disclosure of compensation to the Board of Directors andExecutive Board as per Article 663b bis and Article 663c CO ' in the financial statementsof Forbo Holding Ltd), compensation to the Delegate of the Board of Directors and CEO of
CHF 3.1 million (2007: CHF 3.1 million) is reported in the compensation to the Board of
Directors.
The compensation to the Executive Board in 2008 consists mainly of the gross base salary,
private use of the company car and social insurance payments made by the company.
Employer contributions to the pension fund are reported separately. Share-based compen­
sation to the Executive Board comprises mainly the estimated result-driven variable
component as part of the MIP (see Note 20 'Stock option plans') for the 2008 business year
(payable in spring 2009).
The compensation to the Board of Directors amounts to CHF 0.5 million (2007: CHF 0.5 million)
for the Delegate of the Board of Directors and CEO. This comprises annual amounts of
CHF 0.15 million (2007: CHF 0.15 million) for payment of employee contributions to the pension fund and social insurances and of CHF 0.32 million (2007: CHF 0.35 million) for private
use of the company car, employer contributions to the pension fund and – a new element– employer contributions to AHV / ALV (old-age and unemployment insurance) plus accident and daily benefits insurance. Employer contributions to the pension fund are reported
separately. The short-term compensation for non-executive Board members of Forbo
Holding Ltd amounts to CHF 0.5 million (2007: CHF 0.4 million). The share-based compensation to the Board of Directors includes the annual portion of the Forbo shares allocatedto the Delegate of the Board of Directors and CEO amounting to CHF 2.6 million (2007:
CHF 2.6 million) and the 599 Forbo shares allocated to the non-executive Board members in2008 (2007: 349 shares) at a market value of CHF 0.3 million (2007: CHF 0.2 million).
In December 2008, the employment contract with the Delegate of the Board of Directors
and CEO was extended to encompass the period from January 1, 2011 to April 30, 2013. The
bulk of the remuneration will again be in shares. The modalities are to a large extent thesame as the provisions of the first contract. The 29,775 shares are vested until December 31,
2013.

105

In an off-exchange transaction, Artemis Beteiligungen IV AG , Hergiswil, an investmentcompany controlled by Michael Pieper, acquired 221,600 Rieter registered shares (sec. no.
367 144) from Forbo International SA , Baar on July 25, 2008 at a price of CHF 350 per share.
The closing price of Rieter registered shares on July 25, 2008 was CHF 336.25. According to
the purchase agreement, the payment of the purchase price of CHF 77.6 million had to
be made no later than December 22, 2008, and interest of 3.45 % per annum was to be paidon the purchase price for the period between July 25, 2008 and the date of payment.
The purchase price was paid in full and on time on December 21, 2008. The interest fromthe deferred payment was CHF 1.1 million and is recognized in the income statement.
The average-weighted acquisition price for each Rieter registered share was CHF 347.80.
In 2008, the Forbo Group, which holds 33 1/3 % of Enia Carpet Group, bought products worth
CHF 3.8 million (2007: CHF 3.7 million) from Enia Carpet Group.

33

Risk assessment and financial risk management
The tasks of the Board of Directors include identifying risks, determining suitable measuresand implementing these measures or having them implemented. The Board of Directorsof Forbo Holding Ltd conducted a Group-wide risk assessment in the year under review andalso determined the risks to be managed at particular management levels. The Board of
Directors is closely involved in assessing strategic risks and through dialogue with the Executive Board ensures that operating risks are given due attention and reported accordingly.
This approach gives the Board a complete overview of the key risks and measures. With thisoverview, the Group is able to prioritize and allocate the necessary resources.
Financial risk management
In its financial operations, the Forbo Group uses derivative and non-derivative financial instruments in order to control the risks and opportunities arising from fluctuations in exchange rates and interest rates. The various risks involved in existing assets and liabilities aswell as planned and anticipated transactions are assessed and monitored centrally – with
due regard to the Group’s consolidated risk exposure. In adherence to the Group’s financial
risk management policy (established on the basis of written guidelines and policies), Corporate Treasury continuously monitors both the risk exposure and the effectiveness of thehedging instruments and issues recommendations with regard to partial or complete
hedging of existing risks.
The Group’s financial risk management policy does not permit the use of derivative financial
instruments for speculation. Derivative financial transactions are concluded only with firstclass banking institutions in order to manage the counterparty risk. The creditworthiness ofthese institutions is assessed on the basis of evaluations by leading rating agencies.
At Forbo, 'derivative instruments' are related to management either of currency risks or ofinterest rate risks (or a combination of both).
Management of currency risks
Risks arising from short-term currency exposure created by purchases and sales of goods
and services (transaction risks) are identified, and selective hedging strategies are im­plemented in line with an ongoing assessment of exchange rate movements. The Group
only uses foreign exchange forward and option contracts with maturities of up to twelve
months.

106

Furthermore, risks associated with the translation of assets and liabilities denominated inforeign currencies (translation risks) are managed by establishing an appropriate financing
policy, including net investment hedges.
The following table shows the sensitivity of profit before tax and of equity to changes inthe exchange rate of the US dollar and euro against the Swiss franc.
2008
CHF m
EUR / CHF

USD / CHF

EUR / USD

GBP / CHF

GBP / EUR

Change inexchange rate

Impact on profit
before tax

Impact on equity

5%

– 0.7

– 4.2

–5%

0.7

4.2

5%

0.3

7.9

–5%

– 0.3

– 7.9

5%

0.8

-

–5%

– 0.8

-

5%

0.2

2.2

–5%

– 0.2

– 2.2

5%

– 0.2

1.7

–5%

0.2

– 1.7

Change inexchange rate

Impact on profit
before tax

Impact on equity

5%

– 1.0

– 5.7

–5%

1.0

5.7

2007
CHF m
EUR / CHF

USD / CHF

EUR / USD

5%

0.1

7.8

–5%

– 0.1

– 7.8

5%

0.5

-

–5%

– 0.5

-

107

Management of interest rate risks
Interest-rate risks arise from the fact that the market value of interest-bearing assets andliabilities is subject to fluctuations in interest rates. Since these risks may have a negative
effect on net financial profit and equity, the Group uses derivative financial instruments tomanage them. The table below shows the sensitivity of profit before tax and of equity to
the stated changes in interest rates for liquidity, interest-bearing debt and financial derivatives.
An average figure has been used for liquidity since the final amount is not significant
for calculating interest rate sensitivity. The average was arrived at by taking the arithmetic
mean of the initial and final amounts.
2008
CHF m
EUR

USD

CHF

Change ininterest rate

Impact on profit
before tax

50 bp

1.1

0.1

– 50 bp

– 1.1

– 0.1

50 bp

-

– 0.6

– 50 bp-

0.6

Impact on equity

50 bp

2.0

0.2

– 50 bp

– 2.0

– 0.2

Change ininterest rate

Impact on profit
before tax

Impact on equity

50 bp

0.7

0.3

– 50 bp

– 0.7

– 0.3

2007
CHF m
EUR

USD

CHF

50 bp

– 0.1

– 0.9

– 50 bp

0.1

0.9

50 bp

0.2

0.6

– 50 bp

– 0.2

– 0.6

108

Management of liquidity risksGroup companies need sufficient cash in order to meet their obligations. Individual com­panies are responsible for the management of their own cash surpluses and the raising offunds to cover their liquidity needs subject to guidance by the Group. In certain cases,
approval must be obtained from Corporate Treasury. The Group maintains sufficient cash
reserves to meet its liquidity requirements at all times. At present, the Group regards aliquidity stock of CHF 110.0 million as sufficient to meet its payment obligations at all times.
The maturity structure of the existing financial liabilities can be seen in the following table.
They correspond to contractually agreed maturities and represent nominal payment outflows. Since IFRS 7 demands the presentation of cash outflows, potential cash inflows, forinstance from derivative financial instruments, are not shown.
31.12.2008

Remainingterm
to maturity
up to 1 year

Remainingterm
to maturity
1 – 2 years

Remainingterm
to maturity
2 – 5 years

Remainingterm
to maturity
over 5 years

Liabilities to credit institutions

57.0

349.4

110.1

-

Interest-free liabilities

168.6

-

-

-

Liabilities from leasing contracts

1.3

0.3

0.1

-

Liability from private placement

142.1

3.4

60.0

-

Derivative financial liabilities

183.2

-

-

-

Remainingterm
to maturity
up to 1 year

Remainingterm
to maturity
1 – 2 years

Remainingterm
to maturity
2 – 5 years

Remainingterm
to maturity
over 5 years

Liabilities to credit institutions

23.9

-

-

-

Interest-free liabilities

CHF m

31.12.2007
CHF m

170.2

-

-

0.1

Liabilities from leasing contracts

0.4

0.3

0.2

-

Liability from private placement

11.6

149.1

67.1

-

Derivative financial liabilities

31.6

173.9

-

-

Management of credit risks
Credit risks arise from the possibility that customers may not be able to meet their agreed
obligations. To manage this risk, the financial creditworthiness of the various customers isconstantly assessed. Credit risks are diversified by the company’s widespread customer basein various business segments and geographic regions. With regard to the counterparty risk
exposure to financial institutions, Group-wide directives stipulate that financial investments
and other financial transactions are to be made only with first-class banks. Given the credit
ratings of Forbo’s counterparties, the Group does not expect any of them to fail to meet their
obligations.

109

Capital management
For the Group, capital management means managing its consolidated equity position. Thisconsists of paid-up share capital, the capital reserve, the treasury shares and profit reserves. The objectives of capital management are to ensure that the Group remains a going
concern, to preserve its financial flexibility for investments and to achieve a risk-adjusted
return on equity for investors.
If economic conditions change, capital management may require adjustments to the Group’s
equity structure. These adjustments take the form of dividend distributions, capital repayments and capital increases as well as share buybacks.
In connection with the US private placement and certain bank facilities, there is a covenant
which defines the minimum amount of consolidated equity, i.e. CHF 535.5 million.

34

Events after the balance sheet date
There are no events after the balance sheet date to report.

110

AUD

1,400,000

100 %

S

Wetherill Park, NSW

AUD

6,000,000

100 %Forbo-Contel Handelsges.m.b.H.

ViennaEUR

73,000100 %Forbo Siegling Austria Ges.m.b.H.

ViennaEUR

330,000

100 %Bonar Floors GmbH

ViennaEUR

35,000100 %Currency Share capital

Holding /Services

Wetherill Park, NSW

RegisteredofficeMovement
Systems

Flooring
Systems

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

Company

Bonding
Systems

Equityinterest

Group Companies(December 31, 2008)

Australia
D

S

AustriaD

S
SS

Belgium
Forbo Adhesives België BVBA

DendermondeEUR

61,000100 %Forbo Flooring N.V.

Dilbeek

EUR

250,000

100 %S

Forbo Pisos Ltda.

São Paulo

BRL

10,000100 %S

Forbo Siegling Brasil Ltda.

São Paulo

BRL

7,008,746

50 %S

BrazilN

MS

CanadaForbo Adhesives (Canada), Ltd.

St. John

CAD

3,500,157

100 %Forbo Flooring, Inc.

TorontoCAD

500,000

100 %Forbo Siegling, Ltd.

TorontoCAD

501,000

100 %

S

CLP

335,631,092

50 %

MS

500,000

100 %

MS
S

Chile
Forbo Siegling Chile S.A.

SantiagoN

Czech Republic
Forbo s.r.o.

PragueCZKForbo Siegling Ceska republika s.r.o.

Liberec

CZK

100,000

100 %Bonar Floors s.r.o.

PragueCZK

200,000

100 %S

Forbo Flooring A / S

Glostrup

DKK

500,000

100 %S

Forbo Siegling Danmark A / S

Brøndby

DKK

1,000,000

100 %Oy Forbo Adhesives Finland Ab

Esbo

EUR

25,280100 %Forbo Linoleum OY

HelsinkiEUR

33,638

100 %

S

S
S

DenmarkMS

FinlandMS
HFranceForbo Participations S.A.S.

Reims

EUR

11,524,800

100 %Forbo Sarlino S.A.S.

Reims

EUR

6,400,000

100 %Forbo Adhesives France S.A.S.

Surbourg

EUR

1,440,000

100 %Forbo Siegling France S.A.S.

Lomme

EUR

819,000

100 %Forbo Reims SNC

Reims

EUR

3,879,810

100 %

MS

Bonar Floors SAS

Château-Renault

EUR

8,000,000

100 %

MS

D

H
S
MS
S

15,400,000

100 %Holding /Services

EUR

Movement
Systems

Currency Share capital

Bonding
Systems

RegisteredofficeFlooring
Systems

Company

Equityinterest

111

Germany
Forbo Beteiligungen GmbH

LörrachForbo Erfurt GmbH

ErfurtEUR

2,050,000

100 %Forbo Flooring GmbH

Paderborn

EUR

500,000

100 %Forbo Adhesives Deutschland GmbH

Pirmasens

Paul Heinicke GmbH & Co KG

Pirmasens

Realbelt GmbH

Velen

EUR

100,000

100 %S

Forbo Siegling GmbHHannoverEUR

10,230,000

100 %

MS

Bonar Floors GmbH

RatingenEUR

33,700100 %Kallithea (Athens)

EUR

928,000

100 %Victa Technology Holdings (Hong Kong) Ltd.

Hong Kong

HKD

1,000,000

100 %Forbo Siegling Hong Kong Ltd.

Hong Kong

HKD

1,000,000

100 %Bonar Floors Ltd

Hong Kong

HKD

123,548,000

100 %Forbo Adhesives Hungary Kft.

Budapest

HUF

3,000,000

100 %Forbo Siegling Hungária Kft.

Budapest

HUF

30,000,000

100 %Forbo Ireland Ltd.

DublinEUR127,000

100 %Forbo-Siegling (Ireland) Ltd.

DublinEUR25,395100 %Forbo Adhesives Ireland Ltd.

Dublin

EUR

2,520

100 %

Forbo Adhesives Italia S.p.A.

Pianezze (Vicenza)

EUR

416,000

100 %Forbo Resilienti S.r.l.

Segrate (Milan)

EUR

60,000100 %Forbo Siegling Italia S.p.A.

Paderno Dugnano(Milan)EUR104,000

100 %

S

Tokyo

JPY

330,000,000

100 %

MS

GBP

25,000100 %Johor Bahru

MYR

2,500,002

100 %Tlalnepantla

MXN

2,865,000

100 %

D

D

EUR

5,120,000

100 %

EUR

1,023,000

100 %

H
MS
S
MS
H

S

GreeceForbo Adhesives Greece S.A.I.C

MS

Hong Kong
HS
S

HungaryS
S

Ireland
S
S
S

Italy
MS
S

Japan
Forbo Siegling Japan Ltd.
Jersey, C.I.
Forbo Invest Ltd.

St. Helier

D

H

Malaysia
Forbo Siegling SDN. BHD.

S

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

S Sales
MS Manufacturing and Sales

H Holding / Services
N Not consolidated as at December 31, 2008
D Direct participation of Forbo Holding Ltd

SMS

100 %

Holding /Services

454,000

Movement
Systems

Currency Share capital

Bonding
Systems

RegisteredofficeFlooring
Systems

Company

Equityinterest

112

Netherlands
Forbo Eurocol B.V.

Zaanstad

EUR

Forbo Flooring B.V.

Krommenie

EUR

11,350,000

100 %Forbo NL Holding B.V.

Krommenie

EUR

13,500,000

100 %Forbo-Novilon B.V.

Coevorden

EUR

3,630,000

100 %Forbo Adhesives Nederland B.V.

Genderen

EUR

27,000100 %Forbo Siegling Nederland B.V.

Driebergen

EUR

113,000

100 %Forbo Stamoid B.V.

Krommenie

EUR

227,000

100 %S

Bonar Floors N.V.

Krommenie

EUR

9,700,000

100 %

MS

Auckland

NZD

650,000

100 %

NOK

1,000,000

100 %

CNY

146,391,000

100 %

MS
MS
H
MS
MS
S

New Zealand
Forbo Siegling Ltd.

S

NorwayForbo Flooring AS

Asker

D

S

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

ShenyangMS

Forbo Siegling (Shanghai) Co., Ltd.

Shanghai

CHF

3,300,000

100 %Forbo Adhesives (Guangzhou) Co., Ltd.

Guangzhou

USD

8,000,000

100 %

MS

Forbo Adhesives (Shanghai) Co., Ltd.

Shanghai

USD

1,000,000

100 %

MS

Warsaw

PLZ

50,000100 %S

Forbo-Revestimentos, S.A.

Leça da Palmeira(Porto)EUR74,850100 %Siegling (Portugal) Lda.

Gemunde (Porto)

EUR

500,000

100 %Forbo Helmitin Romania S.R.L.

Oradea

RON

7,077

100 %

Forbo Siegling Romania S.R.L.

Bucharest

RON

38,000100 %S

ZAO 'Forbo Siegling'

St. Petersburg

RUB

400,000

100 %S

OOO 'Forbo Stroitech'

Stary Oskol

RUB

144,181,000

100 %OOO 'Kaluga'

Moscow

RUB

158,313,780

100 %

MS

OOO 'Flooring'

Moscow

RUB

500,000

100 %MS

Forbo Siegling, s.r.o.

Malacky

SKK

200,000

100 %Bonar Floors s.r.o.

Bratislava

SKK200,000

100 %MS

PolandForbo Adhesives Poland Sp. z o.o.
Portugal
S

S

Romania
S

RussiaMS

Slovakia
S
S

100 %

Holding /Services

15,006

Movement
Systems

Currency Share capital

Bonding
Systems

RegisteredofficeFlooring
Systems

Company

Equityinterest

113

Spain
Forbo Adhesives Spain, S.L.

Mos (Pontevedra)

EUR

Forbo Pavimentos, S.A.

Barcelona

EUR

60,101

100 %Forbo Siegling Iberica, S.A.

Montcada i Reixac(Barcelona)EUR

1,532,550

100 %

SEK

8,000,000

100 %

S

MS
S
S

SwedenForbo Flooring AB

Gothenburg

Forbo Parquet AB

Tibro

Forbo Project Vinyl AB

Gothenburg

Forbo Adhesives Sweden AB

Gothenburg

SEK

100,000

100 %Forbo Siegling Svenska ABKållered(Gothenburg)

SEK

1,000,000

100 %

N

CHF

3,375,000

33 %

H

D

D

SEK

20,000,000

100 %

MS

SEK

50,000,000

100 %

MS
S
S

Switzerland
Enia Carpet Group AG

EnnendaFJK Carpet D GmbH

EnnendaN

CHF

20,00025 %H

Forbo Financial Services AG

Baar

D

CHF

100,000

100 %H

Forbo Finanz AG

Baar

D

CHF

10,000,000

100 %Forbo-Giubiasco SA

Giubiasco

D

CHF

10,000,000

100 %Forbo International SA

Baar

D

CHF

100,000

100 %MS

Istanbul

TRY725,000

100 %S

Forbo-Nairn Ltd.

London

GBP

8,000,000

100 %Forbo Adhesives UK Ltd.

Chatteris

GBP

100

100 %

Forbo UK Ltd.

LondonGBP49,500,000

100 %Forbo Siegling (UK) Ltd.

LondonGBP

51,000100 %Bonar Floors Ltd.

LondonGBP2,236,392

100 %Bonar Tiles Holdings Ltd.

London

GBP

1,000

100 %

Bonar Tiles Ltd.

LondonGBP

14,500,002

100 %Westbond Ltd.

LondonGBP

400,000

100 %

USD

5,000,100

100 %

USD

19,957,259

100 %

H
MS
MS

H

TurkeyForbo Adhesives Ticaret Limited Sirketi
United Kingdom

D

MS
MS
H
S
MS
H
H
MS

USA

Forbo Adhesives, LLC

Wilmington, DE

Forbo America, Inc.

Wilmington, DE

Forbo America Services Inc.

Wilmington, DE

USD

50,000100 %Forbo Flooring, Inc.

Wilmington, DE

USD

3,517,000

100 %Forbo Siegling, LLC

Wilmington, DE

USD

15,455,000

100 %

D

S Sales
MS Manufacturing and Sales

H Holding / Services
N Not consolidated as at December 31, 2008
D Direct participation of Forbo Holding Ltd

MS
H
H
S
MS

114
Report of the Statutory Auditor

Report of the Statutory Auditor
to the General Meeting of
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, consolidated cash f low statement, consolidated statement of recognised
income and expense and notes (pages 60 to 113), for the year ended December 31,
2008.
Board of Directors’ Responsibility
The Board of Directors is responsible for the preparation and fair presentation of theconsolidated financial statements in accordance with the International Financial
Reporting Standards (IFRS) and the requirements of Swiss law. This responsibility includes designing, implementing and maintaining an internal control system relevantto 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 andmaking 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 the assessment of the risks of material
misstatement of the consolidated financial statements, whether due to fraud or error.
In making those risk assessments, the auditor considers the internal control system
relevant to the entity’s preparation 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 theentity’s internal control system. An audit also includes evaluating the appropriatenessof the accounting policies used and the reasonableness of accounting estimates made,as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion.

115

OpinionIn our opinion, the consolidated financial statements for the year ended December 31,
2008 give a true and fair view of the financial position, the results of operations andthe cash f lows in accordance with the International Financial Reporting Standards(IFRS) and comply with Swiss law.

Report on other Legal Requirements
We confirm that we meet the legal requirements on licensing according to the Auditor
Oversight Act (AOA) and independence (Article 728 CO and Article 11 AOA) and that
there are no circumstances incompatible with our independence.
In accordance with Article 728a paragraph 1 item 3 CO and Swiss Auditing Standard
890, we confirm that an internal control system exists which has been designed for the
preparation of consolidated financial statements according to the instructions of theBoard of Directors.
We recommend that the consolidated financial statements submitted to you be approved.
PricewaterhouseCoopers AG

Stefan Räbsamen
Audit expert
Auditor in charge
Zurich, March 11, 2009

Gerhard Siegrist
Audit expert

116
Consolidated Income Statements 2004 – 2008

2008
CHF m

2007

2006

2005

2004

Net sales

1,918.7

2,004.0

1,879.5

1,702.0

1,622.3

Cost of goods sold– 1,325.0– 1,331.9– 1,273.4– 1,151.8– 1,092.5

Gross profit

593.7

672.1

606.1

550.2

529.8

Development costs– 29.9– 31.6– 31.3– 32.4– 32.1Marketing and distribution costs– 282.7– 325.9– 300.6– 286.9– 285.1

Administrative costs– 137.9– 137.7– 131.9– 143.5– 143.6

Other operating expenses– 50.0– 33.9– 50.7– 74.3– 126.6

Other operating income

23.9

19.4

18.0

10.8

13.1

117.1

162.4

109.6

23.9

– 44.5

9.2

11.7

7.6

9.5

4.2

Operating profit / (loss)
Financial income– 104.9– 19.3– 21.0– 28.3– 49.8

Share of result of associated companies

-

-

-

-

– 22.5

Financial expenses
Group profit / (loss) before taxes

21.4

154.8

96.2

5.1

– 112.6

Income taxes– 5.4– 44.1– 35.0– 21.6– 44.8Group profit / (loss)

16.0

110.7

61.2

– 16.5– 157.4

117
Consolidated Balance Sheets 2004 – 200831.12.2008

31.12.2007 31.12.2006 31.12.2005 31.12.2004

Assets
CHF m

Non-current assets

928.7

601.7

593.4

597.3

612.2

Tangible assets

586.3

423.7

421.5

422.4

443.5

Intangible assets

311.7

151.9

149.2

144.6

143.0

Deferred taxes

28.8

20.7

20.5

28.1

23.5

-

3.1

-

-

-

Employee benefit assets
Investments in associates and other long-term
assets

1.9

2.3

2.2

2.2

2.2

Current assets

909.1

803.5

905.2

993.7

904.4

Inventories

298.3

286.3

266.7

257.0

255.2

Trade receivables

265.8

287.7

293.7

273.8

242.9

Other receivables

32.2

29.5

25.1

22.8

28.7

Prepaid expenses and deferred charges

23.6

22.5

25.6

35.5

30.8

Marketable securities

73.6

-

-

-

-

Cash and cash equivalents

215.6

177.5

294.1

404.6

346.8

1,837.8

1,405.2

1,498.6

1,591.0

1,516.6

Total assets

31.12.2008

31.12.2007 31.12.2006 31.12.2005 31.12.2004

Shareholders’ equity and liabilities
CHF m

Shareholders’ equity
Share capital

584.4

713.1

638.6

558.1

543.7

10.9

38.0

54.3

54.3

54.3

Treasury shares

– 2.0

– 4.0

– 3.5

– 1.6

– 1.6

Reserves and retained earnings

575.5

679.1

587.8

505.4

491.0

Non-current liabilities

676.6

254.7

304.4

512.9

604.7

Non-current financial debt

512.4

194.9

209.1

358.4

459.7

Employee benefit obligations

58.6

-

45.8

101.1

112.1

Non-current provisions

37.0

42.3

41.7

40.7

26.9

68.6

17.5

7.8

12.7

6.0

Current liabilities

576.8

437.4

555.6

520.0

368.2

Trade payables

144.5

138.1

131.5

131.8

108.8

Current provisions and accrued expenses

149.0

167.6

169.3

136.5

116.6

Current financial debt

181.3

24.2

128.3

155.5

18.1

Current tax liabilities

25.3

29.8

21.8

10.6

6.1

Deferred taxes

76.7

77.7

104.7

85.6

118.6

Total liabilities

1,253.4

692.1

860.0

1,032.9

972.9

Total shareholders’ equity and liabilities

1,837.8

1,405.2

1,498.6

1,591.0

1,516.6

Other current liabilities

118
Financial Statements of Forbo Holding Ltd

Content

Financial Statements of Forbo Holding Ltd
119

Income Statement

120

Balance Sheet

121

Notes to the Financial Statements

128

Proposal for Appropriation of Available Earnings

129

Report of the Statutory Auditor119
Income Statement Forbo Holding Ltd

2008

2007

IncomeCHF

NoteFinancial income
from investments in and advances to Group companies

1

87,631,320

38,789,562

from securities and short-term investments

2

221,952

15,162,264

1,596

1,633

Income from other sources
Impairments

3

Total income

98,158,000-

186,012,868

53,953,459

2008

2007

Expenses
CHF

Notes

Administrative expenses

43,853,011

4,609,165

Financial expenses

5

170,598,603

11,734,535

129,000

18,000Total expenses

174,580,614

16,361,700

Net profit for the year

11,432,254

37,591,759

Taxes

120
Balance Sheet Forbo Holding Ltd(before Appropriation of Available Earnings)

31.12.2008

31.12.2007

650,675,474

445,498,476

442,361,270

346,804,727

AssetsCHF

NoteLong-term assets
Investments in Group companies

6

Advances to Group companies

7

Current assets
Other receivables from Group companies
Other receivables from third parties
Prepaid expenses and deferred charges
Marketable securities

8

Cash and cash equivalents

9208,314,204

98,693,749

100,362,171

153,856,306

3,214,795

2,436,291

22,13815,840264,433

15,19682,921,410

146,918,100

13,939,395

4,470,879

751,037,645

599,354,782

31.12.2008

31.12.2007

412,665,657

428,364,923

10

10,852,608

37,984,128

15,600,000

15,600,000

12211,295,583

112,251,537

13

110,357,635

209,401,681

Profit carried forward

53,127,577

15,535,818

Net profit for the year

11,432,254

37,591,759

338,371,988

170,989,859-

28,000,000

Total assets

Shareholders’ equity and liabilities
CHF

Note

Shareholders’ equity
Share capital
Statutory reserve:
General reserves
Reserve for treasury shares
Other reserves
Available earnings:

Liabilities
Long-term provisions
Long-term bank debt

14

Advances from Group companies
Short-term bank debt
Other liabilities to Group companies

15

181,300,000-

110,398,141

121,356,383

45,000,000

20,000,000

663,234

974,879

Current liabilities to third parties

21,18020,716

Accrued expenses

989,433

637,881751,037,645

599,354,782

Total shareholders’ equity and liabilities

121
Notes to the Financial Statements of Forbo Holding Ltd

1

Financial income from investments in and advances to Group companies
Income from investments in and advances to Group companies amounts to CHF 87.6 million(2007: CHF 38.8 million) and consists of interest, dividend income and the release of provisions.

2

Financial income from securities and short-term investments
This item includes income from short-term investments of CHF 0.2 million (2007: CHF 0.1
million). The previous year’s figure included income on securities transactions of CHF 15.1
million.

3

Impairments
The valuation adjustments of CHF 98.2 million relate mainly to investments in connection
with value adjustments at subsidiaries.

4

Administrative expenses
Administrative expenses decreased from the previous year by CHF 0.8 million and amount to
CHF 3.9 million.

5

Financial expenses
The item relates mainly to losses on treasury shares, interest expenditures for long- and shortterm bank debt and interest expense on loans of Group companies.

6

Investments in Group companies
As at December 31, 2008 Forbo Holding Ltd held the following direct investments:

Company
Currency

Share capitalin 1,000

Equityinterest

AUD

1,400

100 %

Forbo Floorcoverings Pty. Ltd.

AU-Wetherill Park, NSW

Activity
Sales

Forbo Participations S.A.S

FR-Reims

Holding / Services

EUR

11,525100 %Forbo Beteiligungen GmbH

DE-Lörrach

Holding / Services

EUR

15,400100 %Paul Heinicke GmbH & Co KG

DE-Pirmasens

Services

EUR

1,023

72 %

Forbo Invest Ltd.

CI-St. Helier

Services

GBP

25

50 %

Forbo Flooring AS

NO-Asker

Sales

NOK

1,000

100 %

Forbo Flooring AB

SE-Gothenburg

Sales

SEK

8,000

100 %

Forbo Project Vinyl AB

SE-Gothenburg

Manufacturing and Sales

SEK

50,000100 %Forbo Finanz AG

CH-BaarHolding / Services

CHF

10,000100 %Forbo-Giubiasco SA

CH-Giubiasco

Manufacturing and Sales

CHF

10,000100 %Forbo International SA

CH-BaarServices, Manufacturing and
Sales

CHF

100

100 %

Forbo UK Ltd.

GB-London

Holding / Services

GBP

49,500100 %Forbo America, Inc.

US-Wilmington, DE

Holding / Services

USD

19,957100 %Bonar Floors GmbH

AT-Wien

Sales

EUR

35

100 %

Forbo Financial Services AG

CH-BaarServices

CHF

100

100 %

7

Advances to Group companies
Advances to Group companies are denominated in Swiss francs and foreign currencies. The
net increase compared to the previous year is CHF 109.6 million.

8

Marketable securities
The item 'Marketable securities' relates to the treasury shares of Forbo Holding AG . As partof the share buyback program, 213,152 registered shares were acquired. The balance sheet
items were valued at market value at year-end.

122

9

Cash and cash equivalents
This item consists of bank deposits and cash equivalents with initial maturities of 3 months
or less.

10

Share capitalAt the end of 2008, the company’s share capital was CHF 10,852,608, divided into 2,713,152
registered shares with a par value of CHF 4 each. In the year under review, the par value
was reduced by CHF 10 per share from CHF 14 to CHF 4 following a cash distribution. 21,419
registered shares without voting and dividend rights are at the disposal of the Board of
Directors. Consequently, 2,691,733 registered shares were eligible for dividends in the financial year 2008. The shares are listed on SIX Swiss Exchange with the security number 354 151.

11

Conditional capital increase
CHF 8,500,000 of conditional capital reserved for the exercise of shareholder options andwarrants in connection with a bond issue was created by a resolution of the Annual General
Meeting of Shareholders held on April 27, 1994. Following the exercise of options and warrants in 1994, 1995 and 1997 and reductions in the par value by CHF 22 per share in 2003, CHF 8
per share in 2004, CHF 6 per share in 2007 and CHF 10 per share in 2008, the conditional capital on December 31, 2008 was CHF 665,800 (2007: CHF 2,330,300).
12

Reserve for treasury shares
The CHF 211,295,583 included at year-end under 'Reserve for treasury shares' relates totreasury stock held by Forbo Holding Ltd and its subsidiaries valued at cost. The treasury
shares developed as follows over the period under review:
Treasury shares
Cost
CHF

Number ofregistered shares

Total at January 1, 2008

112,251,537

259,773

Additions from share buyback program

97,863,019

213,152

Additions

7,730,755

13,830

Disposals– 1,894,878– 4,332

Reduction of par value– 4,654,850-

Total at December 31, 2008

211,295,583

482,423

13

Other reserves
Other reserves decreased by CHF 99.0 million. This decrease is due to the transfer to thereserve for treasury shares.

14

Long-term bank debt
The long-term bank debt of CHF 181.3 million consists of bilateral committed credit lines
with maturities of 2010 – 11, on which interest is paid on money market terms (LIBOR plus
margin).

15

Short-term bank debt
This item includes a fixed advance of CHF 45 million. This fixed advance yields interest on
money market terms (LIBOR plus margin) and ends in December 2009.

123

16

Commitments and contingent liabilities
Guarantees and letters of support to third parties in favor of Group companies amounted to
CHF 410.5 million at year-end, of which CHF 374.3 million (previous year: CHF 240.6 million)
is utilized. Most of this relates to guarantees to investors in connection with funds raised by
a Group company in the form of a US private placement (CHF 184.7 million) and guarantees
in connection with utilized swap and bank facilities.

17

Significant shareholders
From information available to the Board of Directors, the following shareholders or groupsof shareholders were major shareholders in the company pursuant to Article 663c CO as at
the balance sheet date:

Number of sharesas percentage

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

853,178

31.45 %

Forbo Holding AG, Baar, through its two subsidiaries
Forbo International SA, Baar and Forbo Finanz AG, Baar

482,423

17.78 %

This E. Schneider, Wilen b. Wollerau

142,1975.24 %

124

18	Disclosure of compensation to the Board of Directors and Executive
Board pursuant to Article 663b bis and Article 663c CO
Compensationfor 20081):
Name and function

Variablecompensation

Base compensation
Cash

OthersCash, shares,
options

Shares

Total

CHF

Number

CHF

CHF

CHF

CHF

Dr. Albert Gnägi, Chairman

206,999295

138,001-

26,889371,889

Michael Pieper, Vice Chairman

66,02794

43,973-

11,932

121,932

Dr. Peter Altorfer, member

71,817

103

48,183-

12,650132,650

Dr. Rudolf Huber, member

74,945

107

50,055-13,012138,012-64,484764,484

419,788599

280,212This E. Schneider,
Executive Board member and CEO3)4)

150,000

9,479

2,559,330-

369,817 3,079,147

Board of Directors

569,788 10,078 2,839,542-

434,301 3,843,631

Non-executive Board of Directors

2)

Executive Board5)

1,930,000-- 2,005,500

666,274 4,601,774

Executive Board

1,930,000-- 2,005,500

666,274 4,601,774

1) The amounts stated in the table are, in principle, based on valuation models used and disclosed in the consolidated financial statements. For the valuation of shares and options this means in particular that the grant date is authoritative. The compensation is booked to the appropriate period. The
table therefore discloses all compensation that has been granted for the 2008 financial year, even if the date of the payment of the definitive legal acquisition is after December 31, 2008.
2) The non-executive members of the Board of Directors receive a fixed remuneration, the amount of which is gradated according to whether the member is Chairman or a simple member of the Board and whether he is a member of the AFC or HRC. The cash compensation is shown as a gross amount
before deduction of social insurance contributions. 40 % of the compensation is paid to the directors in the form of shares of Forbo Holding AG. The sharesare valued at fair value on the grant date. The total compensation to the non-executive members of the Board of Directors also includes a lump sum
for expenses plus employer contributions to AHV / ALV (old-age and unemployment funds) and child allowance. These are reported in the column 'Other
compensation'.
3) The compensation to the Delegate of the Board of Directors and CEO is disclosed separately and subsumed under total compensation to the Board of
Directors. It is not possible to clearly allocate the total compensation to the two functions.
4) In fall 2005, it was agreed with the Delegate of the Board of Directors and CEO that part of his compensation for 2005 and for the following five years(2006 up to and including 2010) would be paid to a large extent in stock. In lieu of salary payments, for the contractual period of employment until
December 31, 2010, he was allocated 47,395 shares at the market value on conclusion of the agreement, i.e. CHF 270 each, for the entire five-year termof the agreement (2006 – 2010). The shares are valued at fair value on the grant date. These shares are time-vested until December 31, 2010 and freely
available only as of January 1, 2011. Should he leave the company before this date, the shares must be returned to the company on a pro rata basis.
In addition to the share package, the Delegate of the Board of Directors and CEO draws an annual sum of CHF 150,000, which is used for settlement of
employee contributions to the pension fund and for social insurance payments. With the share package and the cash remuneration, all compensations such as bonuses, inflation, options, etc. are settled. The corresponding personnel expenditure is charged to the income statement over the entire
contractual period on a pro rata basis (see Note 20 'Stock Option Plans' of the consolidated financial statements). The Delegate of the Board of Directors and CEO does not participate in the Management Investment Plan (MIP) or the share-based compensation program of the non-executive Board
members. The entire compensation for the Delegate of the Board of Directors and CEO for the financial year comes to CHF 3,079,147. This total includes
private use of the company car, employer contributions to the pension fund and employer contributions to the AHV / ALV (old-age and unemployment
insurance), plus accident and daily benefits insurance. These are show in the column 'Other compensation'.
5) The total compensation paid to the members of the Executive Board (excluding the Delegate of the Board of Directors and CEO) was CHF 4,601,774
in 2008. It comprises a gross base salary and a performance-related bonus, which is set in March of the year following the business year in question andis determined by the achievement of the individual and the Group targets. The performance-related component is paid in accordance with the rulesof the Management Investment Plan (MIP) (see Note 20 'Stock Option Plans' in the consolidated financial statements). The total compensation paid tothe members of the Executive Board also includes private use of the company car and employer contributions to the pension fund as well as employer
contributions to the AHV / ALV (old-age and unemployment insurance) plus accident and daily benefits insurance, which are shown separately in thecolumn 'Other compensation'.

125

for 2007 1):
Name and function

Variablecompensation

Base compensation
Cash

OthersCash, shares,
options

Shares

Total

CHF

Number

CHF

CHF

CHF

CHF

Dr. Albert Gnägi, Chairman

176,853

172

118,147-

23,560318,560

Michael Pieper, Vice Chairman

54,281

52

35,719-10,493

100,493

Dr. Peter Altorfer, member

60,16058

39,840-11,212111,212

Dr. Rudolf Huber, member

68,97867

46,022-

12,283

127,283

360,272

349

239,728-

57,548657,548

Non-executive Board of Directors

2)This E. Schneider,
Executive Board member and CEO3)4)

150,000

9,479

2,559,330-

380,938 3,090,268

Board of Directors

510,272

9,828 2,799,058-

438,486 3,747,816

Executive Board5)

1,774,733-- 1,876,750

510,772 4,162,255

Executive Board

1,774,733-- 1,876,750

510,772 4,162,255

1) The amounts stated in the table are, in principle, based on valuation models used and disclosed in the consolidated statements. For the valuation ofshares and options this means in particular that the grant date is authoritative. The compensation is booked to the appropriate period. The table
therefore discloses all compensation that has been granted for the 2007 financial year, even if the date of the payment of the definitive legal acquisition is after December 31, 2007.
2) The non-executive members of the Board of Directors receive a fixed remuneration, the amount of which is gradated according to whether the member
is Chairman or a simple member of the Board and whether he is a member of the AFC or HRC. The cash compensation is shown as a gross amount before deduction of social insurance contributions. 40 % of the compensation is paid to the directors in the form of shares of Forbo Holding Ltd. The sharesare valued at fair value on the grant date. The total compensation to the non-executive members of the Board of Directors also includes a lump sum
for expenses and employer contributions to AHV / ALV (old-age and unemployment funds) and child allowance. These are reported in the column 'Other
compensation'.
3) The compensation to the Delegate of the Board of Directors and CEO is disclosed separately and subsumed under total compensation to the Board of
Directors. It is not possible to clearly allocate the total compensation to the two functions.
4) In fall 2005, it was agreed with the Delegate of the Board of Directors and CEO that part of his compensation for 2005 and the compensation for thefollowing five years (2006 up to and including 2010) would be paid to a large extent in stock. In lieu of salary payments, for the contractual period of
employment until December 31, 2010, he was allocated 47,395 shares at the market value on conclusion of the agreement, i.e. CHF 270 each, for theentire five-year term of the agreement (2006 – 2010). The shares are valued at fair value on the grant date. These shares are time-vested until December
31, 2010 and freely available only as of January 1, 2011. Should he leave the company before this date, the shares must be returned to the company
on a pro rata basis. In addition to the share package, the Delegate of the Board of Directors and CEO draws an annual sum of CHF 150,000, which is used
for settlement of employee contributions to the pension fund and for social insurance payments. With the share package and the cash remuneration, all compensations such as bonuses, inflation, adjustments, options, etc. are settled. The corresponding personnel expenditure is charged to theincome statement over the entire contractual period on a pro rata basis. The Delegate of the Board of Directors and CEO does not participate in theManagement Investment Plan (MIP) or the share-based compensation program of the non-executive Board members. The entire compensation for theDelegate of the Board of Directors and CEO for the financial year comes to CHF 3,090,268. This total includes private use of the company car, employer
contributions to the pension fund and – a new element – employer contributions to the AHV / ALV (old-age and unemployment insurance), plus accident
and daily benefits insurance.
5) The total compensation paid to the members of the Executive Board (excluding the Delegate of the Board of Directors and CEO) was CHF 4,162,255 in
the 2007 business year. It comprises a gross base salary and a performance-related bonus, which is set in March of the year following the business year
in question and is determined by the achievement of the individual and the Group targets. The performance-related component is paid in accordancewith the rules of the Management Investment Plan (MIP). The total compensation paid to the members of the Executive Board also includes private useof the company car and employer contributions to the pension fund as well as – a new element – employer contributions to the AHV / ALV (old-age andunemployment insurance) plus accident and daily benefits insurance, which are shown separately in the column 'Other compensation'.

126

Advances and loans
As at December 31, 2008, no advances or loans to members of the Board of Directors or
members of the Executive Board were outstanding.
Investments in Group companies
In business year 2008
As per December 31, 2008, 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:Name and function
Options1)5)

SharesSeries 2008 Series 2007 Series 2006 Series 2005

Tradable
options

1:12)

1:12)

1:12)

1:12)

Dr. Albert Gnägi, Chairman

18,416

-

-

-

-

-

Michael Pieper, Vice Chairman

853,178

-

-

-

-

-

367

-

-

-

-

-

Dr. Peter Altorfer, member

2,062

-

-

-

-

-

Non-executive Board of Directors

874,023

-

-

-

-

-

This E. Schneider,
Executive Board member and CEO3)

142,197

-

-

-

2,100

1,016,220

-

-

-

2,100

-

-

-

-

-

-

-

909

1,157

1,204

1,385

-

-

Dr. Rudolf Huber, member

Board of Directors
This E. Schneider,
Executive Board member and CEO4)
Matthias P. Huenerwadel, Executive VP
Movement Systems
Tom Kaiser, Executive VP
Flooring Systems

1,167

1,073

1,258

2,380

-

-

Daniel Keist, Head Corporate Center

436

783

-

-

-

-

Jörg Riboni, Chief Financial Officer

4,388

1,948

2,091

1,685

-

-

Michel Riva, Executive VP
Bonding Systems
Executive Board

498

485

697

844

1,050

-

7,398

5,446

5,250

6,294

1,050

-

1) The details of the options are described in Note 20 'Stock Option Plans' in the consolidated financial statements.
2) Subscription ratio.
3) The number of shares reported includes the vested 47,395 shares (see Note 4) in the previous table.
4) The compensation to the Delegate of the Board of Directors and CEO is disclosed separately and shown in the line Board of Directors.
5) Since participation in the MIP is not limited to members of the Executive Board, the number of outstanding options shown here as per December 31,
2008 differs from note 20 'Stock Option Plans' in the consolidated financial statements.

127

In business year 2007
As per December 31, 2007, 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:Name and function
Options1)5)

SharesSeries 2007 Series 2006 Series 2005

Tradable
options

1:12)

1:12)

1:12)

Dr. Albert Gnägi, Chairman

12,741----

Michael Pieper, Vice Chairman

814,894

-

-

-

-

264

-

-

-

-

Dr. Peter Altorfer, member
Dr. Rudolf Huber, member
Non-executive Board of Directors

2,345

-

-

-

-

830,244

-

-

-

-

This E. Schneider, Executive Board member and CEO3)

136,955

-

-

2,100

-

Board of Directors

967,199

-

-

2,100

-

-

-

-

-

-

664

1,204

1,385

-

-

1,056

1,258

2,380

1,050

-

This E. Schneider, Executive Board member and CEO4)
Matthias P. Huenerwadel, Executive VP
Movement Systems
Tom Kaiser, Executive VP Flooring Systems
Daniel Keist, Head Corporate Center

170

-

-

-

-

Jörg Riboni, Chief Financial Officer

3,976

2,091

1,685

-

-

Michel Riva, Executive VP Bonding Systems
Executive Board

395

697

844

1,050

-

6,261

5,250

6,294

2,100

-

1) The details of the options are described in note 20 'Stock Option Plans' of the consolidated financial statements.
2) Subscription ratio.
3) The number of shares reported include the vested 47,395 shares.
4) The compensation to the Delegate of the Board of Directors and CEO is disclosed separately and shown in the line Board of Directors.
5) Since participation in the MIP is not limited to members of the Executive Board, the number of outstanding options shown here as per December 31,
2007 differs from the note 'Stock Option Plans' in the consolidated financial statement 2007.

19

Risk assessment
With respect to the Risk Management Process introduced at the beginning of 2008 in connection with Art. 663b, item 12 CO, which came into force on January 1, 2008, please referto the comments in Note 33 to the consolidated financial statements, 'Risk Assessment and
Financial Risk Management'.

128
Proposal for the Appropriation of Available Earnings ofForbo Holding Ltd

The Board of Directors proposes to the Annual General Meetingthat the available earnings, consisting of:
2008

2007

CHF

Net profit for the year

11,432,254

37,591,759

Profit carried forward from the previous year

53,127,577

15,535,818

Total available earnings

64,559,831 53,127,577

be appropriated as follows:
2008

2007

01)

-

To be carried forward to the following year

64,559,831

53,127,577

Total available earnings

64,559,831 53,127,577

CHF

Proposal by the Board of Directors:
Dividend payment

1) In lieu of a dividend, the Board of Directors will propose to the Annual General Meeting to be held on April 24, 2009 a reduction in parvalue of CHF 3.90 to CHF 0.10 per registered share.

129
Report of the Statutory Auditor

Report of the Statutory Auditor
to the General Meeting of
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 balance sheet, income statement and notes (pages 119 to 128), forthe year ended December 31, 2008.
Board of Directors’ Responsibility
The Board of Directors is responsible for the preparation of the financial statements inaccordance with the requirements of Swiss law and the company’s articles of incorporation. This responsibility includes designing, implementing and maintaining an internal control system relevant to the preparation of financial statements that are freefrom material misstatement, whether due to fraud or error. The Board of Directors isfurther responsible for selecting and applying appropriate accounting policies andmaking 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 AuditingStandards. Those standards require that we plan and perform the audit to obtainreasonable 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 the financial statements. The procedures selected depend on theauditor’s judgment, including the assessment of the risks of material misstatement of
the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal control system relevant to the entity’s preparation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness 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, 2008 comply
with Swiss law and the company’s articles of incorporation.

130

Report on other Legal Requirements
We confirm that we meet the legal requirements on licensing according to the Auditor
Oversight Act (AOA) and independence (Article 728 CO and Article 11 AOA) and that
there are no circumstances incompatible with our independence.
In accordance with Article 728a paragraph 1 item 3 CO and Swiss Auditing Standard
890, we confirm that an internal control system exists which has been designed forthe 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 thefinancial statements submitted to you be approved.
PricewaterhouseCoopers AG

Stefan Räbsamen
Audit expert
Auditor in charge
Zurich, March 11, 2009

Reto Tognina
Audit expert

Financial calendar
Ordinary General Meeting:

April 24, 2009

Letter to shareholders:August 18, 2009Media release on the results in the first half of 2009:

August 18, 2009

Publisher:
Forbo Holding Ltd, Baar
Concept and Design:
Gottschalk + Ash Int’l
Photos:Luxwerk, Zurich
Typesetting, Litho and Printing:
Neidhart + Schön AG, Zurich

Our Annual Report is publishedin German language and in
an English language translation.

Forbo Annual Report 2008

Forbo International SA
Lindenstrasse 8
CH-6340 Baar

P +41 58 787 25 25
F +41 58 787 20 25
info@forbo.com

flooring. bonding. movement.

flooring. bonding. movement.

Forbo Holding Ltd
Lindenstrasse 8
CH-6340 Baar

Forbo Annual Report 2008

flooring. bonding. movement.