ANNUAL REPORT 2017

CONNECT.
FLEXIBILITYRELIABILITY
FORBO – IN EVERYDAY LIFE

2

FLEXIBILITY.

High-quality floor coverings are distinguished by good
design and optimum integration in the room. Thanks
to long years of experience, sound know-how and inno­
vative technology, we offer the right floor coverings forthe widest possible range of needs in optimum execution
and the most modern designs. With our diverse productportfolio we can always offer our customers and sales
partners the right applications for every area of a building.

RELIABILITY.
For every production and processing constellation,
we elaborate the individually appropriate solution.
This is also necessary in the food production industry
where especially strict hygiene regulations apply.
Small goods such as candies have to be carefully­conveyed so that they reach their final destination
without being damaged in the production process.
With individual finishing options for the widest
possible range of applications, we can guarantee
careful transport and the cleanliness of your product.

4This E. Schneider

Stephan Bauer

Executive Chairman

CEO‘Forbo raised sales significantly in 2017. Both divisions
again improved operating profit through operations.
Movement Systems built a new, state-of-the-art production plant in China, which will provide additional
capacity for conveyor belts, mainly for the Asia/Pacificregion. The plant is slated to come on stream mid-2018.
The high-tech 3-D digital printing machine installedin the spring of 2017 is enabling Flooring Systems toroll out unique Flotex designs.
We once again selectively broadened our portfoliowith innovative products and particularly expanded
our distribution and service structures. These efforts
are reflected in the company’s strong sales growth.’

FORBO ANNUAL REPORT 2017 – LETTER TO SHAREHOLDERS5

TO OURSHAREHOLDERS
Dear Madam, dear Sir,
Forbo increased net sales significantly in 2017 amid challenging market conditions. It again improved operating
profit before one-off costs despite higher raw material prices. Both divisions were instrumental in this success.
An investigation by the French antitrust authorities that has been going on for several years concerning theexchange of information by various flooring producers – going back to 1990 – was concluded in the year underreview with a payment of EUR 75 million. This was an isolated event relating to a subsidiary of Flooring Systems
in France. Forbo cooperated closely with the French authorities and supported them in establishing the factsof the case. We have up-to-date compliance rules, and under no circumstances do we accept violations of thelaw or of ethical codes of conduct. We have extended training and have tightened our directives and regulations.
This event, which we carried in our financial reporting as a contingent liability until the 2017 Half-Year Report
and which we booked at the end of June 2017, had a major impact on the 2017 results.
The construction of one of our largest and most modern production plants in Pinghu, China, which is slated tocome on stream mid-2018, has created additional capacity for Transilon conveyor belts, mainly for the Asia/
Pacific region.
We gained market share in important market segments despite challenging conditions by systematically­implementing our strategy and generating added value with products and services for our customers. Ongoing
optimization of global processes along the entire value chain enabled us to largely offset the expansion costs
and higher prices for raw materials.
When the results in local currencies were translated into the corporate currency, the currency effect wasslightly positive on balance compared with the previous year.

Significant growth in sales
Strong sales growth in both divisions
In the year under review, Forbo generated net sales of CHF 1,246.4 million (previous year: CHF 1,185.5 million)
which represents an increase of 5.1%, or 4.3% in local currencies, due to slightly positive currency effects. Bothdivisions contributed to this solid growth.
The net sales of Flooring Systems rose by 4.7% to CHF 856.6 million (previous year: CHF 818.0 million). This
represents an increase of 3.7% in local currencies. The innovative flooring collections launched in 2017
impressed customers and were instrumental in producing this positive development. We backed this up
by selectively expanding our distribution structures.
Movement Systems reported net sales of CHF 389.8 million (previous year: CHF 367.5 million), anotherencouraging increase of 6.1%, or a gain of 5.8% in local currencies. The increase was driven by high-quality,
application-specific product innovations along with the ongoing expansion of distribution and service
structures, particularly in growth markets.

6

FORBO ANNUAL REPORT 2017 – LETTER TO SHAREHOLDERS

Operating profit confirmed
Profitability remains strong
Operating profit before depreciation and amortization (EBITDA) and before one-off costs in connection withthe antitrust proceedings against Flooring Systems in France increased by CHF 8.1 million, or 4.2%, to CHF 201.0
million (previous year: CHF 192.9 million). Group operating profit (EBIT) before one-off costs rose by CHF 6.1
million, or 3.9%, to CHF 163.3 million (previous year: CHF 157.2 million). The EBITDA margin declined slightly
from 16.3% to 16.1%, and the EBIT margin from 13.3% to 13.1%, owing to higher raw material prices.
Factoring in one-off costs, operating profit before depreciation and amortization (EBITDA) came to CHF 117.6
million (previous year: CHF 192.9 million), while operating profit (EBIT) stood at CHF 79.9 million (previous year:
CHF 157.2 million).

Tax effects significantly impact Group profit
Profitability impacted by one-off effects
Group profit from continuing operations before one-off costs declined by CHF 7.8 million to CHF 119.8 million(previous year: CHF 127.6 million) owing in particular to higher taxes. The higher tax charge was predominantly
due to the sale of Forbo treasury shares. The sale produced a profit of a high double-digit million amount,which was not recognized in the income statement but rather credited directly to shareholders’ equity. The
federal tax on capital gains, however, was booked in the income statement. Additionally, financial income
in fiscal 2017 was CHF 1.8 million lower than the previous year owing to foreign currency effects.
Factoring in one-off costs, Group profit from continuing operations came to CHF 36.5 million (previous year:
CHF 127.6 million), while Group profit stood at CHF 38.7 million (previous year: CHF 127.6 million).

Balance sheet remains robustHigh net liquidity
Net liquidity at year-end stood at CHF 195.0 million (previous year: CHF 209.2 million) despite high capital
expenditure of CHF 57.8 million – in particular to expand capacity – and a cash outflow of EUR 75.0 million in
the wake of the antitrust proceedings against Flooring Systems in France. In addition, as at December 31, 2017,
Forbo held 95,556 treasury shares valued at year-end at CHF 143.8 million (previous year: CHF 118.4 million).
Of these, 63,105 shares are earmarked for a capital reduction.
The equity ratio still remains at a high 61.9% (previous year: 62.8%).
Undiluted earnings per share from continuing operations before one-off costs decreased by 7.1% to CHF
69.34 (previous year: CHF 74.66). Factoring in the one-off costs, undiluted earnings per share from continuing
operations came to CHF 21.10.

7

Share buyback program
The share buyback program approved by the 2017 Ordinary General Meeting for a maximum of 10 percentof the share capital will remain in effect unchanged. The program is scheduled to end at the Ordinary General
Meeting in 2020. To date, 63,105 shares have been repurchased at an average price of CHF 1,430.
Solid foundation for profitable growth opportunities
Our strong global presence – which we have bolstered with the new Movement Systems plant in Pinghu,
China – as well as our solid balance sheet, and our systematic implementation of the Forbo strategy enable us
to forge ahead with expansion in growth markets and, where appropriate, to capitalize on external growth
opportunities. However, we will make acquisitions only if doing so creates added value for our shareholders.

Proposals to the Ordinary General Meeting
Re-elections to the Board of Directors
All the current members of the Board of Directors will stand for re-election for a further one-year term of office.
Stable dividend
The Board of Directors will propose to the Ordinary General Meeting the distribution of a dividend for 2017,
unchanged from the previous year, of CHF 19 per share.

In good shape for 2018
Outlook for 2018
For the 2018 business year we expect market conditions to be similar to 2017. We still face significant challenges,
especially as we are present in a range of different global markets. Economic and – especially – politicalcircumstances can change quickly. We will stick to our tried-and-tested strategy, convince our customers with
our strong brand plus our high-quality products and services, and further expand our global presence.
Against this background and provided the currency situation remains unchanged and the economic en­vi­ronment remains similar, for 2018 we anticipate a slight increase in net sales and Group profit from continuing
operations before one-off costs (2017: CHF 119.8 million) and special tax effects of CHF 7.8 million (2017:
CHF 127.6 million).

8

FORBO ANNUAL REPORT 2017 – LETTER TO SHAREHOLDERS

Thank youThanks to employees, business partners, and shareholders
Close cooperation at all levels, the committed and professional attitude of our employees, and their flexibility
were the major factors contributing to operational success in the year under review. Many thanks for this effort.
We also wish to thank our customers, business partners, and suppliers for the good cooperation and theconfidence they have placed in our company.
On behalf of the Board of Directors and the Executive Board, we thank you too, dear shareholders, for theongoing trust and loyalty you show to Forbo.

Baar, March 2018

This E. Schneider
Executive Chairman

Stephan Bauer
CEO

Financial calendar
Ordinary General MeetingPublication of 2018 Half-Year Report
Publication of 2018 Annual ReportApril 6, 2018
July 27, 2018
March 5, 2019

9

CONTENTS
At a glance
Forbo in figures
Strong sales result; special items impact profit
Sustainable engagement

Activity report
Two divisions with leading market positions
Flooring Systems: 
Attractive product portfolio provides a competitive edge
Movement Systems:
Impressive customer-specific applications

11
14
18
22

27
29
32
38

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

44
46
48

The Forbo share

51

Corporate governance report

55

Remuneration report

73

Forbo Group financial report

91

Consolidated balance sheet
92
Consolidated income statement
93
Consolidated comprehensive income statement
94
Consolidated statement of changes in equity
95
Consolidated cash flow statement
96
Notes – accounting principles
97
Notes107
Group companies
138
Report of the statutory auditor
142
Consolidated balance sheets 2013 – 2017
148
Consolidated income statements 2013 – 2017
149

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

151
152
153
154
159
160

10

11

AT A GLANCE
Forbo in figures
Strong sales result; special items impact profit 
Sustainable engagement

14
18
22

12

2017 AT A GLANCE

13

FORBO IS A LEADINGPRODUCER OF
FLOOR COVERINGS,BUILDING AND­CONSTRUCTIONADHESIVES, AS WELL
AS POWER TRANSMISSION AND
CONVEYOR BELT­S OLUTIONS.
The company employs more than 5,500 people
and has an international network of 24 production
and distribution ­companies, 6 assembly operations and 45 pure sales organizations in a total of
36 countries. Forbo is headquartered in Baar in
the canton of Zug, Switzerland.

14

FORBO ANNUAL REPORT 2017 – AT A GLANCEFORBO IN FIGURES
Forbo is a global player, and its two div­i­
sions supply a wide range of industries.
The Group’s global reach means that
it is close to dynamic markets, making
Forbo the first choice as a local partner
for customers that have similar global
requirements. The quality, longevity, andperfor­mance of our products and systems reflect the quality and stability of
our relations with our business partners.

Flooring Systems
15 production facilities in 6 countries and distribution
companies in 26 countries. Sales offices in Europe,
North, Central, and South America as well as Asia/
Pacific.
Floor coverings
Building and construction adhesives
Movement Systems
9 production sites and 6 assembly operations in 9
countries and distribution companies in 29 countries.
About 300 sales and service offices worldwide.
 Production facilities andassembly operations

BEFORE ONE-OFF COSTS
Net sales 	 CHF 1,246.4 million
EBIT 		 CHF 163.3 million
EBIT margin 	
13.1%
Group profit	 CHF 119.8 million
from continuing operations

Earnings per share	
undiluted

CHF 69.34

15

Net sales 	 CHF 1,246.4 million
EBIT 		CHF 79.9 million
EBIT margin 	
6.4%
Group profit	
CHF 36.5 million
from continuing operations

Earnings per share	
undiluted

CHF 21.10

16

FORBO ANNUAL REPORT 2017 – AT A GLANCE

Net sales by division
Change on previous year
CHF m 2017
856.6
389.8
1,246.4

Flooring Systems
Movement Systems
Total

in %
4.7
6.1
5.1

in localcurrencies in %
3.7
5.8
4.3

In % of total
68.7
31.3
100.0

31.3%

Movement Systems

68.7%
Flooring Systems

Employees by division

Number 2017
3,157
2,360
42
5,559

Flooring Systems
Movement Systems
Corporate Functions
Total

2,360

Movement Systems

3,157

Flooring Systems

42

Corporate Functions

Change onprevious year in %
1.5
7.6
0.0
4.0

In % of total
56.8
42.5
0.7
100.0

FORBO ANNUAL REPORT 2017 – AT A GLANCE

17

Financial overview Forbo Group
2017

2016

2017

2016

Income statement
Net sales
Flooring Systems
Movement Systems
EBITDAEBITDA before one-off costs6)
EBIT
EBIT before one-off costs6)
Group profit from continuing operations
Group profit from continuing operations
before one-off costs6)

CHF m
1,246.4
856.6
389.8
117.6
201.0
79.9
163.3
36.5
119.8

CHF m
1,185.5
818.0
367.5
192.9
192.9
157.2
157.2
127.6
127.6

EUR m1)
1,121.2
770.5
350.6
105.8
180.8
71.9
146.9
32.8
107.8

EUR m1)
1,087.5
750.4
337.1
177.0
177.0
144.2
144.2
117.1
117.1

Group profit
Group profit before one-off costs6)

38.7
122.0

127.6
127.6

34.8
109.7

117.1
117.1

Balance sheet
Total assets
Operating assets
Shareholders’ equity
Net cash

CHF m
1,067.5
832.8
661.2
195.0

CHF m
989.3
738.9
621.4
209.2

EUR m1)
960.2
749.1
594.8
175.4

EUR m1)
907.5
677.8
570.0
191.9

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

CHF m
78.8
– 56.5
22.3

CHF m
166.5
– 40.3126.2

EUR m1)70.9– 50.820.1

EUR m1)152.7– 37.0115.8

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

%
9.4
61.9
– 29.5%
16.3
62.8– 33.7

Number
5,559

Number5,346

Ratios per share
Earnings per share (undiluted)2), from continuing operations
Earnings per share (undiluted)2), from continuing operations
before one-off costs6)

CHF
21.10
69.34

CHF
74.66
74.66

EUR1)
18.98
62.37

EUR1)
68.49
68.49

Equity (undiluted)
Dividend

382.6019.003)363.5719.004)344.1617.10

333.5217.40

Stock market capitalization (as at December 31)
Stock market capitalization5)

CHF m
2,709.0

CHF m
2,363.4

EUR m1)2,436.8

EUR m1)
2,168.1

Employees (as at December 31)
Total employees

1) Euro values translated at the average annual exchange rate of
CHF 1.1117/1 EUR (2017) and CHF 1.0901/1 EUR (2016).

4) Approval of a dividend of CHF 19 per registered share at theOrdinary General Meeting of April 6, 2017.

2) See note 13 ‘Earnings per share’ on page 114 of the financial­report.

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

3) The Board of Directors proposes to the Ordinary General Meetingof April 6, 2018, the distribution of a dividend in the amount of
CHF 19 per registered share.

6) Not factoring in the one-off costs from the antitrust proceedings
against Flooring Systems in France.

18

FORBO ANNUAL REPORT 2017 – AT A GLANCESTRONG SALES RESULT;SPECIAL ITEMSIMPACT PROFITThe 2017 business year at Forbo wasmarked by strong sales growth in a challenging environment, though market
dynamics sometimes differed greatly
according to country and market segment. Both divisions again raised theiroperating profit – before one-off costs
incurred in connection with the antitrust proceedings against Flooring Systems in France – despite higher raw material prices and a major increase incapital expenditure.

The Group added attractive and innovative products to its portfolio, selectively expanded its distribution and service structures, significantly increased
capacity, and streamlined operational
processes with investments in manufacturing facilities and equipment tools
to bring them up to the state of the art.
Our strong global presence, our solidbalance sheet, and our attractive offering of products and services, along withselective capacity expansion, give us astrong basis and the right prerequisites
for future growth.

Net sales by geographic area
Change on previous year

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

%
20.8
15.0
12.7
12.1
10.0
8.4
7.8
5.7
5.4
2.1
100.0

in %
3.4
4.7
8.2
7.7
6.8
1.7
– 9.9
10.8
23.1
12.1
5.1

in local currencies in %
3.1
5.8
6.2
5.7
4.7
1.0
– 5.8
8.6
14.5
12.1
4.3

Strong sales growth in both divisions
In the year under review, Forbo reported net sales of
CHF 1,246.4 million (previous year: CHF 1,185.5 million)
which represents an increase of 5.1%, or 4.3% in local
currencies, due to slightly positive currency effects.
Both divisions contributed to this strong and gratifying
growth and gained market shares in a challenging environment.

2017
CHF m
259.5
186.3
158.3
150.5
124.5
105.2
97.8
70.6
67.7
26.0
1,246.4

25

50

75

100

125

150

175

The Flooring Systems division generated net sales of
CHF 856.6 million in 2017 (previous year: CHF 818.0 million). This represents an increase of 4.7% in the corporate currency (+ 3.7% in local currencies). All three regions contributed to this growth with different drivers
amid mixed market conditions, particularly in our coremarkets France, Germany, and the Netherlands. Attractive additions to the product portfolio and the targeted
expansion of distribution resources supported this positive trend.

200

225

250

275

19

The Movement Systems division again demonstrated
its strong growth potential and generated net sales of
CHF 389.8 million in the year under review (previous
year: CHF 367.5 million), which was equivalent to a­significant increase of 6.1% (+ 5.8% in local currencies).
All three regions, most markets, and all customer seg-ments contributed to varying degrees to this strong increase in net sales. The other key factors driving thissuccess were application-specific, technologically advanced product innovations, ongoing expansion of the
distribution and service structures, and investments inefficiency-enhancing fabrication tools.

EBITDA by division

Flooring Systems
Movement Systems
Corporate

2017
CHF m
69.7
58.7
– 10.8Change onpre­vious year in % – 25
– 53.37.9
1.9

Profit impacted by special items
Forbo’s profitability remains strong even though various one-off special items had a negative impact on
operating profit.
On the positive side, operating profit was positively­affected by strong sales growth and various efficiencyenhancing measures in a number of different oper­
ational areas. The opposing factors were higher raw­material prices, significantly higher capital expenditure,
and above all the one-off costs in connection withthe antitrust proceedings against Flooring Systems in
France.
Group operating profit before depreciation and amortization (EBITDA) and before one-off costs in connection with the antitrust proceedings against Flooring
Systems in France rose by 4.2% to CHF 201.0 million(previous year: CHF 192.9 million). Factoring in one-off
costs, EBITDA came to CHF 117.6 million. EBITDA at
Flooring Systems before one-off costs rose by 2.7% to
CHF 153.1 million (previous year: CHF 149.1 million)
owing to higher sales and operational efficiency gains,
despite higher raw material prices. Factoring in one-off
costs, the division’s EBITDA came to CHF 69.7 million.
At Movement Systems, EBITDA was up 7.9% to CHF
58.7 million (previous year: 54.4 million) on the back ofstrong sales growth and systematic improvements inglobal processes, despite additional capacity expansion in China.
The EBITDA margin for the Group before one-off costs
decreased slightly from 16.3% to 16.1%. At Flooring
Systems, the EBITDA margin before one-off costs declined from 18.2% the previous year to 17.9% in theyear under review, while at Movement Systems the
EBITDA margin improved by 0.3 percentage points to
15.1% (previous year: 14.8%).

0

25

50

75

Group operating profit (EBIT) before one-off costs increased by 3.9% to CHF 163.3 million (previous year:
CHF 157.2 million). Factoring in one-off costs, EBIT
came to CHF 79.9 million. The Group EBIT margin before one-off costs decreased from 13.3% in the previous year to 13.1% in the year under review.
Group profit from continuing operations before oneoff costs declined by CHF 7.8 million to CHF 119.8 million (previous year: CHF 127.6 million) owing in particular to higher taxes from the sale of Forbo treasury
shares.
Factoring in one-off costs, Group profit from continuing operations came to CHF 36.5 million, while Group
profit stood at CHF 38.7 million (previous year: CHF
127.6 million). The reason for the difference of CHF 2.2
million was the release of provisions owing to the ex­piry of warranty periods in connection with the saleof the industrial adhesives activity at the beginning of2012.
Taxes and financial income
The tax rate for the year under review was 54.4%, well
above the 19.8% of the previous year. This is due to theimpact of the one-off costs in connection with the antitrust proceedings against Flooring Systems in France
as well as the sale of Forbo treasury shares. This saleproduced capital gains of a high double-digit million
amount, which, however, was not recognized in the­income statement but rather credited directly to shareholders’ equity. The federal tax paid on this extraor­
dinary income, meanwhile, was charged to the income
statement.
Financial expenses came to CHF 0.8 million (previous
year: CHF 0.1 million); the increase was due to foreign
currency losses. This was offset by financial income of
CHF 0.9 million (previous year: CHF 2.0 million); the decline is due to non-recurring foreign exchange gains in
the previous year. On balance, the financial result cameto CHF 0.1 million (previous year: CHF 1.9 million).

20

FORBO ANNUAL REPORT 2017 – AT A GLANCE

Free cash flow
2017
CHF m
78.8
– 56.5
22.3

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

Cash flow performance impacted by
one-off special factors
In the reporting year, cash flow from operating activ­
ities came to CHF 78.8 million, a decline of CHF 87.7
million compared with the previous year (CHF 166.5
million), due mainly to the one-off costs incurredin connection with the antitrust proceedings against
Flooring Systems in France. Cash flow from investing
activities came to CHF – 56.5 million (previous year: CHF– 40.3 million), due primarily to the significant increasein capital expenditure in the year under review. Free
cash flow thus amounted to CHF 22.3 million (previous
year: CHF 126.2 million). The main reasons for the decline were the one-off costs incurred in connection
with the antitrust proceedings against Flooring Systems in France, higher capital expenditure, and theone-off steep rise in taxes.

2016
CHF m
166.5
– 40.3
126.2

– 100

– 50

0

50

100

150

200

Balance sheet remains robust
Total assets as at December 31, 2017, stood at CHF
1,067.5 million, which was CHF 78.2 million higher
than the previous year (CHF 989.3 million). Net liquidity remains at a comfortable level, despite the one-off
costs in connection with the antitrust proceedings
against Flooring Systems in France and the significant
increase in capital expenditure. Liquidity declined by
CHF 14.2 million to CHF 195.0 million (previous year:
CHF 209.2 million). Equity stood at CHF 661.2 million
on December 31, 2017, which was CHF 39.8 million
higher than in the previous year (CHF 621.4 million).
The equity ratio still remains at a high 61.9% (previous
year: 62.8%).

Investments 2013 – 2017

2017
2016
2015
2014
2013

Flooring
Systems
CHF m

Movement
Systems
CHF m

Corporate
CHF m

Total
CHF m

22
20
31
30
27

36
17
9
9
7

0
3
0
1
1

58
40
40
40
35

Significant increase in capital expenditure
In addition to increasing efficiency and steadily streamlining processes, our focus is on factors that will promote future growth. Capital expenditure in the year
under review was significantly higher than in the previous year, mainly due to the construction of a new
Movement Systems plant in Pinghu, China. In addition
to this major capacity increase, over the past year weconcentrated our resources in both divisions on key activities and strategic projects in the areas of productportfolio, technology, production capacity, and market
expansion. Total Group investments in property, plant,
and equipment and intangible assets in 2017 rose significantly by 44.5% year-on-year to CHF 57.8 million(previous year: CHF 40.0 million).

10

20

30

40

In the reporting period, Flooring Systems invested
CHF 22.3 million (previous year: CHF 20.5 million),
which represents a 8.8% increase. This sum includes inparticular a portion for the recently installed digitalprinting facility for high-end Flotex designs in 3-D
quality in France as well as a new 3-D digital printing
line for modular Flotex floor coverings in the USA. The
additional cutting facility for luxury vinyl tiles in the
Netherlands is supporting the double-digit growth of
this product line. In the UK, production capacity for
manufacturing carrier layers from recycled material for
carpet tiles was expanded. Part of the funds were also
used for the extension of the product offering with
innovative new collections.

50

60

21

At Movement Systems, investment in property, plant,
and equipment came to CHF 35.5 million, more thandouble the prior-year figure (previous year: CHF 16.5
million). The main reason for the increase was the construction of a new plant in Pinghu, China, which will
provide additional capacity for Transilon processing

belts. Funds were also used for various additional fabrication tools, in particular cutting machines, heatpresses, cooling stations, punch presses using waterjet
technology, bending machines, and laser measurement systems. Part of the expenditure was invested ininnovative range extensions for specific applications.

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

%
21.8
15.0
13.8
12.2
10.9
9.9
7.8
3.1
2.9
2.6
100.0

Change onpre­vious year in %
3.3
8.2
4.5
4.5
– 1.9
8.7
0.2
1.7
0.0
9.9
4.0

2017
1,214
832
772
677
604
551
431
175
159
144
5,559

Headcount higher owing to capacity expansion
At year-end 2017, the Forbo Group employed 5,559
people. This is an increase of 213 employees year-onyear; the increase was due mainly to the capacity expansion at Movement Systems. The individual percentage changes in employee levels by and large reflectmarket developments in the countries and regions inquestion.

200

400

600

800

1,000

1,200

1,400

The significant increase in Asia/Pacific was due mainly
to the new plant in Pinghu, China. The fabrication activity started in fall 2017. For the planned production
start mid-2018, hiring of production personnel alreadybegan in the year under review. These employees
are currently being trained in test production runs.
The strong increase in headcount in Eastern Europe islargely due to the expansion of the European fabrication plant of Movement Systems in Slovakia. The increase in Southern Europe can be ascribed to the expansion of both divisions in the growth market Turkey
and to the continuing growth of Movement Systems
in Spain and Italy.

22

FORBO ANNUAL REPORT 2017 – AT A GLANCESUSTAINABLE
ENGAGEMENT
A responsible attitude toward the management of resources in all dimensions
is one of the fundamental values at
Forbo. We are committed to protecting
the environment and continuously investing in a sustainable future. As amanufacturer and employer consciousof its responsibilities, Forbo sets very
high standards for health, safety, theenvironment, and quality.
Social dimension
Forbo promotes a high-performance culture in order tomeet the high demands of our customers and business
partners as well as the requirements we impose on
ourselves. This is why we promote the necessary cap­abilities and competences at all organizational levels,and support this internally with seminars and further
training activities.
This means that the divisions provide internal training
in a wide range of areas regarding products and applications, sales and marketing, finance, operations, pro-

ject management, strategy implementation, and Forbo’s values. Continuous intensive training in the areaof health and safety includes measures on the topics
of accident prevention, risk awareness, and occupational health and safety, as well as general ongoingpreventive measures.
At the Group level, Forbo has established an internalmanagement training program in collaboration with
the University of St. Gallen as well as other external
partners and internal experts. This practice-oriented
advanced training program for senior managers andpersons in key positions consists of a first training weekthat includes various modules in areas ranging frommanagement and sales to marketing and operations. A
second training week expands on this and includes
leadership modules, focusing on strategic implementation and leadership topics such as dealing with organizational and team changes as well as performance
management. A third training week that builds on theprevious courses was introduced in 2016; it is devoted
mainly to leadership topics that involve implementation of the strategy at various organizational levels. Thisis combined with relevant tools for communication
challenges and cooperation in international, cross-cultural teams.

23

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

24

FORBO ANNUAL REPORT 2017 – AT A GLANCESUSTAINABLE
ENGAGEMENT

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

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

25

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

Economic dimension
As a listed company, Forbo also engages intensively
with the economic dimension of sustainability. Compliance is enormously important for the reputationand positioning of a company. We are successful as acompany when we meet the expectations of customers, when employees are enthusiastic and committed,
and when we create added value in the long term forour shareholders.
In the year under review, we constantly maintained
our efforts in terms of a conscious attitude to what we
do by reinforcing awareness, particularly regarding thecontents of the code of conduct (by means of e-learning modules) as well as competition law and anti-­
corruption principles, and diligently implementing therisk management process.

26

27

ACTIVITYREPORT
Two divisions with leading market positions

29

Flooring Systems:
Attractive product portfolio provides
a competitive edge

32

Movement Systems:
Impressive customer-specific applications

38

FLEXIBILITY.

RELIABILITY.

FORBO ANNUAL REPORT 2017 – ACTIVITY REPORT29

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

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

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

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

FLOORINGSYSTEMSFLEXIBILITYSUSTAINABLY
DURABLE
Linoleum floor coverings are commonly used in educational facilities because they are very durable, versatile, sustainable and easy to clean. Linoleum is madefrom the natural raw materials linseed oil, natural resin,wood flour and limestone as well as jute and pigments.
In addition to all the practical advantages in the ap­
plication, our modular floor coverings offer additional,
attractive design options as well as uncomplicatedhandling in transport and installation.

32

FORBO ANNUAL REPORT 2017 – ACTIVITY REPORTFLOORING SYSTEMS:ATTRACTIVE PRODUCT PORTFOLIOPROVIDES A COMPETITIVE EDGE
‘Once again we added new elements toour product offering this year and enriched our collections with attractive
new products in all categories. A special
highlight was the launch of three collections from the new line of high-end
homogenous vinyl floor coverings. Our
growth initiatives included selectively
building up distribution resources forthe private sector commercial segment,
Matthias P. Huenerwadel
reinforcing our teams in growth mar- Executive Vice President
kets, raising the service level, and there- Flooring Systems
by increasing our customer focus. We
invested in technological innovations
sales trend
in a large number of operational areas, Solid
All three regions contributed to this solid sales trend.
carried out expansion projects, and in
this way streamlined our processes. Most European markets, especially our core markets
Thanks to our attractive product port- in France, Germany, and the Netherlands, reported
to above-average growth. Demand was very
folio and clearly defined market strat­ moderatebuoyant in southern and eastern Europe, and someegies, we further strengthened our po- what more muted in northern Europe. Sales in the UK
sition as a leading systems supplier in declined slightly owing to the economic environment
and the resulting atmosphere of restraint.
the commercial segment.’
The Flooring Systems division generated net sales of
CHF 856.6 million in 2017 (previous year: CHF 818.0 million). This represents a solid increase of 4.7% in the corporate currency (+ 3.7% in local currencies). The division’s share of Group sales was 68.7%. All three regions
contributed to this growth amid mixed market conditions, though with different growth rates. Operating
profit (EBIT) before one-off costs rose by 2.3% to CHF
125.5 million (previous year: CHF 122.7 million) despite
the negative impact of higher raw material prices. The
EBIT margin before one-off costs declined by 0.3 percentage points to 14.7% (previous year: 15.0%). Factoring in one-off costs from the antitrust proceedings –now concluded – against Flooring Systems in France,
operating profit (EBIT) came to CHF 42.1 million.

The Americas region reported marginal sales growth,due mainly to the stabilization and gradual recovery of
the growth markets in South America. The main market, North America, reported sales on a par with theprevious year.
In the Asia/Pacific region, China, Japan, and South Korea made an above-average contribution to the sales
upturn. This gratifying trend was driven by various
growth initiatives and the completion of some major
customer projects.
After a number of difficult years during the down cycle,
the building and construction adhesives activity recovered and reported very satisfactory sales growth overall. Russia and the Netherlands in particular made an
above-average contribution to these gains.

33

Versatile and trendy collections enhance
the product portfolio
The division continued to expand its offering for private sector customers by launching new and innovative collections in the year under review. The range
now features new formats, a broad spectrum of colorand design options, new effects and materials, and advanced functionalities and floor-laying options.
We kicked off 2017 by very successfully launching ahost of attractive linoleum collections along with lux­
ury vinyl tiles and a completely new product line of­homogenous vinyl floor coverings. We followed thisup by focusing on compelling collections in the textile
flooring range, in particular for modular applications, inthe second half of the year.
We also rolled out various new collections of the Flotex product line in the second half of 2017. Flotex is
our high-tech textile flooring that can be cleaned using a pressure washer. It is employed primarily in carefacilities, leisure centers, hotels, restaurants, and offi­
ces, where its robust durability, good hygiene features
for allergy sufferers, and its ease of care make it invaluable. The high-end 3-D digital printing options opened
up by the newly installed facility in Château-Renault,
France, are promising – the ultra-modern designs andspecial features of both broadloom and modular tileand plank formats it enables are creating exciting opportunities. The plant’s increased output is also impressive.
We added attractive collections to our range of highend Tessera carpet tiles, which are in especially great
demand for office premises. They are influenced bystrong design and color trends from the world of architectural décor that we reinforce with fashionable colors
and motifs plus new plank formats that are closely coordinated with our new collections of luxury vinyl tiles.
The modular Coral entrance matting systems launched
the previous year are now available in a click floor-laying option that greatly simplifies installation – a welcome addition especially in the retail segment.
Above-average growth in vinyl floor coverings
The homogenous vinyl flooring line that was launchedwith its three inspiring collections in the year under review met with an enthusiastic response internationally,
and customers, especially in healthcare, were excitedby its designs and material features.

The luxury vinyl tiles again reported double-digit
growth in a highly competitive market and impressedcustomers with a wide range of design and application
options. In the linoleum segment, demand for innovative special collections and revitalized furniture linoleum was gratifying. Demand for linoleum in traditional
broadloom form was close to the previous year’s level.
The other product groups – project vinyl, entrance matting systems, carpet tiles, Flotex, and needle felt floor
coverings – also contributed to the sales growth.
Wide-ranging capital expenditure
In addition to the many activities to complement the
product portfolio, we selectively built up distribution
resources for the private sector customer segments
and gained a number of new, reputable international
key accounts. We supported our growth markets withini­tiatives for successful development: we added distribution partners to strengthen the sales structures in
China; we expanded the distribution team in South­Korea; and we reinforced the organization in Turkey bysupplementing logistics with a local warehouse.
We installed a new 3-D digital printing line in the
USA – in addition to the new facility in Château-Renault,
France – for modular Flotex floor coverings, which will
start operating in the spring of 2018. This facility can
produce small lot sizes with individual designs for the
local market with optimized delivery times.
Ongoing implementation of market strategies
Ongoing implementation and development of the defined market strategies will be important for 2018. We
have made exceptionally large investments over the
past two years to enhance our product portfolio andthe related production facilities. We also selectively expanded distribution structures for private sector commercial customers. Now we have to follow up on these
activities and initiatives and add support through local
market activities.
We are also constantly bolstering our organization
with local operational investments to minimize delivery times and further raise the service level. Cost consciousness plus target procurement measures will ensure that we successfully meet the challenges coming
our way from higher raw material prices.

34

FORBO ANNUAL REPORT 2017 – ACTIVITY REPORTTEXTILE COLLECTIONSFOR A WARM
AMBIENCE
Forbo floor coverings combine functionality and excellent product quality with
innovative designs; they enhance inter­ior spaces, whose character and appearance are geared to the needs of the people using these spaces. With every new
development we are constantly making
our products and production processes
more sustainable and environmentallyfriendly, thus increasing the quality of
the air in the room to meet the moststringent demands. In the reporting year
we kept pace with the pulse of technicalinnovation and design trends.
At the start of 2017 Flooring Systems launched a number of attractive collections ranging from linoleum toluxury vinyl tiles and homogenous vinyl floor coverings.
The focus in the second half of the year was mainly on
new technologies and additions to the product range,
featuring attractive designs for textile floorings.

FLOTEX WITH SPECIAL EMBOSSING

Flotex – versatile and varied
Flotex is a robust, high-tech textile floor covering thatis phthalate-free. It is power-washable with water, easy
to maintain, and is produced exclusively by Forbo.
More than 80 million nylon-6.6 fibers per square meterare injected and anchored electrostatically in an impermeable vinyl base. Due to its robustness, its hygiene
advantages for allergy sufferers, anti-slip properties,
and its excellent acoustic properties, Flotex is ideal foruse in care facilities and nursing homes, the catering
sector, leisure centers, and office premises. The 2017 fallcollections are diverse and distinguished by state-ofthe-art, three-dimensional designs coupled with special embossment textures for broadloom material aswell as for modular tile and plank formats. The Cityscape collection, for instance, features fascinating designs: its embossed lines change in the light dependingon the angle the flooring is viewed from. The new plankcollection encompasses six new designs, each of themavailable in multiple color variations. The planks in the
new 25 × 100 cm format give designers and architects
a host of opportunities for creativity with different col­or combinations and floor-laying patterns.

LUXURY VINYL TILES IN COMBINATION WITH TESSERA CARPET TILES

35

COLLECTION TESSERA DIFFUSIONCORAL CLICK SYSTEM

High-end Tessera carpet tiles
Carpet tiles give a room a special character, generate awarm atmosphere, and are especially suitable for officepremises or cozy hotel settings. We have expanded ourrange of high-end Tessera carpet tiles, adding fashionable colors and designs along with new plank formats
that are coordinated with the new collections of luxury
vinyl tiles. The different formats can be combined witheach other and can be laid without transition strips,
making them an even more attractive option. The new
Tessera Seagrass planks are very appealing with theirsoft, striated look and 12 natural colors ranging fromlight to dark. Yet another collection is geared to maximizing floor-installing options. Depending on whether
the tiles have a monolithic, half-width offset, quarter-turned or randomly patterned configuration, different aesthetic effects can be achieved.

‘MODULARITY INCREASESCREATIVE ABILITY’

Despite the generous fiber weight, which enhances
comfort, our carpet tiles are sustainable in the way they
are produced. Recycled material makes up over 60%,
and they are manufactured entirely with electricity
from renewable resources.
Modular click entrance matting systems
The modular Coral entrance matting systems launchedin 2016 are now also available with a click version.
These versatile tiles with textile inserts can be used in
all types of building and are especially suitable for simple installation in retail stores because they do nothave any metal components that interfere with electronic identification devices.

MOVEMENTSYSTEMSRELIABILITY

EFFICIENT
AND TAILORMADEFor every production and processing constellation,
we elaborate the individually appropriate solution.
This is also necessary in the food production industry
where especially strict hygiene regulations apply.
Small goods such as candies have to be carefully conveyed so that they reach their final destination without being damaged in the production process. With
individual finishing options for the widest possible
range of applications, we can guarantee careful transport and the cleanliness of your product.

38

FORBO ANNUAL REPORT 2017 – ACTIVITY REPORTMOVEMENT SYSTEMS:IMPRESSIVE CUSTOMER-SPECIFICAPPLICATIONS‘Multiple activities on the operationalside, along with the consistent implementation of our strategic initiatives inall business areas, had a very positive impact on Movement Systems in 2017. We
successfully launched innovative and application-specific products that generate
added value for our customers in the
production and logistics process and selectively expanded our distribution andJean-Michel Wins
service structures. Globally, we optimized Executive Vice President
various processes, especially in the sup- Movement Systems
ply chain, fabrication, and production
and we trained our people at all levels ofStrong sales growth again
the organization in these technical top- Almost
all markets contributed to the gratifying sales
ics and areas. In terms of productivity, we expansion with a variety of growth stimuli. The Europe
succeeded in further increasing our effi- region maintained its strong growth path and reportciency and our performance through a ed the largest increase in sales. The core markets inand southern Europe made a larger-than-­number of local investments and the use Germany
average contribution to this increase.
of new tools.’
The Movement Systems division generated net sales of
CHF 389.8 million in the year under review (previous
year: CHF 367.5 million), which reflects a substantial
year-on-year increase of 6.1% in the corporate currency(+ 5.8% in local currencies). The division’s share of Groupsales was 31.3%. All three regions, most markets, and all
customer segments contributed to varying degrees tothis significant increase in sales revenue. We gained
market share in key segments despite the mixed business environment. This sales growth coupled with consistently executed operational activities designed to
improve global processes across the board again had
a positive impact on operating profit (EBIT), which
climbed to CHF 49.3 million (previous year: CHF 45.3
million). This increase of 8.8% was achieved despite
the additional expansion of capacity in China. The EBIT
margin edged up to 12.6% (previous year: 12.3%).

The Americas region also reported a solid increase insales, partly due to the growth market in Mexico but
also to demand in the main market USA, which posted
a strong recovery in key customer segments during
the year under review.
A number of smallish markets in Asia/Pacific reported
very satisfactory developments, while the larger markets such as Japan and China continued to record solid
growth. Only India posted a slight decline, following
several successful years with above-average growth,
owing to unfavorable economic conditions.
All customer segments posted higher sales
All customer segments contributed to the strong
growth, even though sales and market trends showedwide regional disparities in some cases. Our impressive
and high-quality customer-specific solutions, coupledwith ongoing innovative range improvements and exciting features, are a cornerstone of this success.
Demand in the logistics segment was exceptionallyhigh due to a number of large-scale projects for international courier services and airports, especially in Eur­ope and North America. Food-processing, industrial
manufacturing, sports treadmills, and tobacco posted

39satisfactory growth, though the results showed significant regional disparities in some cases. The sales trend
in the textile sector and in the generally downtrending
paper and printing industry was moderately positive.
Innovation partner for our customers
Movement Systems not only supplies a wide rangeof conveyor and power transmission belts but is alsoa reliable source of technical know-how for all-in so­lutions and an innovation partner for both original
equipment manufacturers and end customers. In theyear under review, the division developed numerous
innovative products for very specific applications thathave big advantages and increase efficiency in bothproduction and processing.
For the logistics segment we developed a special coating with longitudinal grooves for moving heavy andsturdier goods. Its grip properties and low operating
noise levels are particularly convincing. We expanded
our sustainable and energy-saving AmpMiser2.0 product line by adding four new belt types for specific applications in various areas of logistics. These conveyor
belts have even lower friction coefficients, meaning
higher energy savings and lower operating noise levels.
The new AmpMiser conveyor belts are more flame-­
resistant than previous developments, and their especially robust fabric design gives them greater lateral
tear resistance.
We created two innovative solutions for the food-processing industry. One of them is an elastic weighing
belt conveyor that is integrated into the production
process. Its elasticity, physical properties, and the resulting runnability make it ideal for use in the packaging phase of food processing. The other is a new seriesof plastic modular belts that we developed mainly forthe pastries industry that need cooling and packaging
lines, especially for small items such as cookies, crackers, and snacks that have to be moved across narrowtransfer gaps during processing.
One of the innovations launched in the reporting year
was a new processing belt for the wood panel industry. The sophisticated surface coating almost entirely
prevents wood fibers from sticking to the belt and also
inhibits the accumulation of moisture, thereby preventing the build-up of dirt and hydrolysis. The belt
is used mainly in the manufacture of particleboard,
medium-density fiberboard (MDF) and oriented strand
board (OSB). OSB is high-quality waferboard that is

produced in an environmentally friendly way using ahigh proportion of recycled wood materials.
Investments to drive future growth
While continuing to invest in expansion in growth markets, we have also invested in new technologies andefficiency-enhancing measures in various fabricationand production facilities in order to promote sustain­
able growth and further improve customer service. The
purchase of local, customer-specific tools for fabrication processes helps us streamline the handling of assembly orders. These are state-of-the-art tools such as
cutting machines, heat presses, cooling stations, punchpresses using waterjet technology, bending machines,
and laser measurement systems.
The biggest capital expenditure item of Movement
Systems at present, however, is the new plant in Pinghu, China, which will provide additional production
capacity for Transilon conveyor belts, mainly for the
Asia/Pacific region. The plant is slated to come on
stream mid-2018.
Operational excellence remains the focus
The successful start-up of operations at Pinghu willcertainly be one of the key topics in the 2018 businessyear. At the same time we are working on optimizing
various global areas of operations in order to further
improve customer satisfaction in terms of delivery
times and increase both our productivity and our efficiency.
We will continue to expand our product offering with
innovative ideas that are geared specifically to theneeds of our varied customer segments and thus position ourselves in a wide range of industries with added value in production or logistics processes and further strengthen our global market position.

40

FORBO ANNUAL REPORT 2017 – ACTIVITY REPORTGUARANTEEINGSEAMLESSPRODUCTION
You will find Movement Systems present
wherever power is transmitted and auto­mated production and conveyor processes have to run smoothly. Our solutions for different configurations andrequirements across a wide range of industries are renowned for innovation,
precision, reliability, and cost effectiveness. In the year under review, Movement
Systems again demonstrated that it is a
professional partner in the developmentof industry-specific and customized so­lutions.
In keeping with our strategic goals, we have selectively expanded in particular the range of Extremultus
high-efficiency flat belts and Prolink plastic modular
belts as well as our main product group, the Transilon
conveyor belts. In the two examples from the food-­
processing industry described hereafter, we show how

PROLINK SERIES 14

the challenges arising in connection with customer­installations continuously inspire Movement Systems
to develop innovative solutions. Our processing andconveyor belts are the ideal choice for the productionof food, where strict hygiene standards and regu­
lations have to be adhered to. Geared to individual
needs and equipped for the stringent requirements ofthe food-processing industry, they ensure efficiency,
quality, hygiene, and careful transportation of goods.
Plastic modular belt for the pastries industry
The product portfolio of the Prolink plastic modular
belts features important innovations for the food industry. The new Series 14 supplements the product range,
especially for the pastries industry with refrigerationand packaging lines on which small confectionery
items such as cookies, crackers, and snacks have to becarefully transported during processing and packaging,
without any damage or loss across narrow transfer
gaps. This series is also suitable for the processingof meat, poultry, fish and seafood, as well as fruit and­vegetables.

41

EXTREMULTUS WEIGHING BELTThe robust design with its single-row sprocket construction ensures that goods remain securely on thebelt as well as excellent belt tension and wear resistance. The closed, solid belt edge prevents damage atthe edges. Moreover, the new headless pin system simplifies belt assembly and dismantling for maintenance.

‘INDUSTRY-SPECIFICINNOVATIONS’Highly elastic weighing belt
Movement Systems has developed a new, highly elastic Extremultus belt especially for use in check-weighing systems. This innovation is already enjoying great
popularity among weighing system manufacturers.
Weighing is needed mostly as part of other processes
such as packaging, labeling, portioning, or cutting, for­example in the case of food or in the packaging ofscrews or plastic parts. Our polyurethane belt meetsthe latest hygiene requirements and is remarkable forits special construction, its elasticity, and the resulting
tracking properties; with these features it’s ideal foruse in an extremely wide range of processes in thefood and packaging i­ndustries. Elastic belts are easy to
track when short center distances apply, thus saving
the use of complicated belt handling devices. Other
advantages are outstanding resistance to grease, oils,
and aggressive cleaning agents and to the buildup ofmoisture (hydrolysis). The new Extremultus belt is thermally stable up to 60 ° C and is antistatic.

42

43

ORGANIZATION
Executive BoardGroup structure
Board of Directors

44
46
48

44

FORBO ANNUAL REPORT 2017 – ORGANIZATIONEXECUTIVE BOARD

Matthias P. Huenerwadel, Urs Uehlinger, Stephan Bauer, Jean-Michel Wins

45

Stephan Bauer

Urs Uehlinger

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

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

Matthias P. Huenerwadel

Jean-Michel Wins

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

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

Chief Executive Officer

Executive Vice President Flooring Systems

Chief Financial Officer

Executive Vice President Movement Systems

46

GROUP STRUCTURE
Forbo has performed better than
average in the last 13 years comparedwith other exchange-listed ­com­panies.
With its two focused divisions, theGroup is now a world leader in its
markets, free of debt, and in possessionof considerable resources for further
strategic development. In line with
its strategy, Forbo is tasked with maintaining its successful performance ofrecent years, on the one hand, and –with the means available – of reinforcing and expanding its positions in the
global market through strong organic
growth and acquisitions, on the otherhand.

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

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

FORBO ANNUAL REPORT 2017 – ORGANIZATION47

BOD / HRNC / RC / AFC
Executive Chairmanof the Board of Directors

Board of Directors Office
Investor Relations
Corporate Communications
Internal Audit
CEO

Corporate HR
Corporate Development

Executive Vice President
Flooring Systems

Executive Vice President
Movement Systems

CFO

Northern/Central/Eastern
EuropeEurope/Middle East/Africa

Corporate Controlling
and Reporting

Southern Europe/
Middle East/Africa
AmericasAsia/Pacific
Building and Construction
Adhesives
Supply Chain
Business Development
Finance and IT
Process Development
Human Resources

AmericasAsia/Pacific
Plastic Modular and
Flat Belts

Corporate Tax
Risk Management

Operational Areas

Corporate Legal Services

Business andProduct Development

Corporate IT

Marketing
Finance
IT
Human Resources

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

Corporate Treasury

M&A
F & A Managers
Group Companies

48

FORBO ANNUAL REPORT 2017 – ORGANIZATIONBOARD OF DIRECTORS

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

49

This E. Schneider
Executive Chairman

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

Michael Pieper
Vice Chairman

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

Dr. Peter Altorfer
Vice Chairman

Partner at the law firm Wenger & Vieli AG, Zurich
Member of the Board of Directors of agta record ag, Fehraltorf
Member of the Board of Directors of BIH SA, Rapperswil-JonaMember of the Board of other private and foreign banks as well as non-listed investment
and real-estate companies in Switzerland

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

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

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

50

51

THE FORBO
SHARE

52

FORBO ANNUAL REPORT 2017 – THE FORBO SHARETHE FORBO SHARE
2017 was a good year for the Swiss equity market, with stock markets benefiting from a prolonged low-interest
environment and a corresponding dearth of investment alternatives. The good performance was helped alongby the stable economic situation.
The Swiss Performance Index (SPI) got off to a strong start in 2017 and after only six trading days was a good 2.5
percentage points above the end-2016 level. By early May the SPI reached the 10,000 mark for the first time andby mid-May performance was up by over 15 percent. The market eased off temporarily during the summer, but
by early October share prices had started to climb again. Shortly after mid-December, the SPI reached an all-timehigh of 10,827 points and closed the year at 10,751, reflecting an annual performance of +19.9%.
For some years now the Forbo share has steadily and sustainably put in better-than-average performances. In
2017 the share price tracked the SPI until March, when the Group announced its 2016 annual results. The Forboshare then posted significant gains, reaching an all-time high of CHF 1,669 in the first half of May. This works out
at an increase of a good 27 percent versus the price at year-end 2016 (CHF 1,313). In the course of the subsequentcorrections, the Forbo share stabilized at the level of the SPI by the end of July 2017. Until early November, theshare price again tracked the SPI, which mainly trended sideways in the final weeks of the year. The Forbo shareclosed 2017 at CHF 1,505, which means that it gained 14.6% in the course of 2017.
Taking the trend since the end of 2005 into consideration, the Forb share has outperformed the SPI by a factor
of almost five.

The Forbo share in comparison to the SPIForbo share
SPI
190%

1,700
1,500

150%

1,300

110%

1,100
70%
900
30%

700

– 10%

500
31.12.2013

31.12.2014

31.12.2015

31.12.2016

31.12.2017

53

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

2017
Number1,800,000

2016
Number1,800,000

2015
Number
1,990,000

2014
Number2,150,000

2013
Number2,250,000

1,704,444
63,105
11,032
21,4191,709,844
068,737
21,4191,708,458
190,000
70,123
21,4191,888,850
158,467
81,264
21,4192,032,703
99,47096,40821,419CHF
180,000

CHF
180,000

CHF
199,000

CHF
215,000

CHF
225,000

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

170,984
0
6,874
2,142

170,846
19,0007,012
2,142

188,885
15,8478,126
2,142

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

CHF
383
22.4
19.004)
1.15)
1.45)
85

CHF
364
74.7
19.00
1.45)
2.05)
25

CHF
300
62.1
17.00
1.45)
2.15)
27

CHF
371
62.0
16.00
1.55)
2.25)
26

CHF
380
56.8
14.00
1.85)
2.45)
26

CHF
1,669
1,324
1,505
3,004
2,383
2,709

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

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

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

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

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

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

High
Low

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

High
Low
Year-end
High
Low
Year-end

1) Par value per share in 2017, 2016, 2015, 2014 and 2013: CHF 0.10
2) Based on the weighted average of the number of shares as set out innote 13 ‘Earnings per share’ on page 114 of the financial report.
3) See note 13 ‘Earnings per share‘ on page 114 of the financial report.
4) Proposal of the Board of Directors to the 2018 Ordinary General Meeting.
5) Calculated on the basis of a cash distribution in the form of a dividend.
6) Gross cash distribution as a percentage of Group profit.
7) Total number of shares multiplied by the corresponding share price.

CORPORATE
GOVERNANCEREPORT

56

FORBO ANNUAL REPORT 2017 – CORPORATE GOVERNANCE REPORTCORPORATEGOVERNANCEREPORTAt Forbo, the concept of corporate governance encompasses the entire set of principles and rules on organization, conduct, and transparency that are designed toprotect the company’s long-term interests. Forbo’s aim is to strike a careful balance
between management and control. The central rules are contained in the Articles of
Association, the Organizational Regulations, and the regulations of the committeesof the Board of Directors. The following information is set out in line with the Directive on Information relating to Corporate Governance (Directive on Corporate Governance ‘DCG’) and the relevant publications of SIX Swiss Exchange.

Group structure and shareholders
Group structure
Forbo Holding Ltd, domiciled at Lindenstrasse 8, 6340 Baar, is a limited company under Swiss law. The holding
company holds all subsidiaries, directly or indirectly, that belong to the Forbo Group. The operational structure of
the Group is shown in the organizational chart on page 47. The scope of consolidation of Forbo Holding Ltd does
not include any listed companies. The unlisted companies within the scope of consolidation of Forbo Holding Ltd
are listed under ‘Group companies’ starting on page 138 of the financial report. The company name and domicile,share capital, and percentage of participation, along with information relating to the allocation of the Group company to the Group’s businesses, can also be found in that section of this Annual Report.
Significant shareholders
As of December 31, 2017, 3,711 shareholders were listed in the share register of Forbo Holding Ltd, or 989 (36%)
more than in the previous year. As of December 31, 2017, Forbo Holding Ltd knew of the following significant
shareholders with a holding of more than 3%:
31.12.2017as a percentage
Michael Pieper1)
Forbo Holding Ltd2)UBS Fund Management (Switzerland) AG
BlackRock Inc.
JPMorgan Chase & Co.

27.01
5.31
3–5
3–5
3–5

1) Michael Pieper holds his interest directly and indirectly through Artemis Beteiligungen I AG.
2) Forbo Holding Ltd holds its interest directly and indirectly through Forbo International SA and Forbo Finanz AG.

Disclosure of significant shareholders and significant shareholder groups and their holdings is effected in accordance with the disclosures made in the year under review pursuant to Article 120 of the Financial Market Infrastructure Act (FMIA) and the provisions of the Ordinance of the Swiss Financial Market Supervisory Authority on
Financial Market Infrastructures and Market Conduct in Securities and Derivatives Trading (FMIO-FINMA).
Below is a summary of the latest disclosure notices published in the year under review:
On March 16, 2017, JPMorgan Chase & Co. reported that it had exceeded the 3% threshold and that it held 54,614
shares and 490 equity swaps indirectly, corresponding to 3.061% of the voting rights.

57BlackRock Inc. reported on September 2, 2017, that it had exceeded the 3% threshold and that it held 59,871
shares, 339 voting rights to be exercised at its own discretion, and 5,200 contracts for difference, corresponding
to 3.63% of voting rights altogether.
On December 1, 2017, Forbo Holding Ltd reported that it had exceeded the threshold of 5% and that it held 95,973
of its own shares, corresponding to 5.33% of the voting rights, directly or indirectly via Forbo International SA, Baar,
Switzerland and Forbo Finanz AG, Baar, Switzerland.
Full disclosure reports and all further published disclosure notices can be consulted on the publication platform of
the disclosure office of the SIX Swiss Exchange (www.six-exchange-regulation.com � Publications � Significant
shareholders).
For further information on significant shareholders or shareholder groups, we refer the reader to the table on page
56 and to page 156 of the financial report (duty of disclosure pursuant to Article 663c, Swiss Code of Obligations).
Cross-shareholdings
Forbo Holding Ltd has not entered into any cross-shareholdings with mutual capital shareholdings or voting
rights.

Capital structure
Share capital
As of December 31, 2017, Forbo Holding Ltd had a fully paid up share capital of CHF 180,000, divided into
1,800,000 listed registered shares, each with a par value of CHF 0.10. Of this amount:–– 68.44% were registered in the name of 3,673 shareholders with voting rights–– 27.21% were shares of banks or of SIX SIS AG pending registration of transfer–– 4.35% were registered in the share register without voting rights
The shares of Forbo Holding Ltd (security number 000354151/ISIN CH0003541510) are listed on SIX Swiss Exchange. No different categories of shares exist. Each share entitles the owner to one vote. Further information on
Forbo shares can be found on pages 52 and 53. Further information on the rights of participation associated withshares can be found on pages 67 and 68 of this Annual Report.
The fixed-price share buyback for the reduction of share capital launched by the Board of Directors on November
16, 2017, based on the authorization given by the Ordinary General Meeting of Forbo Holding Ltd of April 6, 2017,
was completed on November 29, 2017. At one of the forthcoming Ordinary General Meetings, the Board of­Directors will propose a capital reduction by cancelation of the 63,105 registered shares repurchased as part ofthis share buyback. The share buyback program approved by the 2017 Ordinary General Meeting for a maximumof 10 percent of the share capital will remain in effect. The program is scheduled to end at the Ordinary General
Meeting in 2020.

58

FORBO ANNUAL REPORT 2017 – CORPORATE GOVERNANCE REPORT

Conditional and authorized capital
Pursuant to Clause 4 of the Articles of Association, Forbo Holding Ltd has a maximum conditional capital of
CHF 16,645, corresponding to 166,450 registered shares to be paid up in full with a par value of CHF 0.10 each.
The capital increase takes place in accordance with the Articles of Association through the exercise of option
and convertible rights granted in connection with the bonds issued by the company or one of its subsidiaries,or through the exercise of option rights granted to shareholders. Except for shareholder options, shareholders
have no right of subscription. Holders of option or convertible rights are entitled to subscribe to new share issues.
The registration of new shares is subject to the general restriction set out in Clause 6 of the Articles of Association, which stipulates that shareholders are entered in the share register with voting rights only if they declareexpressly that they have acquired the shares in their own name and for their own account.
There is no authorized capital.
Changes in capital
No changes to the capital of Forbo Holding Ltd were made in the year under review.
The Ordinary General Meeting of Forbo Holding Ltd on April 29, 2016, decided, based on the audit report of alicensed audit expert, to reduce the ordinary share capital of the company by CHF 19,000 from CHF 199,000 to
CHF 180,000 by canceling 190,000 shares with a par value of CHF 0.10 each. It was further decided to amend the
Articles of Association accordingly. The capital reduction was effected, and the new share capital of CHF 180,000
was entered in the Commercial Register on July 14, 2016.
The Ordinary General Meeting of Forbo Holding Ltd on April 24, 2015, decided, based on the audit report of alicensed audit expert, to reduce the ordinary share capital of the company by CHF 16,000 from CHF 215,000 to
CHF 199,000 by canceling 160,000 shares with a par value of CHF 0.10 each. The Articles of Association wereamended accordingly.
Participation certificates and non-voting equity securities (‘Genussscheine’)
Forbo Holding Ltd has issued neither participation certificates nor non-voting equity securities.
Limitations on transferability and nominee registrations
Forbo Holding Ltd does not have any percentage limitations on voting rights. The Board of Directors may only
refuse to register stock in the share register if the purchaser of the stock does not expressly declare at the company’s request that he/she has acquired the shares in his/her own name and for his/her own account.
Pursuant to Clause 6 of the Articles of Association, nominees may be entered in the share register with voting
rights for up to a maximum of 0.3% of the registered share capital entered in the Commercial Register. Over andabove this limit, nominees are only entered provided the name, address, and shareholding of those persons aredisclosed for whose account the nominee holds a total of 0.3% or more of the registered share capital entered in
the Commercial Register.
No statutory privileges exist and there is no restriction on the transferability of the shares of Forbo Holding Ltd.
Convertible bonds and warrants/options
Forbo Holding Ltd has no outstanding convertible bonds nor has it issued any marketable warrants/options.
Details on the long-term incentive plan for the Executive Board, introduced in the year under review, under which
future subscription rights are outstanding, can be found in the Remuneration Report on pages 81 and 82, 84 and85 as well as on page 126.

59

Board of Directors
Members of the Board of Directors
The cut-off date for the following information is December 31, 2017.
With the exception of This E. Schneider, Executive Chairman of the Board of Directors, none of the members of
the Board of Directors listed below holds or has held any operational management positions for Forbo Holding
Ltd or its Group companies. With the exception of This E. Schneider, none of the members of the Board of Directors sat on the Executive Board of Forbo Holding Ltd or the management of its Group companies in the threebusiness years preceding the period under review. There are no essential business relationships between themembers of the Board of Directors and Forbo Holding Ltd or its Group companies.
This E. Schneider, Executive Chairman
This E. Schneider, born in 1952, is a Swiss citizen. He studied economics at the University of St. Gallen (lic. oec. HSG)
and at the Graduate School of Business, Stanford University, California, USA. After holding various management
functions in Europe and the USA, he joined the Executive Board of Schmidt Agency, where he was responsible forstrategic planning, operations and logistics from 1984 to 1990. From 1991 to 1993, he was Chairman and CEO of
the publicly listed company SAFAA, Paris. In 1994, he became a member of the Executive Board of Valora, withresponsibility for the canteen and catering division. From 1997 to 2002, he was Delegate and Vice President of theBoard of Directors of Selecta Group. From March 2004 to December 2013, This E. Schneider was Delegate of theBoard of Directors and CEO, and from January to April 2014 Delegate of the Board of Directors of the Forbo Group.
He has been the Executive Chairman of the Board of Directors since the Ordinary General Meeting of 2014. This
E. Schneider is also a member of the Board of Directors of Rieter Holding AG and Autoneum Holding AG.
Michael Pieper, Vice Chairman
Michael Pieper, born in 1946, is a Swiss citizen. He studied economics (lic. oec. HSG) at the University of St. Gallen.
He has been with the Artemis Group (formerly the Franke Group) since 1988 and has been its owner and CEO
since 1989. Among others, he is a member of the Board of Directors of Arbonia AG, Berenberg Bank (Schweiz) AG,
Rieter Holding AG and Autoneum Holding AG. He was first elected to the Board of Directors of Forbo Holding Ltd
in 2000.
Dr. Peter Altorfer, Vice Chairman
Peter Altorfer, born in 1953, is a Swiss citizen. He studied law at the University of Zurich and holds a doctorate inlaw (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 as well as estate planning. Peter Altorfer sits on the Board of Directors of several companies, including
agta record ag in Fehraltorf, BIH SA in Rapperswil-Jona, and various private and foreign banks, as well as unlisted
investment and real estate companies in Switzerland. He has been a member of the Board of Directors of Forbo
Holding Ltd since March 2005.

60

FORBO ANNUAL REPORT 2017 – CORPORATE GOVERNANCE REPORTClaudia Coninx-Kaczynski
Claudia Coninx-Kaczynski, born in 1973, is a Swiss citizen. She took a degree in law at the University of Zurich(lic. iur.) and earned her Master of Law (LL. M.) at the London School of Economics and Political Sciences. From2006 to 2011, she managed the business of Faerbi Immobilien AG (subsequently Rietpark Immobilien AG) in
Zurich as a member of the Board of Directors. Subsequently until 2014, she implemented various projects for
P. A. Media AG and Swisscontent AG in Zurich (M & A among others). Between 2013 and 2016, she was a memberof the Board of Directors of Tamedia AG, where in 2017 she was appointed Chairwoman of the Pool of Majority
Shareholders. She is a member of the Board of Directors of Swisscontent AG and sits on other Boards of Trustees.
She has been a member of the Board of Directors of Forbo Holding Ltd since April 2014.
Dr. Reto Müller
Reto Müller, born in 1951, is a Swiss citizen. He took a first degree in economics and completed his doctorate(Dr. oec. HSG) at the University of St. Gallen. He also completed the Stanford Executive Program and additional
training at IMD, INSEAD and the Harvard Business School. He is a founding partner of the Helbling group of companies, for which he worked from 1984 to 2016. From 2000 to 2011, he was the CEO and Chairman of the Boardand from 2011 to 2016, he was the full-time Chairman of the Board of Helbling Holding AG. Between 2002 and2010, Reto Müller was either a member or Chairman of the Regional Economic Advisory Board (Zurich) of the
Swiss National Bank. He was a member of the Council of SWISSMEM between 2008 and 2016. He is partner at
BLR & Partners AG as well as Chairman of the Board of Directors of Utz Group, Riri Group and is on other Boardsof Directors and Advisory Boards. He has been a member of the Board of Directors of Forbo Holding Ltd sinceApril 2011.
Vincent Studer
Vincent Studer, born in 1962, is a Swiss citizen. He graduated from the University of Applied Sciences, Berne, andtrained as a Swiss certified public accountant. In addition, he has completed various national and international
training courses. From 1991 to 2008, Vincent Studer worked at Ernst & Young AG as an external auditor and washead auditor responsible for auditing the statements of national and international companies in various industries.
In 2001, he was appointed a partner in the area of Auditing. Since 2008, he has been a partner and member ofthe management and since 2015 a member of the Board of the accountancy and auditing firm T + R AG, Gümligen/Berne, where he heads the Auditing business unit. Vincent Studer is a member of the Board of Directors ofBank EEK AG in Berne. He holds further directorships in other companies and foundations. He has been a memberof the Board of Directors of Forbo Holding Ltd since April 2009.

61

Board of Directors of Forbo Holding Ltd
as per December 31, 2017
Executive Chairman
THIS E. SCHNEIDER
Executive Director
Vice Chairmen
MICHAEL PIEPER
Non-executive Director
DR. PETER ALTORFER
Non-executive Director
Members
CLAUDIA CONINX-KACZYNSKI
Non-executive Director
DR. RETO MÜLLER
Non-executive Director
VINCENT STUDER
Non-executive Director
Secretary of the Board of Directors
NICOLE GRAF
Non-member

GV:		
AFC:
HRNC:
RC:		
C: 		
M: 		

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

AFC

HRNC

RC

2004

–

–

–

2000

–

M

M

2005

M

C

C

2014

–

M

M

2011

M

–

–

2009

C

–

–

62

FORBO ANNUAL REPORT 2017 – CORPORATE GOVERNANCE REPORT

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

63

The Board of Directors meets on being convened by the Executive Chairman as often as business requires but atleast four times a year. The items on the agenda must be announced at least five working days before the day ofthe meeting. This notification period may be shortened in urgent cases. In 2017, the Board of Directors met fivetimes, with meetings usually lasting a whole day.
The Executive Chairman may invite members of the Executive Board or other senior employees to attend Board
meetings for individual items. Regular use is made of this option. External consultants participate in the meetingsof the Board of Directors, the AFC, the RC or the HRNC only in exceptional circumstances to deal with particular
items. As a rule, however, the meetings are held without external consultants.
Audit and Finance Committee
The AFC advises the Board of Directors in respect of its duties on behalf of the Group in the areas of financial­reporting, the accounting standards and systems used, and decisions with significant financial implications. The
AFC monitors the activities of the internal auditors and the external auditors. Moreover, it establishes the audit
program of the internal auditors and proposes to the Board of Directors the choice of the external auditors forthe attention of the General Meeting. The CEO and the CFO are regularly requested to attend meetings in anadvisory capacity, while 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 2017 business year, two meetings
were held, each lasting about half a day. The external auditors were present for some items on the agenda of the
AFC’s meeting on the financial statements and at the meeting to discuss the scope of the audit and the audit
fee. The Ernst & Young representatives responsible for internal auditing attended both meetings held to discuss
the internal audit reports.
Human Resources and Nomination Committee
We refer to the explanations in the remuneration report on pages 74 and 75.
Remuneration Committee
We refer to the explanations in the remuneration report on page 75.
Areas of responsibility
The Board of Directors bears ultimate responsibility for the management of Forbo Holding Ltd. The main dutiesof the Board of Directors are the following non-transferable and inalienable tasks pursuant to the Swiss Code ofObligations and the Articles of Association:–– ultimate management of the company and issuing the necessary directives–– definition of the organization–– organization of accounting, financial controlling, and financial planning–– appointment and dismissal of persons entrusted with the management of the company–– overall supervision of the persons entrusted with managing the company, particularly with respect
to compliance with the law, Articles of Association, regulations, and directives–– preparation of the Annual Report as well as of the General Meeting and implementation of its resolutions–– preparation of the remuneration report–– notification of the court in the event of over-indebtedness

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FORBO ANNUAL REPORT 2017 – CORPORATE GOVERNANCE REPORTThe Board of Directors bears ultimate responsibility for supervising and monitoring the management of thecompany and is responsible for the corporate strategy. It issues guidelines for business policy and is regularly
briefed on the current state of business.
Business to be dealt with by the Board of Directors is regularly submitted in advance to the AFC, HRNC, and RC,
ad hoc committees or individual members, depending on the subject, for review or an opinion. With the exception of its non-transferable and inalienable tasks, the Board of Directors may transfer tasks and responsibilities infull or in part to individual members of the Board or to third parties.
The Board of Directors is empowered to take decisions on all matters which are not reserved or transferred to
the General Meeting or another body of Forbo by law, the Articles of Association, or regulations.
Tasks of the Executive Chairman of the Board of Directors:–– leading the Board of Directors–– preparing the decisions of the Board of Directors and ensuring they are executed–– representing and positioning the Group in the public–– overall management of strategy development and involvement in realizing key strategic projects–– management of relationships with key accounts and business, sector and capital market partners
Tasks of the Chief Executive Officer:–– operational management of the Group–– leading the Executive Board–– development and operational implementation of strategies–– implementation and monitoring of multi-year planning and budgets–– support for the Executive Chairman of the Board of Directors in preparing important projects relating tostrategy, personnel, and finances for discussion and decision-taking by the Board of Directors
The CEO reports to the Executive Chairman of the Board of Directors and as a rule participates in all Board meetings dealing with topics that are relevant for the exercise of his function. He himself though is not a member ofthe Board of Directors. All business management tasks that are not allocated to the Board of Directors or the
Executive Chairman of the Board and that do not require the approval of the Board of Directors are delegated to
the CEO and are conducted by him on his own responsibility. The CEO is responsible for ensuring compliancewith the provisions of the law, the Articles of Association, and regulations throughout the Forbo Group.
In carrying out his tasks, the CEO is supported by the members of the Executive Board, who report to him. The
Executive Board comprises the CEO, CFO, and the Executive Vice Presidents of the two divisions; it is responsible
for the long-term success and market-driven management of the Forbo Group.
The members of the Executive Board are responsible for their particular area of activity and also bear joint responsibility for safeguarding the interests of the Group and achieving the financial Group result.

65

Information and control instruments vis-à-vis the Executive Board
At the meetings of the Board of Directors, any member may request information about any matter concerning theForbo Group. Outside the meetings, such requests for information are to be addressed to the Executive Chairman.
The CEO and the other members of the Executive Board inform the Board of Directors at each regular meeting
about the current state of business, important business events, and significant deviations from the budget.
The Chairmen of the AFC, the HRNC, and the RC report at the Board of Directors meetings on the activities of theircommittees and express the opinions and recommendations of the AFC, HRNC or RC on the business items on
which decisions are to be taken. Each member of the Board of Directors has the right to inspect the minutes of
the AFC, HRNC, and RC meetings. The Executive Board reports to the AFC through the CFO in consultation with
the CEO; it reports to the HRNC and RC through the CEO.
The Board is also regularly briefed outside meetings about events and challenges facing the Group and the general performance of the divisions. In addition, the Executive Chairman and the two Vice Chairmen are in regularcontact when essential policy issues are involved. For important, particularly urgent events, the CEO informs the
Executive Chairman of the Board of Directors immediately.
The Executive Board meets as often as business requires, normally once a month. In the 2017 business year, twelve
meetings were held, with the meetings usually lasting half a day.
The CEO conducts the meetings of the Executive Board. For details concerning the participation of members of
the Executive Board in meetings of the Board of Directors and its committees, see the sections on internal organization and on the AFC, HRNC, and RC on pages 62 and 63, as well as 74 and 75.
The Board of Directors furthermore fulfils its supervisory and monitoring obligations by means of financial reporting and its role in the planning cycle. The internal and external auditors also assist the Board in this task. Neither
the external auditors nor the internal auditors, however, were invited to any meetings of the Board of Directors in2017 as there were no special incidents or topics for discussion.
As part of financial reporting, the Board of Directors is informed as a rule once a month in writing about the company’s current business performance and earnings situation by means of annotated income statements, key ratios,and deviation analyses.
The Board of Directors is, moreover, involved in the company’s planning cycle. As a rule, the existing strategy is
subjected to a thorough review by the Board of Directors in the first half of the year. The revised strategy is quantified in the three-year medium-term plan, which is normally approved at mid-year by the Board of Directors. Basedon the medium-term plan, the Board of Directors sets the budget objectives for the coming business year. Thesebudget objectives are the basis for the detailed budget, which is discussed and adopted by the Board of Directors
in the fourth quarter.
The current business year is assessed in a first estimate always at the end of May and in a second estimate
mid-October. On completion of the business year, the extent to which the budget has been reached is checkedand deviations are analyzed. This analysis is used to derive appropriate measures, which are then implemented
in the next planning cycle.
Internal auditing is effected by Ernst & Young, which has been commissioned for this purpose. Internal auditing is
administratively subordinated to the Executive Chairman of the Board of Directors, is functionally independent,
and reports directly to the AFC.

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FORBO ANNUAL REPORT 2017 – CORPORATE GOVERNANCE REPORTThe audits are conducted in accordance with an annual plan approved by the AFC. A distinction is made between
ordinary and special engagement audits. The latter consist of limited reviews, follow-up reviews, compliance­audits, and other special engagements. Where necessary, the risks and weaknesses identified in these audits areminimized or eliminated by measures adopted by management and are constantly monitored.
In 2017, a total of six internal audits were conducted. The internal audits were restricted to selected businessprocesses. In its review of audited Group companies, the internal audit included any issues that had been definedin the framework of the internal control system (ICS). Internal audits also involved various compliance reviews
related to these processes. Lastly, additional risks and controls in connection with the above-mentioned businessprocesses were analyzed in the audit. At least three companies in each division were audited in the course of theinternal audits.
By means of self-assessments and management controls by division management, the implementation and reliability of the controls introduced with the ICS were examined to ensure that deviations were identified and thatappropriate corrective measures were implemented.
Risk management
The ongoing and systematic evaluation of current and future risks invariably involves identifying and capitalizingon opportunities. Forbo regards risk management as a managerial and working tool designed, among otherthings, to safeguard the tangible and intangible assets of the company.
Forbo has a risk-based insurance coverage in line with industry practice and has appropriately insured in particular operational risks such as property damage, business interruption and liability. The risks specifically in the areasof property damage and business interruption are examined in the context of periodic risk engineering reportsby external experts. For this purpose, production companies are visited at regular intervals, and comprehensive
surveys are worked through with local management. Action plans are drawn up and implemented based on therisks identified. These risk engineering audits have been prepared since 1990.
As regards business risks, Forbo addresses strategic risks as well as market and financial risks. In the area of market
risks, interest and currency risks are monitored centrally and hedged in certain cases. The liquidity and financing
of subsidiaries are also monitored centrally. Please also refer to pages 132 to 136 of the financial report for more
information on this subject.
With regard to the risk management process, the reader is referred to the relevant explanations on pages 132 to
136 (note 32 ‘Risk assessment and financial risk management’) of the financial report.

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

Compensation, shareholdings, and loans
For the relevant information we refer to the remuneration report from page 73.

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

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FORBO ANNUAL REPORT 2017 – CORPORATE GOVERNANCE REPORT

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

Changes in control and defense measures
Duty to make an offer
The Articles of Association of Forbo Holding Ltd do not contain an ‘opting-up’ clause or an ‘opting-out’ clausepursuant to Articles 135 and 125 of the Financial Market Infrastructure Act.
Clause on changes of control
As per year-end 2017, no clauses on changes of control existed in agreements or plans involving members of
the Board of Directors, the Executive Board or other members of management.

Auditors
Duration of the mandate and term of office of the Auditor in Charge
KPMG has been the Forbo Group’s auditors since 2015. The auditors are elected every year by the Ordinary General Meeting on a proposal by the Board of Directors. Rolf Hauenstein has been the Auditor in Charge since April
24, 2015.
Auditing fees
The auditing fees levied by the Group’s auditors for auditing the consolidated financial statements, including thestatutory audit of the individual financial statements of the holding company and the consolidated subsidiaries,
amounted to CHF 0.9 million in the year under review.
Additional fees
The additional consultancy fees that were invoiced by the auditing company amounted to CHF 0.1 million in2017. These fees consist in the main of general tax advice as well as general advice.

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

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

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FORBO ANNUAL REPORT 2017 – CORPORATE GOVERNANCE REPORT

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

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REMUNERATIONREPORT

74

FORBO ANNUAL REPORT 2017 – REMUNERATION REPORTREMUNERATIONREPORT
Introduction
The report meets the provisions of the Ordinance against Excessive Remuneration in Listed Public Companies(OaER), which came into effect on January 1, 2014, and consequently fulfils the requirements of the Swiss Codeof Obligations.
Once a year, in a separate and binding ballot, the Ordinary General Meeting approves the maximum sum for the
total remuneration to be paid to the Board of Directors for the business year following the Ordinary General
Meeting. In addition, a vote is taken on the maximum total amount of fixed remuneration to be paid to the­Executive Board for the business year following the Ordinary General Meeting, the amount of short-term variable
remuneration (bonus/short-term incentive) to be paid to the Executive Board for the business year preceding
the Ordinary General Meeting, as well as the maximum total amount of the long-term participation (long-term
incentive) for the Executive Board for the year of the respective Ordinary General Meeting.
The variable remuneration model for the Executive Board with the short-term incentive was supplemented bya long-term participation (long-term incentive) component, effective as of January 1, 2017. This long-term­incentive consists of a performance share unit plan. Its aim is to link a significant portion of the Executive Board’s
remuneration even more closely with the company’s long-term success and to make it more responsive to shareholders’ interests. Details on the long-term incentive can be found in the chapter ‘elements of remuneration of
the Executive Board’ on pages 80 to 82.
In this context, the Ordinary General Meeting of April 6, 2017, approved by a large majority a relevant amendment to the Articles of Association and also approved the maximum total sum of the long-term incentive paid
to the Executive Board for the year 2017.
Owing to this change in the remuneration system effective as of 2017, shareholders will vote individually at the2018 Ordinary General Meeting on the following four remuneration payments:–– Maximum total remuneration for the Board of Directors for 2019–– Maximum fixed remuneration for the Executive Board for 2019–– Short-term variable remuneration of the Executive Board for 2017 (bonus/short-term incentive)–– Maximum total amount of the long-term participation for the Executive Board for 2018
(long-term incentive plan 2018 – 2020)
The total remuneration was approved by a large majority in a consultative vote on the 2016 remuneration reportat the Ordinary General Meeting of April 6, 2017 (agenda item 6.1). Participants in the 2018 Ordinary General
Meeting will also be invited to vote in a consultative ballot on the entire 2017 remuneration report.

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

75

The Human Resources and Nomination Committee meets as often as business requires, but at least twice a year.
In the 2017 business year, the HRNC held two meetings, both lasting a couple of hours.
The Human Resources and Nomination Committee consists of at least two members of the Board of Directors.
The Ordinary General Meeting of April 6, 2017, elected Dr. Peter Altorfer (Chair), Claudia Coninx-Kaczynski andMichael Pieper to the HRNC for the 2017 business year.
The Remuneration Committee (RC): task and function
The Remuneration Committee supports the Board of Directors in defining the principles of remuneration policy
and in determining the remuneration paid to members of the Board of Directors and the Executive Board out of
the total sum of remuneration as approved by the Ordinary General Meeting. It supports the Board of Directors
in drawing up participation programs and in all other tasks related to remuneration. The Remuneration Committee formulates appropriate recommendations for submission to the Board of Directors. The Board of Directors
may delegate further duties and powers to the Remuneration Committee. The Executive Chairman of the Boardof Directors is regularly invited to its meetings in an advisory capacity, as is the CEO in certain circumstances.
Agenda items and matters directly affecting the function or the person of the Executive Chairman of the Boardof Directors or the CEO are deliberated in their absence.
The Remuneration Committee meets as often as business requires, but at least twice a year. In the 2017 business
year, the Remuneration Committee held two meetings, each lasting a couple of hours.
The Remuneration Committee consists of at least two members of the Board of Directors. The Ordinary General
Meeting of April 6, 2017, elected Dr. Peter Altorfer (Chair), Claudia Coninx-Kaczynski and Michael Pieper to theRemuneration Committee for the 2017 business year. The members of the Remuneration Committee are independent (non-executive) members of the Board of Directors, i.e. they have never belonged to the managementof Forbo and have no, or only negligible, business relations with the company, though they may be shareholders.
Decision-making process of the Remuneration Committee
The maximum amount of the total remuneration paid to the Board of Directors and the maximum fixed remuneration paid to the Executive Board are usually determined by the Remuneration Committee once a year in thespring for the following business year and are submitted to the Board of Directors for acceptance at its Marchmeeting. The amount of the short-term variable remuneration (bonus/short-term incentive) and the definitionand objectives of the long-term participation (long-term incentive) for the Executive Board are determined by the
Remuneration Committee once a year in November for the following year.
ProposalAcceptanceApproval

RC
RC
RC

BoD
BoD
BoD

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

RC

BoD

Ordinary General Meeting for the current business year

RC

BoD

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

RC

BoD

Performance targets – CEO

RC

BoD

Remuneration budget
Maximum total remuneration of the Board of Directors
Maximum fixed remuneration of the Executive Board
Short-term variable remuneration of the Executive Board(bonus/short-term incentive)
Maximum total amount of the long-term participation for
the Executive Board for 2017 (long-term incentive)
Performance targets
Performance targets – Executive Board regarding shortterm variable remuneration (bonus/short-term incentive)

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FORBO ANNUAL REPORT 2017 – REMUNERATION REPORT

Important changes in 2017
An important change was made to the Executive Board’s remuneration system. The hitherto short-term variable
remuneration (bonus/short-term incentive) was supplemented, effective as of January 1, 2017, by a long-term
participation (long-term incentive plan). Its aim is to link a significant portion of the Executive Board’s remuneration even more closely with the company’s long-term success and to align it more closely with shareholders’interests. Details on the long-term incentive can be found in the chapter ‘elements of remuneration of theEx­ecutive Board’ on pages 80 to 82.
In 2017, however, there were no important changes in the remuneration system for the Board of Directors.

Principles of remuneration for the Boardof Directors and the Executive Board
Forbo’s remuneration strategy is geared to long-term and sustainable corporate development. The aim is to­remunerate employees appropriately for their achievements, commitment, and performance, and thereby­encourage their long-term loyalty to the company. The purpose of paying part of the remuneration in the formof shares is to link the interests of the managers to those of the shareholders. The portion of the remuneration
paid in shares is derived from a fixed remuneration amount.
The members of the Board of Directors receive a fixed remuneration, the amount of which is determined basedon whether the member is Board Chairman, a simple Board member or also a member of one of the Board committees. The remuneration is paid out to members of the Board of Directors partly in the form of locked-up sharesin Forbo Holding Ltd.
The members of the Executive Board receive a fixed and a variable remuneration. The fixed remuneration is paid
mainly in cash but may also include shares of Forbo Holding Ltd. The portion paid in shares is derived from afixed remuneration amount. The variable remuneration consists of a short-term remuneration (bonus/short-term
incentive) and a long-term participation (long-term incentive).
The bonus/short-term incentive is a short-term, performance-related remuneration, at least 50% of which must
be taken in the form of locked-up shares of Forbo Holding Ltd (see the description of the management investment plan (MIP) on pages 80 and 81 of this Remuneration Report). The portion paid in shares is derived from afixed remuneration amount. The bonus is derived from the achievement of individual (qualitative) targets byeach Executive Board member and of financial (quantitative) targets by the company. Depending on the function and responsibilities of the Executive Board member in question, these financial targets may be derived fromGroup and/or divisional objectives. It may not exceed 200% of the fixed remuneration of the individual Executive
Board member.
The long-term incentive is a long-term participation plan consisting of a performance share unit plan. At the startof the performance period, each member of the Executive Board is granted a given number of future subscription rights in the form of performance share units (PSUs). One PSU corresponds to a future subscription right toone share. The size of the PSU allocation corresponds to a defined percentage of the fixed remuneration. The
PSUs are subject to a three-year vesting period. They are converted into vested shares only on condition that theGroup’s performance objectives are achieved. At the end of the performance period, the company will determine
whether the objectives set by the Board of Directors at the start of the performance period for the performanceindicators have been reached. Depending on the degree to which the objectives have been reached, a given
percentage of the PSUs will be converted into shares, which are subject to a three-year vesting period.

77

The relevant statutory provisions governing the principles of performance-related remuneration, the distributionof shares, and the additional sum for remuneration of new members of the Executive Board who are appointed
after the Ordinary General Meeting are set out in Chapter IV, pages 9 and 10 of the Articles of Association of Forbo
Holding Ltd. These can be found at:www.forbo.com � Investors � Ordinary General Meeting

Determining the remuneration of the Board of Directors
In order to determine the remuneration of the Board of Directors, the compensation paid to Board membersof Forbo Holding Ltd is compared periodically with that paid to Board members of comparable industrial companies based on information that is available from publicly accessible sources and from respected market data
providers or is known to Board members from their experience of office in similar companies. Industrial com­panies are regarded as comparable if they are similar to Forbo in terms of sector, structure, size (sales and numberof employees), geographic presence, profitability, market capitalization, and complexity. As a general rule, no
external consultants are co-opted for determining the remuneration.
The relevant statutory provisions governing the principles of performance-driven remuneration and the distribution of shares are set out in Chapter IV, pages 9 and 10 of the Articles of Association of Forbo Holding Ltd.
These can be found at:www.forbo.com � Investors � Ordinary General Meeting

Elements of remuneration for the Board of Directors
Non-executive members of the Board of Directors
The non-executive members of the Board of Directors receive a fixed remuneration, the amount of which is­determined based on whether the member is Board Chairman, a simple Board member, or also a member of the
Audit and Finance Committee (AFC), the Remuneration Committee (RC) or the Human Resources and Nomination
Committee (HRNC). Of the remuneration, 40% is paid to the Board of Directors in shares of Forbo Holding Ltd. The
portion paid in shares is derived from a fixed remuneration amount. These shares have a lock-up period of three
years. The number of shares issued is determined on the basis of the average price in the ten stock market days
after distribution of a dividend or repayment of par value. If no dividend is distributed or no par value repayment
made, the average price during the first ten stock market days starting on June 1 of the relevant business year
applies. The settlement or payment of the shares usually takes place in November.
For the purpose of reporting the remuneration, the shares issued are valued at fair value on the date of allocation.
The total compensation for the non-executive members of the Board of Directors also includes a lump sum for
expenses plus employer contributions to the usual social insurances.
The non-executive Board members do not participate in the management investment plan (MIP).
Executive Chairman of the Board of Directors
The compensation for the Executive Chairman of the Board of Directors is disclosed separately and included
under total remuneration to the Board of Directors.
As the previous contract for the period from May 1, 2013, to December 31, 2016, had expired and the Ordinanceagainst Excessive Remuneration in Listed Public Companies (OaER) had come into effect, a new contract was
concluded with the Executive Chairman of the Board of Directors effective as of January 1, 2017 (details on thecontract in effect from 2013 – 2016 can be found on pages 80 and 81 as well as 86 and 87), of the 2016 Annual
Report.

78

FORBO ANNUAL REPORT 2017 – REMUNERATION REPORTThe remuneration will again be paid mainly in locked-up shares, which have a lock-up period of three years. The
annual cash payment of CHF 310,000 is used largely for employee contributions to the pension fund and social
security (AHV and IV) and for other levies. The underlying share price used to calculate the number of shares is theweighted average price of the first ten days on which Forbo Holding Ltd shares were traded on the stock market
in 2017, less the reduced value as a result of locking-up the shares (tax value of CHF 1,137.27 per share). The share
package corresponds to annual compensation at fair value (excluding the reduction for the lock-up period) of
CHF 2,263,404 (1,671 shares).
With this share package and this cash remuneration, all compensations such as bonuses, inflation, salary adjustments, options, etc. are settled. This share package may not be either pledged or assigned and can be sold in three
years at the earliest. This compensation model is thus also geared to long-term and sustainable corporate development and is fully consistent with the interests of the company and its shareholders.
The total compensation for the Executive Chairman of the Board of Directors came to CHF 2,943,326 for the year
under review. Contained in this amount and reported in the column ‘Other payments’ are employer contributions
to the pension fund, other usual social insurances, private use of the company car, contributions for accident andhealth insurance, and location expenses. The Executive Chairman of the Board of Directors is not a party to the
management investment plan (MIP) or the share-based compensation program of the Board of Directors.
Remuneration paid
For the remuneration paid to the Board of Directors in the year under review and the details concerning valuationof the shares, the reader is referred to pages 84 to 88 of this remuneration report.

Determining the remuneration of the Executive Board
Basic principles
In order to determine the remuneration of the Executive Board, criteria such as function, responsibility and ex­perience are taken into account and the remuneration paid to Forbo Executive Board members is comparedwith that paid to Executive Board members in comparable industrial companies. This is based on informationthat is available from publicly accessible sources and from respected market data providers or is known to themembers of the Remuneration Committee from their experience of office in similar companies. Industrial companies are regarded as comparable if they are similar to Forbo in terms of sector, structure, size (sales and numberof employees), geographic presence, profitability, market capitalization, and complexity. As a general rule, no
external consultants are co-opted for determining the remuneration.
Alignment of performance-based remuneration with the corporate strategy
The remuneration strategy of Forbo is geared to its current corporate strategy and linked to the relevant key ratios.
This is reflected in the choice of performance criteria that are derived from Group and/or divisional objectives
depending on the function of the individual Executive Board member; these include net sales, organic growth,
EBIT, net working capital, return on net assets, free cash flow, and growth in earnings per share. The criteria for
determining the remuneration paid to Executive Board members are thus transparent.
The Board of Directors is closely involved in the company’s planning cycle. As a rule, the current corporate strategy is subjected to an in-depth review by the Board in the first half of the year. Once it has been confirmed orrevised, the strategy is quantified in the three-year medium-term plan, which is approved at mid-year by the
Board of Directors. Based on the medium-term plan, the Board of Directors sets the budget objectives for the
coming business year. These budget objectives are the basis for the detailed budget, which is examined andadopted by the Board of Directors in the fourth quarter.

79

The Board of Directors assesses the current business year by means of an initial estimate at the end of May anda second estimate in mid-October. On completion of the business year, the extent to which the budget has beenreached is checked and deviations are analyzed. The actual amount of the variable remuneration paid out to the
Executive Board is determined on the basis of the achievement of these individual targets. The Board of Directors
defines the relation between budget target achievement and payment ratio.
The short-term, variable remuneration (bonus/short-term incentive) for the previous year is paid out on completion of the business year and after approval by the shareholders. In the case of the long-term participation (longterm incentive), the performance share units are allocated after approval by the Ordinary General Meeting; any
entitlement arising therefrom is determined in March on completion of the three-year performance period andconverted into vested shares.
The contributing factors/performance criteria determining the amount of the payout/share allocation of thevariable remuneration components are linked directly to the company’s success.
The chart below provides a detailed breakdown of the timeline and the interdependence of the corporate targets
and the remuneration.

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

2nd quarter3rd quarter

4th quarter80

FORBO ANNUAL REPORT 2017 – REMUNERATION REPORT

Elements of remuneration of the Executive Board
Remuneration of the members of the Executive Board consists of a fixed base salary and two variable compensation components, the bonus/short-term incentive and the long-term incentive.
Fixed remuneration
The fixed base remuneration paid to the Executive Board in the reporting year consists of the gross base salary,
private company car use, and social security payments made by the company. The Remuneration Committee may
also decide that part of the remuneration will be paid in the form of shares in Forbo Holding Ltd (lock-up periodof five years).
Short-term variable remuneration (bonus/short-term incentive)
The bonus/short-term incentive is derived from qualitative (individual) and quantitative (financial) targets, which
are defined in accordance with the operational responsibility of the Executive Board member in question. The
Board of Directors defines and weights the individual and financial targets.
The qualitative targets are geared to the company’s long-term sustainable development and may account for
10% of the bonus/short-term incentive. The remaining 90% depend on the achievement of the financial (quantitative) targets. The main targets for members of the Executive Board are: net sales of the Group and/or a division(25 to 30% of the variable remuneration), EBIT of the Group and/or a division (50 to 55% of the variable remuneration), net working capital of the Group and/or a division (5 to 10% of the variable remuneration), RONA of
the Group (0 to 10% of the variable remuneration) and free cash flow of the Group (0 to 10% of the variable
remuneration).
The defined objectives of the short-term variable remuneration are equivalent to 100% target achievement. The
maximum target achievement is 150%. If a given threshold for a particular target is not reached, no bonus for thattarget is paid. Depending on the function, the variable remuneration may be as much as 140% of the fixed remuneration if targets are fully met. If the targets are exceeded, the variable remuneration may be as much as 200%of the fixed remuneration.
The amount of the short-term variable remuneration, which is based on achievement of the individual and Grouptargets, is set in March after completion of the business year and is submitted to shareholders for approval at theOrdinary General Meeting.
Conversion of remuneration into shares in the management investment plan (MIP)
The bonus payment from the bonus/short-term incentive is linked to the management investment plan (MIP),
which was introduced in 2006 and amended in 2012. According to this plan, at least 50% of the annual short-term
variable remuneration of Executive Board members must be paid into the MIP. The portion paid in shares is derived
from a fixed remuneration amount.
As for the remaining 50% of the annual short-term variable remuneration, the Executive Board members mayeither draw all or part of it in cash or pay it into the MIP. The Executive Board members may redefine the allocation of this remaining 50% every year. The portion paid in shares is derived from a fixed remuneration amount.
Following the amendment of the MIP, all the sums paid into it will be invested solely in shares of Forbo Holding
Ltd as of January 1, 2013. As a first step, the amount invested in the MIP will be increased by 25%, partly in orderto take account of the three-year lock-up period. In addition, this amount will be multiplied by a factor that tracks
the share price movement. This factor is calculated as follows:

81((SPA – SPP)/SPP) + 1, where ‘SPA’ stands for the share price applicable for the allocation of shares in the year of
allocation and ‘SPP’ for the applicable share price in the previous year. The upper limit for this factor is 1.1 and thelower limit is 0.95.
The relevant share price for the allocation of shares is calculated based on the unweighted average of the closing
prices of the Forbo share in the first 14 trading days in January of the allocation year. The shares are locked-up fora period of three years. They cannot be sold or pledged during this time.

portion in cash
maximum 50%

in cashBonus

portion MIP investment
minimum 50% –maximum 100%

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

in shares
three-year lock-up

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

82

FORBO ANNUAL REPORT 2017 – REMUNERATION REPORTThe relevant share price for the allocation of PSUs at the start of the performance period is calculated based on
the unweighted average of the closing prices of the Forbo share in the first 14 trading days in January of the relevant year.
The performance indicators of the long-term incentive are geared to the long-term and sustainable developmentof the company and consist of three evenly weighted objectives. These are organic growth, the return on net
assets (RONA) and growth in earnings per share (EPS).
The long-term incentive objectives are based on a target achievement of 100%. It is not possible to exceed the
maximum target achievement level of 100%. If a member fails to reach a given threshold for an objective, no PSUs
are converted into shares for this indicator.
Foreign members of the Executive Board may draw stock awards rather than shares when the PSUs are converted.
The relevant shares are transferred after three years.
The degree to which objectives have been achieved is determined in March after conclusion of the three-year
performance period.
Actual bonus payments
Readers are referred to pages 84 to 88 of this remuneration report for the amount of the actual short-term variable
remuneration (bonus/short-term incentive) paid to the Executive Board in the year under review and for details
on the valuation and allocation of shares. The number of future subscription rights in the form of performance
share units for the Executive Board as part of the long-term incentive can also be found on these pages.

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

83

Remuneration elements allocatedfor previous years and still outstanding
Under the old MIP, which has been replaced, 25% of the payments was invested in options and 75% in shares ofForbo Holding Ltd. The shares and options were locked up for a period of three years, and the lifetime of the­options was five years. The options issued in connection with the MIP came to maturity on April 21, 2017. Owing
to the revision of the MIP, the sums paid into the MIP were no longer invested in options and shares as of January
1, 2013, but solely in shares of Forbo Holding Ltd. These shares are subject to a lock-up period of three years.
Of special note with regard to the options issued before the revision of the MIP is the treatment of these optionsin the event of termination of the employment contract, disability or retirement. If notice is given by either party
to terminate the employment contract during the lock-up period, the MIP participants may either sell back theoptions (the reselling price then corresponds to the difference between the strike price of the option and theaverage price of the shares during the last five trading days before the employment contract was terminated) or
they may keep the options and sell or exercise them after the lock-up period during their remaining lifetime. In
the event of death, disability or retirement (including early retirement), the options – regardless of whether or notthey are still subject to a lock-up period – may be sold during the entire remaining period to maturity from themoment the disability or retirement begins or from the date of death.
Details on MIP allocation
The shares and options issued in connection with the MIP are equity-settled. The options were issued on thebasis of a valuation by an independent bank, with the valuation being based on the average market price of theshares in the first 14 trading days in January of the year the allocation was made. The last allocation of options wasmade in 2012. The shares that were distributed in connection with the MIP up to and including 2012 were issued
at the average market price for the first 14 trading days in January of the corresponding year. The last options were
exercised in 2017, and therefore no further options were outstanding as of December 31, 2017.

84

FORBO ANNUAL REPORT 2017 – REMUNERATION REPORT

Disclosure of remuneration for the Boardof Directors and the Executive Board
Remuneration of the Board of Directors
The total remuneration paid to the non-executive members of the Board of Directors came to CHF 811,293 in theyear under review (previous year: CHF 813,772). This sum consists of the base salary in cash (60% of the remuneration), amounting to CHF 414,545 (previous year: CHF 415,414) and the base remuneration in shares (40% of the
remuneration) of CHF 334,027 (previous year: CHF 332,987). This corresponds to 212 shares (previous year: 278
shares) at a market value of CHF 1,575.60 each (previous year: CHF 1,197.80). The portion paid in shares is derived
from a fixed remuneration amount. This total remuneration includes a lump sum for expenses plus employer contributions to the usual social insurances, which are reported separately in the column ‘Other remuneration’.
The remuneration paid to the Executive Chairman of the Board of Directors is explained in detail on pages 77 and
78 of this remuneration report.
Remuneration of the Executive Board
The total remuneration paid to the members of the Executive Board came to CHF 3,268,606 in the year underreview (previous year: CHF 3,606,280), subject to approval of the variable portion by the 2018 Ordinary General
Meeting. This sum includes a fixed base salary of CHF 1,791,179 (previous year: CHF 1,727,003) and short-term
variable bonus remuneration (short-term incentive) of CHF 849,617 (previous year: CHF 1,386,787), a long-term
participation (long-term incentive) of CHF 159,793 (previous year: introduced on January 1, 2017) plus the private
use of the company car, and employer contributions to the pension fund and other usual social insurances,which are reported separately in the column ‘Other remuneration’.
The fixed portion of the base salary paid in shares (lock-up period of five years) came to CHF 417,420 (previous
year: CHF 404,478). The portion paid in shares is derived from a fixed remuneration amount. The portion of
the variable remuneration (short-term incentive plan) paid in shares in connection with the MIP (lock-up periodof three years) came to CHF 653,856 (previous year: CHF 1,300,125), which is subject to approval by the 2018
Ordinary General Meeting. The portion paid in shares is derived from a fixed remuneration amount.
For the long-term incentive plan 2017 – 2019, a total of 118 future subscription rights in the form of performance
share units were issued for the first time in 2017.

Plan
2017 – 2019

Allocationof subscription rights
April 2017

Performance
period2017 – 2019

Vesting
Date (PSUs)
April 2020

Unlockingof shares
April 2023

Numberof PSUs
allocated
118

Value PSUs
in CHF(allocation)
159,793

Payoutfactorto bedetermined

Numberof shares(vesting)
to bedetermined

Value ofshares in CHF(vesting)
to bedetermined

85

Disclosure of remuneration of the Board of Directors and Executive Board
Remuneration
For the year 20171)

Variable
remunerations

Base salary

CashName and function

SharesCash
CHF

Bonus/short-term incentive2)

Long-term incentive3)

Shares

Allocation performance
share units

CHF

Number

CHF

CHF

CHF

310,000

1,671

2,263,404

369,9222,943,326

Michael Pieper,
Vice Chairman

80,76141

64,60012,021

157,382

Dr. Peter Altorfer,
Vice Chairman

104,88653

83,507

17,641

206,034

Claudia Coninx-Kaczynski,
member

71,05337

58,297

13,464

142,814

Dr. Reto Müller, member
Vincent Studer, member
Board of Directors total6)
Executive Board7)8)9) total
Of whom highest paidmember of Executive Board

71,05386,792
724,545
1,373,759
400,000

37
44
1,883
283
136

58,297
69,326
2,597,431
417,420
202,634

11,004
8,591
432,643
468,017
187,536

140,354
164,7093,754,619
3,268,606
1,166,906

417
202

CHF

653,856
316,736

Number

118
44

CHF

Total

This E. Schneider,
Executive Chairman5)

195,7610

NumberOther
remuneration4)

159,793
60,0001) The remuneration of the Board of Directors and the Executive Board is reported gross before deduction of employee social insurance contributions. The amounts shown in the table are based on the valuation models used and disclosed in the consolidated financial statements.
2) The variable short-term remuneration of the Executive Board (bonus/short-term incentive) corresponds to the actual degree to whichtargets were reached in 2017 and will be submitted to the April 2018 Ordinary General Meeting for approval. The criterion for determining
the number of shares issued for the variable remuneration is the unweighted average of the closing prices of the Forbo share in the first
14 trading days in January of the allocation year in connection with the MIP. The allocation takes place in April (subject to approval by theOrdinary General Meeting) for the period from January to December of the previous year. The value at allocation was CHF 1,568.00. The
shares are locked up for a period of three years.
3) The long-term incentive for the Executive Board corresponds to the long-term participation plan for 2017 (long-term incentive plan2017 – 2019) and to the number of future subscription rights allocated to the plan in the form of performance share units (PSUs). One PSU
corresponds to a future subscription right to one share and is subject to a three-year vesting period.
4) ‘Other remuneration’ includes in particular employer contributions to the usual social insurances, private use of the company car, and lumpsum or on-site expenses.
5) Please refer to pages 77 and 78 of this remuneration report for details on the structure of the remuneration of the Executive Chairman of theBoard of Directors. These details also contain the criterion for determining the number of shares issued and their lock-up periods.
6) The criterion for determining the number of shares issued for the non-executive members of the Board of Directors is the average share pricein the ten trading days after payment of the dividend or repayment of the par value: CHF 1,575.60. The allocation is made at the discounted
tax value of CHF 1,322.90. The shares are locked up for a period of three years and are reported at market value in the table above.
7) Remuneration of the entire Executive Board including the highest paid Executive Board member.
8) The criterion for determining the number of shares issued for the base salary is the unweighted average of the closing price of the Forbo sharein the first 14 trading days in January of the allocation year. The shares are allocated in April for the period from May of the previous year to
April of the year of allocation. The shares are locked up for a period of five years. The value of the shares allocated was CHF 1,355.71 in 2017and
CHF 1,568,00 for 2018.
9) The criterion for determining the number of shares issued for the variable remuneration is the unweighted average of the closing price of the
Forbo share in the first 14 trading days in January of the allocation year. The shares for the bonus for the business year 2017 will be allocatedin April 2018, subject to approval by the 2018 Ordinary General Meeting. The shares are locked up for a period of three years. The value atallocation was CHF 1,568.00. Foreign members of the Executive Board may acquire stock awards instead of shares. The stock in question willbe transferred after three years.

86

FORBO ANNUAL REPORT 2017 – REMUNERATION REPORT

Remuneration
For the year 20161)

Variable
remuneration2)(bonus/short-term incentive)

Base salary
CashName and function

This E. Schneider, Executive Chairman4)
Michael Pieper, Vice Chairman
Dr. Peter Altorfer, Vice Chairman
Claudia Coninx-Kaczynski, member
Dr. Reto Müller, member
Vincent Studer, member
Board of Directors total5)
Executive Board6)7)8) total
Of whom highest paid-memberof Executive Board

SharesCash

CHF

Number

CHF

CHF

310,000
80,692
104,601
71,726
71,726
86,669725,414
1,322,525
400,000

5,314
54
70
48
48
58
5,592
326
162

2,200,020
64,681
83,84657,49457,49469,472
2,533,007
404,478
201,031

86,6620

Other
remuneration3)

Total

SharesNumber

959
450

CHF

CHF

CHF

1,300,125
610,069

454,542
12,058
17,695
13,50013,5008,618
519,913492,490
206,869

2,964,562
157,431206,142
142,720
142,720
164,759
3,778,334
3,606,280
1,417,969

1) The remuneration of the Board of Directors and the Executive Board is reported gross before deduction of employee social insurance contributions. The amounts shown in the table are based on the valuation models used and disclosed in the consolidated financial statements.
2) The variable short-term remuneration of the Executive Board (bonus/short-term incentive) corresponds to the actual degree to which targets
were reached in 2016 and will be submitted to the April 2017 Ordinary General Meeting for approval. The criterion for determining the number of shares issued for the variable remuneration is the unweighted average of the closing prices of the Forbo share in the first 14 trading
days in January of the allocation year in connection with the MIP. The allocation takes place in April (subject to approval by the Ordinary General Meeting) for the period from January to December of the previous year. The value at allocation was CHF 1,355.71. The shares are locked
up for a period of three years.
3) ‘Other remuneration’ includes in particular employer contributions to the usual social insurances, private use of the company car and lumpsum or on-site expenses.
4) This E. Schneider was Delegate of the Board of Directors until the 2014 Ordinary General Meeting. From this point on, he has had the functionof Executive Chairman of the Board of Directors. Please refer to pages 80 and 81 as well as 86 and 87 of the 2016 Annual Report for details on
the structure of his remuneration for the 2016 business year. These details also contain the criterion for determining the number of sharesissued and their lock-up periods.
5) The criterion for determining the number of shares issued for the non-executive members of the Board of Directors is the average share pricein the ten trading days after payment of the dividend or repayment of the par value: CHF 1,197.80. The allocation is made at the discounted
tax value of CHF 1,005.70. The shares are locked up for a period of three years and are reported at market value in the table above.
6) Remuneration of the entire Executive Board including the highest paid Executive Board member.
7) The criterion for determining the number of shares issued for the base salary is the unweighted average of the closing prices of the Forboshare in the first 14 trading days in January of the allocation year. The shares are allocated in April for the period from May of the previous year
to April of the year of allocation. The shares are locked up for a period of five years. The value of the shares allocated was CHF 1,060.57 in 2016
and CHF 1,355.71 for 2017.
8) The criterion for determining the number of shares issued for the variable remuneration is the unweighted average of the closing price of the
Forbo share in the first 14 trading days in January of the allocation year. The shares for the bonus for the business year 2016 will be allocatedin April 2017, subject to approval by the 2017 Ordinary General Meeting. The shares are locked up for a period of three years. The value atallocation was CHF 1,355.71. Foreign members of the Executive Board may acquire stock awards instead of shares. The stock in question willbe transferred after three years.

87

Options
As of the 2013 business year, no more options have been issued in connection with the MIP. As of end-December
2017, there were no options outstanding anymore within the management investment plan (MIP) launched in2006 and revised in 2012.
Advances and loans
As of December 31, 2017, no advances or loans to members of the Board of Directors or the Executive Board were
outstanding.
The relevant statutory provisions concerning advances, loans and employee benefits for members of the Boardof Directors and the Executive Board are set out in Chapter IV, pages 9 and 10 of the Articles of Association ofForbo Holding Ltd, which can be downloaded at:www.forbo.com � Investors � Ordinary General Meeting

Disclosure of shareholdings pursuant to Article 663c CO2017 business year
As at December 31, 2017, the individual members of the Board of Directors and the Executive Board (including
related parties) held the following number of shares in Forbo Holding Ltd:
Shareholdings 2017
SharesName and function
This E. Schneider, Executive Chairman
Michael Pieper, Vice Chairman
Dr. Peter Altorfer, Vice Chairman
Claudia Coninx-Kaczynski, member
Dr. Reto Müller, member
Vincent Studer, member
Total Board of Directors
Stephan Bauer, Chief Executive Officer
Matthias P. Huenerwadel, Executive Vice President Flooring Systems
Urs Uehlinger, Chief Financial Officer
Jean-Michel Wins, Executive Vice President Movement Systems
Total Executive Board

47,892486,217
1,227
170
590
866
536,962
2,639
2,856
18
195
5,708

88

FORBO ANNUAL REPORT 2017 – REMUNERATION REPORTAs at December 31, 2016, the individual members of the Board of Directors and the Executive Board (including
related parties) held the following number of shares in Forbo Holding Ltd:
Shareholdings 2016
SharesName and function
This E. Schneider, Executive Chairman3)
Michael Pieper, Vice Chairman
Dr. Peter Altorfer, Vice Chairman
Claudia Coninx-Kaczynski, member
Dr. Reto Müller, member
Vincent Studer, member
Total Board of Directors
Stephan Bauer, Chief Executive Officer
Matthias P. Huenerwadel, Executive Vice President Flooring Systems
Andreas Spreiter, Chief Financial Officer
Jean-Michel Wins, Executive Vice President Movement Systems
Total Executive Board

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

Options1)
2012 series
1:12)

46,221
544,176
1,174
133
553
812
593,069
2,041
2,098
1,398
195
5,732

500

500

89

Report of the statutory auditor

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

We have audited the accompanying remuneration report of Forbo Holding Ltd for the year ended December 31,
2017. The audit was limited to the information according to articles 14 – 16 of the Ordiance against Excessive
Compensation in Stock Exchange Listed Companies (Ordiance) on pages 85 to 88 of the remuneration report.
Responsibility of the Board of Directors
The Board of Directors is responsible for the preparation and overall fair presentation of the remuneration reportin accordance with Swiss law and the Ordinance against Excessive compensation in Stock Exchange Listed
Companies (Ordinance). The Board of Directors is also responsible for designing the remuneration system anddefining individual remuneration packages.
Auditor's Responsibility
Our responsibility is to express an opinion on the accompanying remuneration report. We conducted our audit inaccordance with Swiss Auditing Standards. Those standards require that we comply with ethical requirements
and plan and perform the audit to obtain reasonable assurance about whether the remuneration report complies
with Swiss law and articles 14 – 16 of the Ordinance.
An audit involves performing procedures to obtain audit evidence on the disclosures made in the remuneration
report with regard to compensation, loans and credits in accordance with articles 14 – 16 of the Ordinance. The
procedures selected depend on the auditor’s judgment, including the assessment of the risks of material
misstatements in the remuneration report, whether due to fraud or error. This audit also includes evaluating thereasonableness of the methods applied to value components of remuneration, as well as assessing the overall
presentation of the remuneration report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
OpinionIn our opinion, the remuneration report for the year ended December 31, 2017 of Forbo Holding Ltd complies with
Swiss law and articles 14 – 16 of the Ordinance.
KPMG AG

Rolf Hauenstein
Licensed Audit Expert
Auditor in Charge

Regula Tobler
Licensed Audit Expert

Zurich, February 28, 2018

KPMG AG, Badenerstrasse 172, PO Box, CH-8036 Zurich
KPMG AG is a subsidiary of KPMG Holding AG, which is a member of the KPMG network of independent firms affiliated with KPMG International Cooperative(“KPMG International”), a Swiss legal entity. All rights reserved.

FINANCIAL REPORT
Forbo Group financial report
91
Consolidated balance sheet
92
Consolidated income statement
93
Consolidated comprehensive income statement
94
Consolidated statement of changes in equity
95
Consolidated cash flow statement
96
Notes – accounting principles
97
Notes107
Group companies
138
Report of the statutory auditor
142
Consolidated balance sheets 2013 – 2017
148
Consolidated income statements 2013 – 2017
149
Financial statements for Forbo Holding LtdBalance sheet
Income statementNotes to the financial statements
Proposal for appropriation of available earnings
Report of the statutory auditor

151
152
153
154
159
160

92

FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS

Consolidated balance sheet

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

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

31.12.201731.12.2016

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

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

275.3
0.2
105.9
32.4
26.5
91.5
18.8
131.0
0.2
10.8
32.3
87.7
406.3
661.2
0.2
– 0.1
661.1
1,067.5

241.8
0.1
95.4
24.2
20.4
81.5
20.2
126.1
0.4
10.9
26.1
88.7
367.9
621.4
0.2
– 0.1
621.3
989.3

Note

14
15

16

12
17
18

Note

20

21
22
23
12
22
24

26
26

FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS

93

Consolidated income statement

CHF mContinuing operations
Net sales
Cost of goods sold
Gross profit
Development costs
Marketing and distribution costs
Administrative costs
Other operating expenses
Other operating income
Operating profit
Financial income
Financial expenses
Group profit before taxes
Income taxes
Group profit for the year from continuing operations
Group profit for the year from discontinued operations after taxes
Group profit for the year
Group profit attributable to shareholders of Forbo Holding Ltd.

2017

2016

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

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

Note

5

6

7
8
10
11
12
27

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

13
13

22.36
22.36

74.66
74.65

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

13
13

21.10
21.10

74.66
74.65

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

13
13

1.26
1.26

0.00
0.00

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

94

FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS

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

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

2017

2016

38.7

127.6

5.7

– 14.6

36.1
41.8
80.5
80.5

– 27.2– 41.8
85.8
85.8

Note

12

FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS

95

Consolidated statementof changes in equity
2017

CHF m
December 31, 2016
Group profit for the year
Other comprehensive income for the year, net of tax
Total comprehensive income
Share-based payments
Treasury shares
Dividend payment
December 31, 2017

SharecapitalTreasuryshares0.2– 0.1

Reserves

0.2

– 0.1

941.4
38.7
5.7
44.4
4.4
– 12.6– 32.5945.1

Share
capitalTreasurysharesReserves

0.2

– 0.1

0.0

Translationdifferences– 320.1
36.1
36.1– 284.0

Translationdifferences

Total

621.4
38.7
41.8
80.5
4.4
– 12.6– 32.5
661.2

2016

CHF m
December 31, 2015
Group profit for the year
Other comprehensive income for the year, net of tax
Total comprehensive income
Share-based payments
Treasury shares
Dividend payment
December 31, 2016

0.0
0.2

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

– 0.1

852.0
127.6
– 14.6
113.0
4.8
0.7
– 29.1941.4– 292.9– 27.2– 27.2– 320.1

Total

559.2
127.6
– 41.885.8
4.8
0.7– 29.1
621.4

96

FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS

Consolidated cash flow statement

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

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

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

2017

2016

38.7
– 2.2
43.5
– 0.1
31.8
5.9
4.4
– 37.97.4– 15.9
3.2
78.8

127.6
0.0
31.5
– 1.9
29.9
5.9
4.8
– 29.90.4
19.2– 21.0166.5

0.0– 57.8
0.5
– 0.1
0.9
– 56.5– 1.7– 40.00.9
0.0
0.5– 40.3

0.1
– 0.2
0.0
– 103.3
90.9– 32.5– 45.0

0.0
– 0.5
0.0
0.0
0.0
– 29.1– 29.6– 22.7
8.4
209.7
195.4

96.6
– 3.2
116.3
209.7

Note

27
12
17
18
25

Note

10

Note

23
11

Note

14
14

FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS

97

Notes –
accounting principles
1 General information
Forbo Holding Ltd and its subsidiaries (together constituting the ‘Group’) manufacture floorings, construction adhesives, and drive and conveyor technology.
The Group has a global network of locations with production and distribution as well as pure sales companies.
Forbo Holding Ltd is a public limited company under
Swiss law, domiciled in Baar, Switzerland. It is listed on
the SIX Swiss Exchange.
These financial statements were approved by the
Board of Directors on February 28, 2018, and released
for publication on March 6, 2018. This financial report
is subject to approval by the Ordinary General Meetingof April 6, 2018.

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

The consolidated statements were prepared in accordance with the principle of historical costs with the ex­
ception of available-for-sale financial assets and de­rivative financial instruments, which are measured atfair value.
The preparation of the consolidated financial statements requires management to make discretionary
judgements, estimates and assumptions that can affectthe application of accounting methods and reported
revenues, expenses, assets, liabilities, and contingent
assets and liabilities at the date of the financial statements. Actual results may differ from these estimatesand assumptions. Estimates and the underlying assumptions are being reviewed continually. Revised versions of estimates and assumptions are recognized prospectively. Information about discretionary judgements
as well as assumptions and uncertainty involved in­estimates are contained in note 3 ‘Critical judgements,
estimates and appraisals by management’.
Scope and principles of consolidation
Subsidiaries are companies that are controlled by theGroup. The Group exercises control over a company if
it is exposed to variable returns from its involvement in
the company or possesses rights to the returns and isable to influence these returns by means of its discretionary control over the company. The financial statements of subsidiaries are included in the consolidated
financial statements from the point at which control
begins.
The purchase method of accounting is used to accountfor business combinations. The value of the transferredconsideration in a business combination and the acquired identifiable net assets are recognized at thefair value on the acquisition date. The consideration includes cash payments and the fair value of the assets
transferred, liabilities incurred or acquired, and equity
instruments issued by the acquirer on the transaction
date. Liabilities dependent on future events, which are
based on agreements on contingent considerations
are accounted for at their fair value in the accounting
treatment of the acquisition. Acquisition costs are­reported as expenditure in the income statement.
Non-controlling interests are measured at the acquisition date with their proportionate share in the identifiable net assets of the acquired entity.

98

FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS

Goodwill is the excess of the consideration of the business combination and the amount of the non-controlling interest over the identifiable net assets assessedat fair value.
Inter-company transactions, balances, and unrealized
gains or losses on transactions between Group companies are eliminated.
Associates are all entities over which the Group hassignificant influence but not control, generally accompanied by a shareholding of between 20% and 50%of the voting rights. Investments in associates are accounted for using the equity method of accounting
and are initially recognized at cost.
The Group’s share of its associates’ post-acquisition
profits or losses is recognized in the income statement,
and its share of post-acquisition changes in reserves isrecognized in reserves. The cumulative post-acquisition
movements are offset against the carrying amount of
the investment. When the Group’s share of losses in an
associate equals or exceeds its interest in the associate,
the Group does not recognize further losses, unless it
has incurred obligations or made payments on behalfof the associate.
Changes in the scope of consolidation
There were no significant changes in the scope of consolidation in the year under review.
The previous year, effective June 28, 2016, Forbo Siegling Italia S.p.A. acquired the entire share capital ofTema S.r.l. in Parma, Italy. Tema S.r.l. was an existing customer of Forbo that sold fabric conveyor belts andplastic modular belts and is now an additional service
point for the Movement Systems division in northern
Italy.
In addition, in the previous year Forbo Finanz AG established a new production facility belonging to Forbo
Movement Systems (China) Co. Ltd in Pinghu and a
new sales company Forbo Flooring Middle East DMCC
in Dubai.
The subsidiaries included in the group of consolidated
companies are listed under ‘Group companies’ (frompage 138 of this report).

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

FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS

99

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

Exchange rates
Euro zone
USA
Great Britain
Japan
China
Sweden

EUR
USD
GBP
JPY
CNY
SEK

Discontinued operations
Discontinued operations are recognized separately if
a component of the Group has either already been discontinued or been classified as ‘held for sale’. The prior-year figures affecting the income statement are adjusted accordingly and are also presented separately.
Net sales and revenue recognition
Net sales include the fair value of the consideration received or to be received for the sale of goods and services as part of ordinary business activity. Net sales arereported net of revenue reductions such as sales tax,
returns, discounts, and rebates.
Revenue from the sale of goods and services is recognized in the income statement if the risks and rewardsof ownership have been transferred to the buyer, theamount of the revenue can be reliably determined, andpayment is deemed to be likely.
Appropriate provisions are made for expected warranty
claims.
Government grants
Government grants are recognized only when there isreasonable assurance that the related conditions are
met and the grants will be received. Grants are deducted when arriving at the carrying amount of the asset
concerned and they are recognized in profit or loss
over the period of the depreciable asset by means of areduced depreciation charge.
Government grants that compensate the company for
expenses incurred are recognized in the income statement in the periods in which the expenses to be compensated accrue.

1
1
1
100
100
100

Balance sheet(year-end exchange rates)

2017

2016

2017

2016

1.11170.98471.26860.877914.5800
11.5360

1.09010.9853
1.33540.907114.8300
11.5216

1.17050.97631.32030.867415.0100
11.9018

1.07191.0184
1.25760.870914.6600
11.1963

Research and development
All research costs are posted directly to the income
statement in the period in which they are incurred.
­Development costs are capitalized only if these costs
can be reliably measured, the product or process istechnically feasible and commercially viable, a future
economic benefit is likely, and the Group has sufficient
resources and intends to complete the development
and exploit the asset. Other development expenses
that do not meet these criteria are taken to the income
statement as soon as they are incurred. Capitalized development costs are measured at the cost of acquisition or production less cumulative amortizations andimpairments.
Share-based payments
Equity-settled share-based payments to employees
are valued at the fair value of the equity instrument on
the date on which the instruments are granted. The fairvalue determined on granting equity-settled sharebased payments is recognized in the income statement over the vesting period and is included in personnel expenses.

100 FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS

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

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

5 to 10 years
3 to 5 years
5 years
3 to 10 years
no depreciation

FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS 101

If there are signs of an impairment, the recoverable
amount of the asset is determined. If the carrying
amount exceeds the recoverable value, the carrying
amount of the asset is reduced accordingly and thedifference charged to the income statement.
Assets which are held in financial leasing arrangements
are depreciated over their estimated useful life in thesame way as assets belonging to the company or, if
this is shorter, over the life of the underlying leaseagreement. The costs of short-term leasing are charged
directly to the income statement. The corresponding
liabilities are disclosed in the notes (see note 29 ‘Leasing’).
Intangible assets and goodwill
The goodwill generated in connection with businesscombinations is measured at the cost of acquisition
less cumulative impairment losses.
Goodwill is not amortized but tested for impairment atleast at each reporting date or earlier if there are signsof a potential impairment.
The acquisition costs of trademarks, licenses, customer
relationships, and technologies acquired in a businesscombination correspond to the fair value at the dateof acquisition.
Trademarks with an indefinite useful life are not subject to amortization but are tested for impairment atleast annually. Any impairment is recognized as an expense in the income statement.
Other intangible assets that are acquired by the Groupand have a finite useful life are carried at acquisition or
production costs less cumulative amortizations andimpairments. The amortization of other intangible assets with a finite useful life uses the straight-line method; the following estimated useful lives are applied:
Customer relations Technologies Software 

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

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

Financial instruments
Financial instruments can be classified as follows:(a) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss arethose held for trading. A financial asset is classified inthis category if acquired principally for the purpose of
selling in the short term. Derivatives are also classified
in this category unless they are designated as hedges.
The Group uses derivative financial instruments solely
to manage financial risks and not for the purpose of
speculation. The derivatives used are accounted for on
the day the trade is conducted. Derivative financial instruments are recognized at fair value in the balance
sheet under ‘Other current financial assets’ or in ‘Current
financial debt’.
To hedge its currency risks, the Group uses mainly currency spot transactions, forward currency contracts,
and currency swap transactions. The fair values of various derivative instruments used for hedging purposes
are disclosed in note 30 ‘Additional information on financial instruments’.
(b) Loans and receivables
Loans and receivables are loans and receivables granted by the Group with fixed or determinable paymentsthat are not quoted in an active market. They are included in current assets except for maturities greaterthan 12 months after the end of the reporting year, inwhich case they are classified as non-current assets.
Trade receivables are carried in the balance sheet attheir nominal value less allowances for doubtful risks.
Allowances for doubtful risks are established based on
the maturity structure and discernible solvency risks.
In addition to individual allowances for specific identifi­
able risks, allowances are also made on the basis of statistically determined default risks.

102 FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS(c) Financial assets available-for-sale
Available-for-sale financial assets are non-derivative financial assets that are either designated in this category or not classified in any of the other categories.
(d) Financial liabilities at amortized costs
Financial liabilities are recognized at fair value less directtransaction costs the first time they are reported. Subsequent valuations are generally done at the amortized
cost, applying the effective interest method.
Current and non-current financial debt comprise bankloans and finance lease obligations. It is stated at amortized costs.
Financial debt is assigned to current debt, except if theGroup has to settle the obligation earliest 12 months
after the reporting date or enjoys an unlimited right topostpone payment of the debt by at least 12 months
after the reporting date.
Trade payables are non-interest-bearing and are disclosed at nominal value.
RECOGNITION AND MEASUREMENT
Purchases and sales of financial assets are basically recognized as soon as the Group becomes a contractual
party. In the case of regular purchases or sales, the settlement date is relevant for the initial recognition andderecognition.
Financial assets not classified as being ‘Financial assets
at fair value through profit or loss’ are initially recognized at fair value plus transaction costs. Financial assets which are carried at fair value through profit or loss
are initially recognized at fair value, and transaction
costs are expensed in the income statement. Financial
assets are derecognized when the rights to receive
cash flows from the investments have expired or havebeen transferred and the Group has transferred substantially all risks and rewards incidental to ownership.

Available-for-sale financial assets and assets in the category ‘Financial assets at fair value through profit orloss’ are carried at fair value after their initial recognition. Loans and receivables are carried at amortizedcost using the effective interest method.
Gains or losses arising from financial assets in the category ‘Financial assets at fair value through profit orloss’ are recognized in the income statement in the period in which they are incurred. Dividend income fromfinancial assets classified as ‘at fair value through profit
or loss’ is recognized in the income statement when
the Group’s right to receive payments is established.
Changes in the fair value of securities classified as available-for-sale are recognized in other comprehensive
income. When securities classified as ‘available-for-sale’
are sold or impaired, the accumulated fair value adjustments previously recognized in other comprehensive
income are reclassified to the income statement.
The Group assesses at the end of each reporting year
whether there is objective evidence that a financial asset or a group of financial assets is impaired.
Inventories
Inventories are stated at the lower of cost or 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 net realizable value constitutes the estimated sales
price less all estimated costs up to completion, as wellas the costs of marketing, sales, and distribution.
Inventories are for the greater part measured at average cost. Adjustments are made for unsaleable in­ventories and inventories with insufficient turnover.
Inter-company profits on intra-Group deliveries are
eliminated in the income statement.

FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS 103

Cash and cash equivalents
Cash and cash equivalents are stated at nominal value.
They include cash on hand, postal and bank accounts,and fixed-term deposits with maturities of up to threemonths from the date of acquisition.
Shareholders’ equity
Registered shares are classified as share capital at theirpar value. Payments by shareholders above the par value are credited to reserves.
Treasury shares are deducted at their par value fromshare capital. The acquisition costs in excess of par value arising on the acquisition of treasury shares are debited to reserves. On the sale of treasury shares, gains orlosses compared with the par value are credited ordebited to reserves.
Dividends are debited to equity in the period in which
the resolution on their distribution is adopted.
Employee pension plans
The Group maintains various pension plans designed
as defined contribution and defined benefit plans.
These pension plans are established in accordancewith the local conditions in each country. The plans are
funded either by contributions to legally autonomous
pension funds and insurance plans or by recognitionof 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 the agreed employer contributions.
For defined benefit plans, the pension costs and liabilities are assessed annually on the basis of various economic and demographic assumptions by independentactuaries according to the projected unit credit method. The liabilities correspond to the present value of the
expected future cash flows. The plan assets are statedat market value and deducted from the pension liabilities. Pension costs, consisting of current service costs
incurred in the relevant period and net interest expense, less employee contributions, are stated as personnel expenses in the income statement. Past service
costs resulting from changes in pension plans are posted directly to the income statement. Profits or losses
resulting from pension plan curtailments or settlements are immediately taken to the income statement.

Revaluation components include actuarial gains andlosses due to changes in the present value of the pension obligations arising from changes in assumptions
and experience adjustments plus the return on plan
assets less the contributions contained in net interest
expense. Revaluation components are recognized inother comprehensive income, taking deferred taxes
into account, and are never subsequently reclassified
to the income statement.
Provisions
Provisions are recognized if the Group has a current
legal or constructive obligation as a result of a past
event, it is probable that an outflow of resources will
be required to settle the obligation, and a reliable estimate of the amount can be made. The provision isthe best estimate on the reporting date of the amountrequired to meet the current obligation, taking into
account the risks and uncertainties underlying the obligation.

3 Critical judgements, estimates andappraisals by management
The application of the measurement and accounting
principles requires that circumstances and estimates
be assessed and assumptions be made with respect
to the carrying amounts of assets and liabilities. The
estimates and the underlying assumptions are basedon past experience and other factors regarded as relevant, including expectations of future events that­appear reasonable in the given circumstances. The actual results may, of course, deviate from the estimatesand assumptions of management.
The following are the main areas in which a significant
risk exists in the coming business year involving a significant adjustment of the carrying value of assets andliabilities.

104 FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS

Impairment tests
Along with the regular periodic review of goodwill
and intangible assets with an indefinite useful life, thecarrying amounts of fixed and intangible assets witha finite useful life are also always reviewed if due tochanged circumstances or other triggering events
these amounts can possibly no longer be realized. Ifsuch a situation occurs, the recoverable amount is­determined based on expected future revenues. This
corresponds to either the discounted expected cash
flows or the expected net sales price.
Important assumptions in the calculations underlying
these impairment tests include growth rates, margins,
estimates and management’s expectations of the future development of net working capital, and discountrates. The actual cash flows may deviate from theplanned discounted future values. Likewise, the useful
lives may be shortened or non-current assets impairedin the event of a change in the use of buildings, machinery and facilities, change or abandonment of locations, or lower-than-expected revenues over the me­dium term. Further information on this topic can befound in note 17 ‘Property, plant, and equipment’ andnote 18 ‘Intangible assets and goodwill’.
Valuation of pension plan liabilities
Various employee pension plans exist for employees of
the Group. In the valuation of defined benefit plans,
actuarial assumptions are made to estimate future developments. These include assumptions and estimates
relating to the discount rate, the inflation rate as well asassumptions for future wage trends. In their actuarial
calculations for determining employee benefit obligations, the actuaries also use statistical information suchas 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 income
from the employee pension schemes and on the comprehensive income statement. Further information on
this topic can be found in note 24 ‘Employee benefit
obligations’.

Recognition and valuation of provisions
In the conduct of ordinary business activities, a liabilityof uncertain timing and/or amount may arise. Provisions are determined using available information basedon reasonably expected cash outflows. Claims against
the Group may arise that may not be covered, or arecovered only in part, by provisions or insurance benefits. Further information on this topic can be found innote 22 ‘Provisions’.
Income taxes
The Group is obliged to pay income taxes in various
countries. Certain key assumptions are necessary in order to determine income tax in the relevant countries.
There are business events which have an impact on
taxation and taxable profit. Hence, the amount of the
final taxation cannot be determined definitively. The
measurement of current tax liabilities is subject to theinterpretation of tax regulations in the relevant countries. The adequacy of this interpretation is assessed by
the tax authorities in the course of the final assessment
or tax audits. This may result in material changes to tax
expenses. Where the definitive taxation of these business events deviates from the previous assumptions,this will have an impact on the current and deferredtaxes in the period in which the taxation is definitively
determined. Furthermore, determining whether tax
losses carried forward can be capitalized requires a critical estimate of the probability that they can be offset
against future profits. This assessment is based on planning information. Further information on this topic canbe found in note 12 ‘Income taxes’.

FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS 105

4 Application of new or revised
accounting standards
Applied new and revised standards
and interpretations
The following new or revised standards and inter­
pretations of the International Accounting Standards
Board (IASB) were applied for the first time in the business year that began on January 1, 2017:–– Amendments to IAS 7 ‘Initiative on disclosure’–– Amendments to IAS 12 ‘Recognition of deferred tax
assets for unrealized losses’–– Annual improvements to IFRS 2014 – 2016 cycle

The first-time application of the before-mentioned
new and revised standards and interpretations had noappreciable effect on the Annual Report presented
here.
Introduction of new standards
in 2018 and beyond
The following new and revised standards and interpretations that were published by end-2017 but are notyet mandatory were not applied in advance in thepresent consolidated financial statements. Since theirimpact on the consolidated financial statements has
not yet been systematically analyzed, the anticipatedeffects shown in the corresponding note to the tablebelow represent an estimate by management.

Standards
New standards or interpretations:
IFRS 9 ‘Financial instruments’
IFRS 15 ‘Revenue from contracts with customers’ and related clarifications
to IFRS 15 ‘Revenue from contracts with customers’
IFRS 16 ‘Leases’
IFRIC 23 ‘Uncertainty over income tax treatments’
Amendments and changes to standards and interpretations:
Amendments to IFRS 2 ‘Classification and measurementof share-based payment transactions’Amendments to IAS 28 ‘Long-term interests in associates and joint ventures’Annual improvements to IFRS 2014 – 2016 cycle:
Amendments to IAS 28 ‘Investments in associates and joint ventures’Annual improvements to IFRS 2015 – 2017 cycle:
Amendments to IFRS 3 ‘business combinations’ and IFRS 11 ‘joint arrangements’
Amendments to IFRS 12 ‘income taxes’*

No significant impact on the consolidated financial statements is
expected.
** Mainly additional disclosures in the consolidated financial statements are anticipated.
*** The impact on the consolidated financial statements cannot yet
be fully assessed.

Date effective

Plannedapplication****

January 1, 2018
January 1, 2018

Business year 2018
Business year 2018****

January 1, 2019
January 1, 2019

Business year 2019
Business year 2019*

January 1, 2018

Business year 2018*

January 1, 2019
January 1, 2018

Business year 2019
Business year 2018

January 1, 2019

Business year 2019***

106 FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTSIFRS 9 Financial instruments
IFRS contains a new standard for recognition and measurement of financial instruments, which reflects thebusiness model in which the instruments are held andthe characteristics of their cash flows.
IFRS 9 contains three important categories for recognizing financial assets: ‘measured at amortized cost’,‘measured at fair value and reclassified in profit or loss
(FVTPL)’, and ‘measured at fair value and reclassified inother comprehensive income (FVOCI)’. The standard
eliminates the existing categories of IAS 39: ‘hold to maturity’, ‘loans and receivables’, and ‘available for sale’.
IFRS 9 replaces the ‘Incurred loss model’ of IAS 39 by afuture-oriented model of ‘Expected credit losses’. Thisrequires discretionary judgments as to how far the expected credit losses are influenced by changes in economic factors. Financial instruments at Forbo consist
in particular of trade receivables in which a simplified
model of valuation allowances is employed (‘provision
matrix’).
The Group will apply the new standard as of January 1,
2018, and will take advantage of the possibility permitted by the standard of waiving any adjustment of comparative figures for 2017 in respect of classification andvaluation.
Any effect of the application of the new provisions as
per January 1, 2018, to financial instruments will be recognized in equity at the time of changeover, but are
not expected to have any significant impact on the
consolidated financial statements.
IFRS 15 – Revenue from contracts with customers
IFRS 15 provides a comprehensive framework for spe­cifying whether, when, and to what extent sales revenues are recognized.
The Group has made detailed analyses of the impact of
the new standard. They have shown that, in switching
to the requirements of the new standard, the Groupneed not make any significant changes regarding thetime and amount of revenue recognized comparedwith the current accounting practice under IAS 18; only
the notes will have to be expanded to take account of
the new recognition and disclosure provisions.
The Group will apply the new standard as of January 1,
2018; to comply with the transitional provisions of IFRS
15, the prospective method will be applied, with theeffects being recognized in equity.

IFRS 16 – Leases
IFRS 16 introduces a uniform accounting model inwhich leases are to be recognized in the lessee’s balance sheet. A lessee recognizes a ‘right-of-use asset’that represents his right to use the underlying asset,
plus a debt from the lease that represents his obligation to make leasing payments. Exceptions are madefor short-term leases and for leases for low-value assets.
Forbo has made an initial assessment of the possible
impact on its financial statements. The most significant
impact identified to date is that the Group will haveto book new assets and debts for its operational leases,in particular for vehicles and property. The type of expenditure associated with these leases will thereforechange since IFRS 16 substitutes expenses for operational leases by depreciation charges for ‘right-of-use
assets’ and interest expense for debts from the lease.
The Group will apply the new standard as of January 1,
2019, and recognize the cumulative adjustment in­equity at the time of the first application.

FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS 107

Notes

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

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

2017
CHF m
Total net sales
Inter-segment sales
Net sales to third parties
Operating profit
EBITDA
Operating assets
Capital expenditure
Number of employees (December 31)

Flooring
Systems
856.6
0.0
856.6
42.1
69.7
539.8
22.3
3,157

Movement
Systems
390.0
– 0.2
389.8
49.3
58.7
275.7
35.5
2,360

Corporate/
Elimination
– 0.2
0.2

Flooring
Systems
818.3
– 0.3
818.0
122.7
149.1
498.6
20.5
3,110

Movement
Systems
367.7
– 0.2
367.5
45.3
54.4
223.4
16.5
2,194

Corporate/
Elimination
– 0.5
0.5

– 11.5– 10.8
17.3
0.0
42

Total
1,246.4
0.0
1,246.4
79.9
117.6
832.8
57.8
5,559

Segment information on the reportable segments forthe prior year:
2016
CHF m
Total net sales
Inter-segment sales
Net sales to third parties
Operating profit
EBITDA
Operating assets
Capital expenditure
Number of employees (December 31)– 10.8– 10.6
16.9
3.0
42

Total
1,185.5
0.0
1,185.5
157.2
192.9
738.9
40.0
5,346

108 FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS

The management reporting is based on the same accounting principles as external reporting.
The Executive Chairman of the Board of Directors andthe Chief Executive Officer assess the performance ofthe reportable segments based on their operating result (EBIT). The net financial result is not allocated tothe segments since it is Corporate Treasury that mainly exercises central control over the financial result.

CHF mTotal segment result (EBIT)
Financial result
Group profit before taxes

CHF m
Total operating assets
Non-operating assets
Total assets

Inter-segment sales are transacted at arm’s length. The
segments apply the same accounting principles as theGroup. Sales to third parties, as they are reported to
the Executive Chairman of the Board of Directors andthe Chief Executive Officer, are identical with the sales
reported in the income statement.
Reconciliation of segment results to the income statement and balance sheet:
2017

2016

79.9
0.1
80.0

157.2
1.9
159.1

31.12.201731.12.2016

832.8
234.7
1,067.5

738.9
250.4
989.3

FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS 109

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

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

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

2017
Third-party sales

2016
Third-party sales

26.0
158.3
150.5
124.5
105.2
97.8
70.6
67.7
800.6
259.5
186.3
1,246.4

23.2
146.3
139.7
116.6
103.4
108.6
63.7
55.0
756.5
251.0
178.0
1,185.5

31.12.2017
Operating assets

31.12.2016
Operating assets

30.6
72.1
85.6
211.8
28.2
121.3
25.6
25.1
600.3
102.7
129.8
832.8

27.6
62.9
78.9
192.9
24.7
123.5
20.9
19.9
551.3
99.2
88.4
738.9

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

Costs for manufacturing trials, recipe optimization andnew collections are not reported within ‘Development
costs’.

6 Development costs

As in the previous year, no development costs were
capitalized.

‘Development costs’, which mainly comprise productdevelopment, amounted to CHF 15.5 million in the reporting year (2016: CHF 15.1 million).

110 FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS

7 Other operating expenses

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

‘Other operating income’ comprises a range of income,mainly in connection with the sale of tangible assets,
the release of provisions for legal proceedings, insurance payments, rental income, the sale of material forrecycling purposes, and the release of allowances for
doubtful trade receivables.

The increase versus the previous year is due to theone-off costs of CHF 83.4 million arising from the now
concluded antitrust proceedings brought against
leading flooring manufacturers in France (see note 28‘Contingent liabilities’) and to higher provisions set
aside for litigation.

In fiscal 2017, government grants in connection withthe construction of the plant in Pinghu, China, amounting to CHF 1.7 million (2016: CHF 0.0 million) were recognized in the income statement.

9 Personnel expenses

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

As at December 31, 2017, the headcount was 5,559(2016: 5,346). The average headcount over the year
was 5,534 (2016: 5,336).

2017

2016

297.2
71.7
5.7
374.6

281.0
68.3
6.4
355.7

Salaries and wages include share-based payments­expenses of CHF 4.4 million (2016: CHF 4.8 million). A
bonus program is available for around 130 managers,which is linked to achieving financial targets set for
the Group, the divisions, and individual objectives (seealso note 25 ‘Employee participation plan’).

10 Financial income

Financial income
CHF mInterest income
Foreign exchange gains, net
Total financial income

2017

2016

0.9
0.0
0.9

0.5
1.5
2.0

FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS 111

11 Financial expenses

Financial expenses
CHF mInterest expenditure from financial liabilities valued at amortized cost
Foreign exchange losses, net
Other financial expense
Total financial expenses

2017

2016

0.0
0.7
0.1
0.8

0.0
0.0
0.1
0.1

2017

2016

44.6
– 1.1
43.5

38.9
– 7.4
31.5

2017

2016

80.0
– 19.4159.1– 40.1– 29.2
4.2
1.1
0.8
– 5.8
4.8
– 43.5

– 1.4
1.2
4.1
2.0
0.0
2.7
– 31.5

As in the previous year, the Group did not have any­interest-bearing liabilities with the exception of somefinancial leasing arrangements.

12 Income taxes

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

Analysis of tax expense
The following reconciliation explains the difference
between the expected and the effective tax expense.

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

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

pense of all subsidiaries. The expected individual tax
income/expense in a country is calculated by multiplying the individual profit/loss by the tax rate applicablein the country concerned. The expected tax rate in theyear under review was 24.2% (2016: 25.2%).

112 FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS

Capitalized and non-capitalized tax loss carry-forwards,
by expiry date:
2017
CHF m
Expiry after:
1 year
2 years
3 years
4 years
5 years
More than 5 years
Total tax loss carry-forwards

Not capitalized

Capitalized

Total

0.0
0.0
0.0
1.1
2.0
42.8
45.9

0.0
0.1
0.1
0.0
0.0
50.2
50.4

0.0
0.1
0.1
1.1
2.0
93.0
96.3

Not capitalized

Capitalized

Total

0.4
0.1
0.2
0.7
2.1
44.0
47.5

0.1
0.1
0.8
3.3
0.1
49.5
53.9

0.5
0.2
1.0
4.0
2.2
93.5
101.4

2016
CHF m
Expiry after:
1 year
2 years
3 years
4 years
5 years
More than 5 years
Total tax loss carry-forwards

In 2017, tax loss carry-forwards amounting to CHF 1.0
million expired unused (2016: CHF 0.0 million).

CHF mDeferred tax assets
Deferred tax liabilities
Deferred tax assets, net

Deferred income tax assets and liabilities are offset
when they relate to the same tax jurisdiction, provided
that the legal right to offset exists, and they are intended either to be settled net or to be realized simultan­
eously. The following amounts are shown in the balance sheet:
31.12.201731.12.2016

39.0– 10.828.2

40.5– 10.929.6

FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS 113

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

CHF m
As at December 31, 2016
Decrease (–)/increase in deferred tax assets
As at December 31, 2017
Netting
As at December 31, 2017, net

Inventories
8.8
– 1.1
7.7

Property,plant, andequipment
2.3
– 0.9
1.4

Provisions
5.5
2.2
7.7

Loss carryforwards
13.9
– 0.3
13.6

Inventories
3.2
0.0

Property,plant, andequipment
3.8
– 0.2

Provisions
3.4
0.3

Intangible
assets
13.5
– 0.1

3.2

3.6

3.7

13.4

Employeebenefitobligations
17.6
– 0.1
17.5

Other
7.2
– 1.3
5.9

Total
55.3
– 1.5
53.8
– 14.8
39.0

Other
1.8
– 0.1

Total
25.7
– 0.1

1.7

25.6
– 14.8
10.8

Deferred tax liabilities

CHF m
As at December 31, 2016
Decrease (–)/increase indeferred tax liabilities
As at December 31, 2017
Netting
As at December 31, 2017, net

Employeebenefitobligations
0.0

0.0

Decrease in deferred tax assets, net
Of which recognized in other comprehensive income
Of which recognized in the income statement
Of which due to currency translation
Of which deferred tax expense of discontinued operations

– 1.4
– 1.2
1.1
– 0.7
– 0.6

As at December 31, 2017, no deferred tax liabilities
on undistributed profits from consolidated companies
have been recognized, since this income is deemed tohave been reinvested for an indefinite period. Should
there be a distribution, withholding and other taxes

might be incurred, which upon decision may be provided for accordingly.
Tax expense and income recognized directly in theother comprehensive income statement:
2017

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

2016

Before tax

Tax income

After tax

Before tax

Tax income

After tax

6.9
36.1
43.0

– 1.2
0.0
– 1.2

5.7
36.1
41.8

– 18.1– 27.2– 45.3

3.5
0.0
3.5

– 14.6– 27.2– 41.8

114 FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

2017
36.5
2.2
38.7
1,728,259
1,728,259

2016
127.6
0.0
127.6
1,709,233
246
1,709,479

31.12.201731.12.2016

0.1
150.9
44.4
195.4

0.1
164.8
44.8
209.7

31.12.201731.12.2016

157.4
18.7
– 6.9
169.2

140.8
16.2
– 5.6
151.4

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

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

15 Trade receivables

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

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

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

FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS 115

Trade receivables recognized as at the balance sheet
date:

CHF m
Total trade receivables, grossNot due
Overdue < 30 days
Overdue < 90 days
Overdue < 180 days
Overdue > 180 days
Allowance for doubtful trade receivables
Total trade receivables

31.12.201731.12.2016

176.1
148.6
14.8
6.2
3.1
3.4
– 6.9
169.2

157.0
137.6
10.1
4.6
2.5
2.2
– 5.6
151.4

31.12.201731.12.2016

1.6
72.9
25.7
8.0
10.4
8.2
5.2
44.1
176.1

1.0
75.9
22.9
13.4
11.3
3.8
5.3
23.4
157.0

2017

2016

– 5.6
– 1.5
0.1
0.4
– 0.3
– 6.9

– 5.9
– 0.8
0.4
0.6
0.1
– 5.6

Of the total of CHF 27.5 million in trade receivables
past due as at December 31, 2017 (2016: CHF 19.4 million), CHF 23.1 million (2016: CHF 16.1 million) were notsubjected to a valuation allowance.

Gross value of trade receivables by currency:

CHF m
CHF
EUR
USD
JPY
GBP
CNY
SEK
Other
Total trade receivables, grossChanges in valuation allowances for doubtful trade receivables during the reporting year:

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

116 FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS

Allowances of CHF 2.1 million (2016: CHF 1.9 million)
were made for trade receivables not yet due and of
CHF 4.8 million (2016: CHF 3.7 million) for trade receivables past due.

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

16 Inventories

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

Expenses for inventories recognized in the reporting
year came to CHF 487.4 million (2016: CHF 455.0 million).

31.12.201731.12.2016

48.6
73.3
135.7
– 31.0
226.6

39.8
67.0
129.8
– 30.2
206.4

FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS 117

17 Property, plant, and equipment

Cost on acquisition
CHF m
As at January 1, 2016
Change in scope of consolidation
Additions
Disposals
Transfers
Translation differences
As at December 31, 2016
Additions
Disposals
Transfers
Translation differences
As at December 31, 2017Land andbuildings

108.0

Machineryandequipment

1.3
– 0.2
9.0
– 6.1
112.0
0.9
– 0.9
0.5
16.1
128.6

645.4
0.6
5.5
– 3.9
30.4
– 22.7
655.3
6.6
– 7.7
17.2
47.6
719.0

Land andbuildings

Machineryandequipment

Accumulated depreciation and impairments
CHF m
As at January 1, 2016
Depreciation
Disposals
Transfers
Translation differences
As at December 31, 2016
Depreciation
Disposals
Translation differences
As at December 31, 2017
Net carrying amountAs at January 1, 2016
As at December 31, 2016
As at December 31, 2017

7.9
6.5
– 0.1

Other
property,plant, andequipment

Assetsunderconstruction

116.5

29.9

1.3
– 2.8
1.4
– 2.8
113.6
1.8
– 7.0
1.4
7.8
117.6

28.9

Other
property,plant, andequipment

107.6
3.8
– 2.5

– 3.5
10.8
6.5
– 0.9
11.0
27.4

557.0
19.6
– 3.4
– 0.2
– 19.4
553.6
21.9
– 7.3
40.3
608.5

100.1
101.2
101.2

88.4
101.7
110.5

8.9
7.3
7.5

Property, plant, and equipment is recognized at amort­ized cost. As in the previous year, no impairments occurred in the year under review.
Maintenance and repair costs amounted to CHF 21.7
million (2016: CHF 20.1 million). The depreciation expense of CHF 31.8 million (2016: CHF 29.9 million) is
included in the items ‘Cost of goods sold’, ‘Development costs’, ‘Marketing and distribution costs’, and ‘Administrative costs’.
Property, plant, and equipment also includes leased­assets with a net book value of CHF 0.2 million (2016:

– 2.6
106.3
3.4
– 6.9
7.3
110.1

– 41.0
– 0.4
17.4
48.1

Total
property,plant, andequipment

899.8
0.6
37.0
– 6.9
– 0.2
– 32.0898.3
57.4– 15.6– 19.1
2.0
48.4

73.5
1,013.6

Assetsunderconstruction

Total
property,plant, andequipment

0.0

0.0

672.5
29.9
– 6.0
– 0.2
– 25.5670.7
31.8– 15.1
58.6
746.0

29.9
17.4
48.4

227.3
227.6
267.6

0.0

CHF 0.5 million). The leasing liability for fixed assets
carried in the balance sheet amounts to CHF 0.2 million (2016: CHF 0.5 million) and is found in note 23‘Non-current financial debt’.
As at December 31, 2017 there were no assets forwhich interest on borrowed capital was capitalized
during the preparation phase.
As at December 31, 2017 the Group had outstanding
purchase orders for capital goods amounting to CHF
4.0 million (2016: CHF 22.1 million).

118 FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS

18 Intangible assets and goodwill

Cost on acquisition
CHF m
As at January 1, 2016
Acquisition
Additions
Disposals
Transfers
Translation differences
As at December 31, 2016
Additions
Disposals
Translation differences
As at December 31, 2017

Accumulated amortization and impairments
CHF m
As at January 1, 2016
Amortization
Disposals
Transfers
Translation differences
As at December 31, 2016
Amortization
Disposals
Translation differences
As at December 31, 2017
Net carrying amountAs at January 1, 2016
As at December 31, 2016
As at December 31, 2017

Other
intangible assets

Total

0.3
33.1

84.1
0.5
3.0
– 0.2
0.2
– 10.4
77.2
0.4
– 0.1
3.9
81.4

204.0
0.5
3.0
– 0.2
0.2
– 13.8
193.7
0.4
– 0.1
8.9
202.9

Goodwill

Trademarks

Otherintangible assets

Total

8.8

25.8
0.2

– 0.1
8.7

0.0
26.0
0.2

68.3
5.9
– 0.2
0.2
– 0.3
73.9
5.9
– 0.1
0.8
80.5

135.7
119.8
122.4

Goodwill

Trademarks

85.9

34.0

– 2.2
83.7

– 1.2
32.8

4.7
88.4

0.6
9.3

26.2

33.7
5.7
– 0.2
0.2
– 0.2
39.2
5.7
– 0.1
0.2
45.0

77.1
75.0
79.1

8.2
6.8
6.9

50.4
38.0
36.4

FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS 119

Goodwill is distributed among the following groups ofcash-generating units:31.12.2017
74.8
4.3
79.1

Flooring Systems
Movement Systems

The goodwill in Flooring Systems as at December 31,
2017, comprises primarily the goodwill acquired inconnection with the acquisition of Bonar Floors in
2008. ‘Other intangible assets’ consists mainly of thecustomer relations and technologies as part of the acquisition of Bonar Floors, as well as acquired software.
The annual impairment test of goodwill yielded a value in use that was greater than the carrying amount.
Intangible assets with an indefinite useful life (goodwill
and trademarks) are subject to an annual impairment
test at cash-generating unit level. The test is carriedout using a standardized method with discounted
cash flow for calculating the value in use. Cash flow for
the first five years is estimated on the basis of the plan
approved by management (detailed planning period).
Cash flows beyond the detailed planning period are­extrapolated to the terminal value by means of using
sustainable earnings. The growth rate underlying theterminal value equals the expected inflation. During thedetailed planning period, relatively constant EBITDA
margins are assumed, which are around 18% (2016:31.12.2016
70.9
4.1
75.0

18%) for Flooring Systems and around 16% (2016: 15%)for Movement Systems. The discount rate corresponds
to the total weighted cost of capital before taxes including an average risk charge estimated by management,
and lies between 9.4% and 11.6% (2016: between 9.3%
and 11.8%). The intangible assets with an indefinite useful life were subject to impairment testing also in theform of sensitivity analyses.
No change in the basic assumptions that can be regarded as reasonably realistic will result in the carrying
amounts exceeding the recoverable amounts.

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

20 Current financial debt
Current financial debt comprises the current portion of
the financial lease liability and issued checks not yet
cashed.

120 FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS

21 Accrued expenses
and deferred income
31.12.201731.12.2016

42.1
49.4
91.5

37.8
43.7
81.5

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

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

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

22 Provisions

Provisions
CHF m
As at January 1, 2017
Additions
Used during the year
Released during the year
Reclassification
Translation differences
As at December 31, 2017
Of which current provisions
Of which non-current provisions

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

Warranty
provisions

Environmental
provisions

5.4
3.1
– 3.3

11.4

Provisions
for legal
claims

Personnel
provisions

Other
provisions

Total
2016

4.3
1.6
– 0.3
– 1.6
0.7
0.0
4.7

46.3
106.5
– 91.6– 10.9
0.0
0.8
51.1

3.4
1.3

18.8
32.3

– 3.4

12.7
96.3
– 84.9
– 3.8

0.1
5.3

0.4
8.4

0.0
20.3

12.5
5.5
– 3.1
– 2.1
– 0.7
0.3
12.4

3.4
1.9

0.0
8.4

0.0
20.3

12.0
0.4

Provisions for expected cash outflows arising in connection with the sale of the industrial adhesives activity,
including synthetic polymers, exist for risks in the areasof environmental protection (CHF 4.2 million), litigation(CHF 3.0 million), and others (CHF 1.0 million). Provisions for environmental protection amounting to CHF
2.8 million, or CHF 2.2 million after tax, were released in
the year under review owing to the expiry of warranty
periods and were taken to Group profit from discontinued operations.

FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS 121

23 Non-current financial debt
The item ‘Non-current financial debt’ contains only financial leasing liabilities. The average interest rate on
leasing liabilities was 3.5%.

24 Employee benefit obligations
The Group has established several pension plans on
the basis of the specific requirements of the countries
in which it operates. Both defined contribution and defined benefit plans exist in the Group that insure employees against the risks of death and invalidity andprovide old-age pensions.
The liabilities and assets under the main defined benefit plans are assessed annually by independent actu­
aries using the projected unit credit method.
Pension plans in the United Kingdom
The Group has two defined benefit pension plans in
the United Kingdom. The main one is the Forbo Superannuation Fund (the FSF), which accounts for about
63% of the Group’s total pension liabilities. The FSF isa pension plan whose benefits are based on the final
salary and which pays out a guaranteed pension forlife to its members. The FSF is closed to new entrants.
The composition of the pension liabilities is as follows:
3% to active employees, 33% to deferred members
and 64% to current beneficiaries. New employees in
the United Kingdom who meet certain criteria are
now offered a defined contribution plan.
The FSF operates under trust law and is managed andadministered by the trustees on behalf of the members in accordance with the terms of the Trust Deed
and Rules and relevant legislation. The FSF’s assets areheld by the trust. Responsibility for governance of the
FSF – including investment decisions and contribution schedules – lies jointly with the company and thetrustees. The board of the trustees must be composedof representatives of the company and plan participants in accordance with the FSF’s regulations andBritish pension law.

The pension plan follows an investment strategy thatis geared to the structure of the pension liabilities(LDI – liability-driven investment approach). The coreelements of this strategy are:–– Hedging of liabilities: 56% of the assets of the fundare held in physical form in corporate bonds and afurther 18% in funds geared to the pension liabilities.
This approach hedges a substantial portion of interest rate and inflation risks.
–– Return-seeking assets: 26% of the assets of the FSF
are held in the form of diversified growth investment
funds.
The use of any surplus is not subject to any restriction
under the FSF’s articles of incorporation and may be
used freely by the Group. These surpluses are therefore
recognized in the balance sheet as assets in accordance with IAS 19 revised.
Pension plan in Switzerland
The Group pays contributions to an independent pension fund as part of the occupational pension provision(known in Switzerland as the ‘second pillar’). As a minimum benefit, this independent pension fund must
­provide the beneficiary with an old-age pension at thetime of retirement. This pension is paid out of the retirement savings capital at the start of the pension. The
Group meets these liabilities through agreements withpension funds that cover the pension liabilities in full.
The pension liabilities of the Swiss Group companies
account for about 16% of the Group’s entire pension
liabilities. 96% of the liabilities are to active members
and 4% to retired beneficiaries.
The Swiss pension system includes guarantees that
expose the company to the risk that it may have toprovide additional financing, for instance, if the pension fund is unable to meet its obligations or decides
to end the insurance relationship. The pension fundguarantees a minimum return and is responsible forthe payment of a pension for life once the insurance
benefits fall due. As a result of these guarantees, Swisspension plans are treated as defined benefit plans under IFRS, even though they contain essential elementsof defined contribution plans.

122 FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS

The company cannot participate in any surplus of thepension plan. According to Swiss pension law, all surpluses belong to the pension plan and hence to its
members.
OthersOther notable defined benefit plans exist in France,
Germany, Japan, Sweden, and the USA.
The latest actuarial valuations of the present values ofdefined benefit liabilities and of service costs were performed as at December 31, 2017, by independent ac-

tuaries using the projected unit credit method. The fairvalue of the plan assets was determined as at December 31, 2017, based on the information available when
the annual financial statements were prepared. The
weighted average duration of the pension plans (planduration) is 13.9 years for the United Kingdom, 19.7
years for Switzerland, and 15.3 years for the othercountries.
The principal assumptions underlying the actuarial calculations are summarized as follows.

2017

2016

Actuarial assumptions
Switzerland

UK

Other

Weighted

Switzerland

UK

Other

Weighted

0.7
1.8
1.3

2.4
4.1
3.4

1.8
2.7
1.8

2.0
2.4
2.9

0.7
1.5
1.0

2.5
4.2
3.5

1.7
2.7
1.8

2.1
2.3
2.9

22
24

22
24

20
23

21
24

22
24

22
24

20
23

21
24

24
26

23
25

21
25

23
25

24
26

23
25

21
25

23
25

Discount rate (in %)Future increases in salaries (in %)Inflation rate (in %)Life expectancy at age of 65 (in years)
Year of birth 1952
Men
Women
Year of birth 1967
Men
Women

The pension costs for defined benefit plans recognized in the consolidated income statement can besummarized as follows:
2017

2016

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

Switzerland

UK

Other

Total

Switzerland

UK

Other

Total

1.9
0.4
– 0.3
– 0.5
1.5

0.5
6.0
– 5.6

2.4
1.0
– 0.1

2.1
0.6
– 0.4

0.9
8.0
– 7.9

2.2
1.1
– 0.2

5.2
9.7
– 8.5

0.9

3.3

4.8
7.4
– 6.0
– 0.5
5.7

2.3

1.0

3.1

6.4

FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS 123

Changes in pension liabilities under the defined benefit plans:
2017

2016

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

Switzerland

UK

Other

Total

Switzerland

UK

Other

Total

63.7
1.9
1.0
0.4
– 2.6
– 0.8
– 3.7

243.2
0.5

65.4
2.1
1.0
0.6
– 4.0
– 1.4

51.0
2.2
0.0
1.1
– 3.0
3.9

360.4
5.2
1.0
9.7
– 17.9
42.2

11.9

3.4

362.2
4.8
1.0
7.4
– 15.1
– 2.5
– 3.7
15.3

244.0
0.9

6.0
– 10.7
– 0.4

55.3
2.4
0.0
1.0
– 1.8
– 1.3

250.5

59.0

369.4

63.7

– 0.1
0.2
55.3

– 38.6
0.2
362.2

59.9

8.0
– 10.939.7– 38.5
243.2

Changes in plan assets of the defined benefit plans atfair value:
2017

2016

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

Switzerland

UK

Other

Total

Switzerland

UK

Other

Total

42.2
0.3
1.7
1.0
0.1

225.6
5.6
0.1

273.5
6.0
3.7
1.0
4.4

43.0
0.4
1.8
1.0
0.0

241.5
7.9
0.1

4.5

5.7
0.1
1.9
0.0
– 0.2

24.1

5.8
0.2
2.9
0.0
0.0

290.3
8.5
4.8
1.0
24.1

– 2.6
– 3.2

– 10.7

– 1.8

– 4.0

– 10.9– 3.0– 17.9

11.2
236.3

0.2
5.9

– 15.1
– 3.2
11.4
281.7

42.2

– 37.1
225.6

– 0.2
5.7

– 37.3273.5

39.5

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

Most of the pension plans are financed in full or in partvia outsourced funds. Pension liabilities amounting to
CHF 40.3 million (2016: CHF 37.2 million) out of a totalof CHF 369.4 million (2016: CHF 362.2 million) are unfunded.

124 FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS

Changes in the net liabilities of defined benefit plans
recognized in the balance sheet:
2017

2016

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

Switzerland

UK

Other

Total

Switzerland

UK

Other

Total

21.5
1.5
– 1.7
– 0.9

17.6
0.9
– 0.1
– 4.9
0.7

49.6
3.3
– 1.9
– 1.1
3.2

22.4
2.3
– 1.8
– 1.4

2.5
1.0
– 0.1
15.6
– 1.4

20.4

14.2

53.1

88.7
5.7
– 3.7
– 6.9
3.9
0.0
87.7

21.5

17.6

45.2
3.1
– 2.9
3.9
0.1
0.2
49.6

70.1
6.4
– 4.8
18.1
– 1.3
0.2
88.7

Gains and losses of defined benefit pension plans offset in the comprehensive income statement for all segments:
2017

2016

Recognized gains and losses
in the comprehensive
income statement
CHF m
Actuarial losses (–)/gains in thecurrent period:

Switzerland

UK

Other

Total

Switzerland

UK

Other

Total

– 0.8

0.1

0.4

– 0.3

0.6

– 42.3– 3.9– 45.6

Based on adjustment ofdemographic assumptions

0.0

1.9

0.0

1.9

1.1

3.4

0.0

4.5

Based on adjustment of financial
assumptions

– 0.8

– 1.8

0.4

– 2.2

– 0.5

– 45.7– 3.9– 50.1

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

1.6
0.1

0.3
4.5

0.9
– 0.2

2.8
4.4

0.8
0.0

2.6
24.1

0.0
0.0

3.4
24.1

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

0.9

4.9

1.1

6.9

1.4

– 15.6– 3.9– 18.1FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS 125

Change in the present value of defined benefit liabilities:

Sensitivities + 50bp
CHF m
Discount rate
Rate of salary increase
Inflation rate
Interest credits on retirement assets

2017

2016

+ 50bp+ 50bp

Switzerland

UK

Other

Switzerland

UK

Other

– 5.6
1.6
1.3
1.4

– 16.5
0.2
9.8

– 4.2
2.7
3.8

– 5.9
1.8
1.4
1.6

– 16.9
0.2
9.9

– 4.2
2.7
3.7

Sensitivities – 50bp

– 50bp

CHF m
Discount rate
Rate of salary increase
Inflation rate
Interest credits on retirement assets– 50bp

Switzerland

UK

Other

Switzerland

UK

Other

6.4
– 1.7
– 1.2
– 1.4

18.4
– 0.2
– 8.9

4.8
– 2.4
– 3.3

6.5
– 1.8
– 1.3
– 1.4

18.5
– 0.2
– 9.3

4.6
– 2.4
– 3.3

The above table describes the effect of the principal
actuarial assumptions on pension liabilities. The tableshows the effect of an isolated change of a single par­ameter, assuming that all other parameters remain unchanged. The table illustrates the overall effect for eachregion. However, sensitivities may differ for individual
plans within the regions. Sensitivity analysis aims to­visualize the uncertainty in valuating pension liabilities under market conditions at the date of valuation.

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

126 FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS

Weighted average asset allocation of the defined benefit plan assets as at December 31:%
Shares
Bonds
Other securities
Cash and cash equivalents
Total plan assets as at December 31

Other securities amounting to 51.3% (2016: 51.4%)
consisted of 37.2% listed investments (2016: 35.9%)
and 14.1% unlisted investments (2016: 15.5%). The
shares and bonds are all listed investments. The plan
assets do not include any shares or other securities of
the Forbo Group.
Future contributions to defined benefit plans in the following year are estimated on the basis of the period
under review.
The expense for the contributions to defined contribution plans, which is included in personnel expenses,
amounted to CHF 13.6 million (2016: CHF 13.1 million).
Other non-current benefits
The Group does not finance any other non-current
benefits. The plans for long-service bonuses and otherbenefits related to years of service are negligible or do
not qualify as plans for other non-current benefits.

25 Employee participation plan
As of December 31, 2017, there were two share-based
remuneration elements:
Remuneration of the Executive Board
Long-term incentive plan
The long-term Incentive consists of a performance-shareunit plan. At the start of the performance period, eachmember of the Executive Board is granted a given number of future subscription rights in the form of perform­
ance-share units (PSUs). One PSU corresponds to afuture subscription right to one share. The PSUs are­subject to a three-year vesting period, after which they
are converted into vested shares. At the end of the performance period, the company will determine whether
the objectives set by the Board of Directors at the startof the performance period for the performance indicators have been reached. Depending on the degree towhich the objectives are reached, a given percentageof the PSUs will be converted into shares after the

2017

2016

2.0
46.2
51.3
0.5
100.0

1.8
46.2
51.4
0.6
100.0

three-year vesting period. Converted shares are locked
up for a period of three years. The relevant share pricefor the allocation of PSUs at the start of the perform­
ance period is calculated from the unweighted averageof the closing prices of the Forbo share in the first 14
trading days in January of the year in which the PSUs
were allocated.
Management investment plan 2012
Short-term variable compensation for the Executive
Board is linked to the Management Investment Plan
(MIP), which was amended in 2012. According to thisplan, at least 50% of the annual short-term variable remuneration of Executive Board members is paid into
the MIP. As for the remaining 50% of the annual shortterm variable remuneration, the Executive Board members may either draw all or part of it in cash or pay it into
the MIP. They may redefine the allocation of this remaining 50% every year. The shares are locked up for aperiod of three years.
The portion of variable remuneration that is settled in
the form of equity instruments is recognized at fair value and reported as a corresponding increase in equity.
The shares distributed under the MIP are issued at theunweighted average closing price of the Forbo sharefor the first 14 trading days in January of the year inwhich they were issued.
Management investment plan 2006
Until 2012, the variable short-term remuneration of the
Executive Board was settled under the Management
Incentive Plan (MIP 2006) introduced in 2006. Under
this MIP, 25% of the sums paid into it was invested in
options and 75% in shares of Forbo Holding Ltd. The
shares and options were locked up for a period of
three years, and the lifetime of the options was five
years. The last options issued in connection with the
MIP came to maturity on April 21, 2017. All 500 options
that were outstanding as of December 31, 2016 were
exercised in the year under review. No options were
exercised the previous year. The exercise of the 500 options in the year under review resulted in the issue of

FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS 127

500 Forbo Holding Ltd shares at a weighted average
strike price of CHF 616. The share price on the exercise
date was CHF 1,524.
The number of shares of Forbo Holding Ltd issued in
the year under review under the MIP was 1,039 (2016:729). A further 320 shares (2016: 379) were allocated to
Executive Board members in the reporting year as partof the fix base salary. The share price at measurement
date was CHF 1,584 (2016: CHF 1,061).
Remuneration of the Board of Directors
The remuneration of the Executive Chairman of theBoard of Directors is mainly in locked-up shares. The
details and figures for this remuneration model are to
be found on page 131 of this Financial Report and on
pages 84 and 85 of the Remuneration Report.

The number of shares with a three-year vesting period
allocated to the non-executive members of the Boardof Directors came to 212 in the reporting year (2016:278).
The amount charged to the income statement in application of IFRS 2 for shares issued came to CHF 4.4 million in the year under review (2016: CHF 4.8 million).

26 Share capital
As at December 31, 2017, the share capital of Forbo
Holding Ltd stood at CHF 180,000 (2016: CHF 180,000),
divided into 1,800,000 registered shares with a par­value of CHF 0.10 each. Of this amount 21,419 registered shares without voting or dividend rights are unchanged at the disposal of the Board of Directors. Consequently, 1,778,581 registered shares were still eligiblefor dividends as at December 31, 2017.
Change of shares issued and outstanding:

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

31.12.2017
Number1,800,000

ChangeNumber031.12.2016
Number1,800,000

11,032
63,105
21,41995,556
1,704,444– 57,705
63,10568,7375,400– 5,400

21,41990,156
1,709,844

128 FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS

27 Discontinued operations and assets
held for sale as well as liabilities directly
associated with assets held for sale
As reported in note 22 ‘Provisions’, there are still risks
from existing warranty deadlines that arise from thesale of the industrial adhesives activity, including synthetic polymers, of the former Bonding Systems div­
ision. This division was sold to H.B. Fuller on March 5,2012, for CHF 384.7 million.

28 Contingent liabilities
The antitrust proceedings originally brought against
leading flooring manufacturers in France in 2013 andcarried since then as a contingent liability were concluded. The one-off costs for Forbo, which were booked
to Operating profit in ‘Other operating expenses’, cameto CHF 83.4 million.

In this connection, provisions amounting to CHF 2.8
million, or CHF 2.2 million after tax, were released owing to the expiry of warranty periods.

29 Leasing

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

Expenses for operating leasing and rentals charged to
the 2017 income statement totaled CHF 19.7 million(2016: CHF 19.1 million). The Group has no individually significant operating leasing contracts.

31.12.201731.12.2016

7.3
17.1
2.4
26.8

6.0
17.9
5.7
29.6

The liabilities arising from financial leasing are contained in the item ‘Non-current financial debt’.

FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS 129

30 Additional information on
financial instruments–– Level 3: input factors for the asset or liability that are
not based on observable market data (non-observable inputs).

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

There were no material financial instruments in the fairvalue hierarchy levels nor was there any regrouping
between the levels of the fair value hierarchy. The­financial instruments held at the balance sheet datewere all valued at amortized costs:

Classification of financial instruments
CHF m
31.12.2017
Financial assets valued at fair value

Carrying amount
Fair value throughprofit or loss –held for trading

Financial assets valued at amortized costs:
Other non-current financial assets
Trade receivables
Other receivables
Cash and cash equivalents

Loans andreceivables

Other
financial liabilities

0.3
169.2
4.6

Total

0.3
169.2
4.6
195.4

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

The carrying amount of the financial assets and financial liabilities valued at amortized cost is a reasonableapproximation for the fair value.

0.2
105.9
0.2
16.4

0.2
105.9
0.2
16.4

130 FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS

Classification of financial instruments
CHF m
31.12.2016
Financial assets valued at fair value
Financial assets valued at amortized costs:
Other non-current financial assets
Trade receivables
Other receivables
Cash and cash equivalents

Carrying amount
Fair value throughprofit or loss –held for trading

Loans andreceivables

Other
financial liabilities

0.2
151.4
3.5

0.2
151.4
3.5
209.7

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

The carrying amount of the financial assets and financial liabilities valued at amortized cost is a reasonableapproximation for the fair value.

Total

0.0

0.4
95.4
0.1
9.8

0.4
95.4
0.1
9.8

FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS 131

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

2017
1.79
0.24
1.10
3.13

2016
1.66
0.24
1.70
3.60

The compensation paid to the Executive Board consists of a fixed gross base salary, short-term variable
remuneration in cash, private use of the company car,and social security payments made by the company.
Employer contributions to the pension fund are reported separately. The share-based remuneration paid
to the Executive Board consists of the following elements: a fixed base salary portion, which is paid inshares of Forbo Holding Ltd; short-term variable remuneration under the Management Investment Plan
(MIP) for the reporting year; and the future subscription rights, awarded for the first time in 2017, in theform of performance-share units for the long-term­incentive plan 2017 – 2019 (see Note 25 ‘Employee
participation plans’).

Board of Directors
2017
0.99
0.18
2.60
3.77

2016
1.05
0.20
2.53
3.78

Total
2017
2.78
0.42
3.70
6.90

2016
2.71
0.44
4.23
7.38

This remuneration paid to the Board of Directors includes a gross base remuneration in cash, employer
contributions to the usual social insurances, lump sum
and on-site expenses, and private use of the company
car (only for the Executive Chairman).
The share-based remuneration paid to the Board of­Directors includes a gross base remuneration in shares,
consisting on the one hand of a 40% portion of the
remuneration in shares for the non-executive Board
members and, on the other hand, of the share-based
portion of the remuneration for the Executive Chairman.
As at December 31, 2017 and 2016, the Group had no
significant receivables due from or liabilities to relatedparties.

132 FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS

32 Risk assessment and financial
risk management
The tasks of the Board of Directors include identifying
risks, determining suitable measures, and implementing those measures or having them implemented. The
Board of Directors of Forbo Holding Ltd conducted aGroup-wide risk assessment in the reporting year andalso determined the risks to be managed by particularmanagement levels. The Board of Directors is closely
involved in the assessment of strategic risks and, in
consultation with the Executive Board, ensures that
operational risks are dealt with appropriately and thatthey are duly reported. This approach gives the Board
a complete overview of the key risks and measures.
This broad overview enables the Group to set priorities
and allocate the necessary resources.

Financial risk management
In its day-to-day operations, the Forbo Group uses derivative and non-derivative financial instruments tomanage the risks and opportunities arising from fluctuations in exchange rates and interest rates. The various
risks associated with existing assets and liabilities aswell as planned and anticipated transactions are monitored and managed centrally – with due regard to theGroup’s overall risk exposure. In line with the Group’s
hedging policy, Corporate Treasury constantly monitors both the risk exposure and the effectiveness of thehedging instruments and issues recommendations
with regard to partial or complete hedging of existingrisks.
The Group’s financial risk management policy does not
permit the use of derivative financial instruments for
speculation. In order to manage counterparty risk, derivative financial transactions are concluded only with
first-class banks. The creditworthiness of these institutions is assessed on the basis of evaluations by leading
rating agencies.
Derivatives include instruments used by the company
to manage foreign currency and interest risks or combinations thereof.

FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS 133

Foreign exchange risk management
Risks arising from short-term currency exposure created by purchases and sales of goods and services(transaction risks) are identified, and selective hedging
strategies are implemented in line with an ongoingassessment of exchange rate movements. The Group
uses only foreign exchange forward and option contracts with maturities of up to 15 months to hedge
against transaction risk.
Furthermore, risks associated with the translation ofassets and liabilities denominated in foreign currencies (translation risks) are managed by establishing anappropriate financing policy.

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

Transaction risks from financial instruments
2017
Change inexchange rate

Impact on profit
before tax– 20.3

5%
– 5%

– 1.0
1.0

USD/CHF

8.6

5%
– 5%

0.4
– 0.4

EUR/USD

10.9

5%
– 5%

0.5
– 0.5

GBP/USD

0.5

5%
– 5%

0.0
0.0

Change inexchange rate

Impact on profit
before tax

CHF m
EUR/CHF

Net exposure

Transaction risks from financial instruments
2016
CHF m
EUR/CHF

Net exposure

2.6

5%
– 5%

0.1
– 0.1

USD/CHF

1.9

5%
– 5%

0.1
– 0.1

EUR/USD

12.8

5%
– 5%

0.6
– 0.6

GBP/USD

– 2.2

5%
– 5%

– 0.1
0.1

134 FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTSManagement of interest rate risks
Interest rate risks arise from changes in the fair valueof interest-bearing assets and liabilities caused by fluctuations in interest rates. Since these risks may have anegative effect on net financial profit and shareholders’ equity, the Group uses derivatives to manage themon a case-by-case basis. The table below shows only
the sensitivity of profit before tax to the stated changes in interest rates for cash and cash equivalents, interest-bearing debt, and financial derivatives. Except for
the effect on profit, the same change in interest rates
of +/– 50 bp has no effect on equity.

Interest rate risks from cash and cash equivalents,
interest-bearing debt and financial derivatives
2017
Change ininterest rate

Impact on profit
before tax

50bp– 50bp

0.3
– 0.3

USD

50bp
– 50bp

0.1
– 0.1

CHF

50bp
– 50bp0.2– 0.2

Change ininterest rate

Impact on profit
before tax

50bp– 50bp

0.2
– 0.2

USD

50bp
– 50bp

0.1
– 0.1

CHF

50bp
– 50bp

0.2
– 0.2

CHF m
EUR

Interest rate risks from cash and cash equivalents,
interest-bearing debt and financial derivatives
2016
CHF m
EUR

FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS 135

Management of liquidity risksGroup companies need sufficient cash in order to meettheir commitments. Corporate Treasury is responsible
for managing liquidity surpluses. The share of the­aggregate cash and cash equivalents managed by
Corpor­ate Treasury was around 56% on December 31,
2017. At present, the Group regards a cash level ofroughly CHF 60 million as sufficient to meet its payment obligations at all times.

The maturity structure of the existing financial liabilities
is shown in the following table. These liabilities corres­
pond to contractually agreed maturities and represent
nominal payment outflows. Inflows and outflows offunds from derivative financial instruments are shown
separately.

As at December 31, 2017

CHF m
Interest-free liabilities
Liabilities from finance leasing

Remaining term
to maturity up to
1 year122.5
0.0

Remaining term
to maturity
1 – 2 years

Remaining term
to maturity
2 – 5 years

Remaining term
to maturity
over 5 years

Remaining term
to maturity up to
1 year105.2
0.1

Remaining term
to maturity
1 – 2 years

Remaining term
to maturity
2 – 5 years

Remaining term
to maturity
over 5 years

0.1

0.3

0.2

As at December 31, 2016

CHF m
Interest-free liabilities
Liabilities from finance leasing

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

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

136 FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS

Capital management
For the Group, capital management means both optimizing the capital employed and managing consolidated shareholders’ equity, which consists of paid-up
share capital, treasury shares, reserves, and translationdifferences. As at December 31, 2017, shareholders’ equity stood at CHF 661.2 million (2016: CHF 621.4 million). The objectives of capital management are to­ensure that the Group remains a going concern, topreserve its financial flexibility for investments, and toachieve a risk-adjusted return on equity for investors.
Changes in economic conditions may require adjustments to the Group’s shareholders’ equity. These adjustments can take the form of dividend distributions,capital repayments or increases, or share buybacks.

33 Events after the balance sheet date
Between the balance sheet date and the date of publication of this annual report no event occurred that
could have a significant effect on the 2017 annual financial statements.

FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS 137

138 FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS

Group companies(as at December 31, 2017)

Currency

Share capital

Equityinterest

Wetherill Park, NSW
Wetherill Park, NSW

AUD
AUD

1,400,000
7,100,000

100%
100%

S

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

ViennaViennaEUR
EUR

73,000330,000

100%
100%

S

Belgium
Forbo Flooring N.V.

Groot-Bijgaarden

EUR

250,000

100%

S

BrazilForbo Pisos Ltda.
Forbo Siegling Brasil Ltda.

São PauloSão Paulo

BRL
BRL

16,564,200
7,008,746

100%
50%

S

CanadaForbo Flooring Canada Corp.
Forbo Siegling Canada Corp.

Halifax
Halifax

CAD
CAD

500,200
501,000

100%
100%

S

Chile
Forbo Siegling Chile S.A.

Santiago

CLP

313,090,945

50%

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

Liberec
PragueCZK
CZK100,000
500,000

100%
100%

Denmark
Forbo Flooring A/SForbo Siegling Danmark A/S

Glostrup
Brøndby

DKK
DKK

500,000
32,300,000

100%
100%

S

Finland
Forbo Flooring Finland Oy

HelsinkiEUR

33,638100%

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

Château-Renault
Reims
Reims
Reims
Lomme

EUR
EUR
EUR
EUR
EUR

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

100%
100%
100%
100%
100%

MS

Group company

Registered office

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

S Sales
MS Manufacturing and Sales
H Holding/Services
N Not consolidated as at December 31, 2017
D Direct participation of Forbo Holding Ltd

N

N

D

Flooring
Systems

Movement
Systems

Holding/Services

S

S

MS

S

S

S
S

MS

H
MS
S
S

FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS 139

Currency

Share capital

EUR
EUR
EUR
EUR
EUR

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

100%
100%
100%
100%
100%

GBP
GBP
GBP
GBP
GBP
GBP

22,262,001
3,609,990
8,000,000
50,77449,500,000
400,000

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

Hong Kong

HKD

1

100%

Delhi
Pune

INR
INR

15,000,000
26,000,000

100%
100%

Indonesia
PT Forbo Siegling Indonesia

Kabupaten Bandung

IDR

6,344,580,000

100%

Ireland
Forbo Ireland Ltd.

DublinEUR125,000

100%

S

Segrate (Milan)
Paderno Dugnano(Milan)EUR
EUR

60,000120,000

100%
100%

S

Tema S.r.l.

Parma

EUR

50,000

100%

S

Japan
Forbo Siegling Japan Ltd.

Tokyo

JPY

330,000,000

100%

MS

Malaysia
Forbo Siegling SDN. BHD.

Johor Bahru

MYR

2,500,002

100%

S

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

Tlalnepantla

MXN

24,676,404

100%

MS

Group company

Registered office

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

LörrachErfurtPaderborn
Hanover
LörrachD

Great Britain
Forbo Flooring UK Ltd.
Forbo Floors UK Ltd.
Forbo-Nairn Ltd.
Forbo Siegling (UK) Ltd.
Forbo UK Ltd.
Westbond Ltd.

Derbyshire
Kirkcaldy
Derbyshire
Dukinfield
Derbyshire
Derbyshire

D

Hong Kong
Forbo International Hong Kong Ltd.
India
Forbo Flooring India Pvt. Ltd.
Forbo Siegling Movement Systems
India Pvt. Ltd.

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

S Sales
MS Manufacturing and Sales
H Holding/Services
N Not consolidated as at December 31, 2017
D Direct participation of Forbo Holding Ltd

D

Flooring
Systems

Movement
Systems

Equityinterest

Holding/Services

H
MS
S
MS
S

MS
H
H
S
H
H

H

S
S

S

S

140 FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS

Currency

Share capital

Equityinterest

Zaanstad
Krommenie
Krommenie
Krommenie
Coevorden
Spankeren

EUR
EUR
EUR
EUR
EUR
EUR

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

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

New Zealand
Forbo Siegling Ltd.

Auckland

NZD

650,000

100%

NorwayForbo Flooring AS

Asker

NOK

1,000,000

100%

S

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

PinghuShanghai
Shenyang

USD
CHF
USD

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

100%
100%
100%

S

Portugal
Forbo-Revestimentos, S.A.

Maia (Porto)

EUR

74,850100%

S

Romania
Forbo Siegling Romania S.R.L.

Bucharest

RON

38,000100%

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

Moscow
MoscowSaint Petersburg
Stary Oskol

RUB
RUB
RUB
RUB

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

100%
100%
100%
100%

Slovakia
Forbo Siegling s.r.o.

Malacky

EUR

15,281,639

100%

South Korea
Forbo Korea Ltd.

Seoul

KRW

900,000,000

100%Group company

Registered office

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

S Sales
MS Manufacturing and Sales
H Holding/Services
N Not consolidated as at December 31, 2017
D Direct participation of Forbo Holding Ltd

Flooring
SystemsMS
MS
MS

Movement
Systems

Holding/Services

H
MS
S

S

MS
MS

S

S
MS
S
MS

MS

S

S

FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS 141

Group company

Registered office

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

Barcelona
Montcada i Reixac(Barcelona)

Currency

Share capital

Equityinterest

Flooring
Systems

EUR
EUR

60,101
1,532,550

100%
100%

S

SEK
SEK
SEK

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

100%
100%
100%

S

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

100%
100%
100%
100%
100%

Gothenburg
GothenburgKållered (Gothenburg)

D

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

Baar
Baar
Baar
Giubiasco
Baar

D
D

D

CHF
CHF
CHF
CHF
CHF

Thailand
Forbo Siegling (Thailand) Co. Ltd.

Samut Prakan

D

THB

13,005,000100%

Istanbul

TRY

5,500,000

100%

S

United Arab Emirates
Forbo Flooring Middle East DMCC

Dubai

AED

499,000

100%

S

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

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

USD
USD
USD
USD

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

100%
100%
100%
100%

S Sales
MS Manufacturing and Sales
H Holding/Services
N Not consolidated as at December 31, 2017
D Direct participation of Forbo Holding Ltd

D

Holding/Services

S

SwedenForbo Flooring AB
Forbo Project Vinyl AB
Forbo Siegling Svenska AB

TurkeyForbo Hareket ve Zemin Sistemleri Ticaret
Limited irketi

Movement
Systems

H
S

H
H
H
MS
MS

H

S

S

H
H
S
MS

142 FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS

Report of the statutory auditor

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

Report on the Audit of the Consolidated Financial Statements
OpinionWe have audited the consolidated financial statements of Forbo Holding Ltd and its subsidiaries (the Group),
which comprise the consolidated balance sheet as at 31 December 2017 and the consolidated income statement,
consolidated comprehensive income statement consolidated statement of changes in equity and consolidated
cash flow statement for the year then ended, and notes to the consolidated financial statements, including asummary of significant accounting policies.
In our opinion the consolidated financial statements (pages 92 to 141) give a true and fair view of the consolidated
financial position of the Group as at 31 December 2017, and its consolidated financial performance and its
consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards(IFRS) and comply with Swiss law.
Basis for Opinion
We conducted our audit in accordance with Swiss law, International Standards on Auditing (ISAs) and Swiss
Auditing Standards. Our responsibilities under those provisions and standards are further described in the
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are
independent of the Group in accordance with the provisions of Swiss law and the requirements of the Swiss audit
profession, as well as the IESBA Code of Ethics for Professional Accountants, and we have fulfilled our otherethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.

Key Audit Matters
Revenue recognition

Valuation of inventories

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

1

FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS 143

Revenue recognition

Key Audit Matter

Our response

Total consolidated net sales of the financial year 2017 We mainly performed the following audit procedures:amounted to CHF 1,246.4 million (2016: CHF 1,185.5
million). The segment Flooring Systems contributed— We analyzed the process from the purchase order
CHF 856.6 million (2016: CHF 818.3 million) or 68.7%
to the receipt of payment and assessed whether(2016: 69.0%) to total net sales, while the segment
transactions are completely and accurately
Movement Systems realized CHF 390.0 million (2016:
recorded in the accounts.
CHF 367.7 million), representing 31.3% of total net— Considering the diverse design of internal control
sales (2016: 31.0%).
and IT systems of individual subsidiaries, wetested the operating effectiveness of identified key
Net sales are a key performance indicator for Forbo
controls relating to the proper recognition ofand therefore in the focus of internal and external
revenue.
stakeholders. Consequently, when performing theaudit we had a focus on existence of revenue— Based on a statistical sample of delivery notes
transactions and their recognition in the appropriate
and payments received, we assessed theperiod.
existence of revenues and their recognition in thecorrect period.
In both segments, sales arrangements are based on— We furthermore performed analytical procedures
standardized commercial terms and conditions
on a segment level as well as on the level of(incoterms), which govern the transfer of risk andspecific individual entities. These included
rewards. Different incoterms may be used depending
analyses of price and volume deviations, margin
on the region and the industry of the buyer. Owing todevelopment, the largest clients and the mostthe types of products sold by either segment of thesold products as well as analyses of theGroup, the contractual sales arrangements are notdistribution of sales throughout the year andcomplex. Due to the large number of transactions, thespecific months.
proper recognition of revenue nevertheless depends
on a functioning internal control system, adapted to
local circumstances. Furthermore, accurate data on
volumes and prices are central to revenue recognition.

For further information on revenue recognition refer to the following:
Note 2 – Summary of significant accounting policies: net sales and revenue recognition, page 99

Valuation of inventories

Key Audit Matter

Our response

Inventory as at 31 December 2017 amounted to CHF
226.6 million (31 December 2016: CHF 206.4 million)
and represents one of the most material asset
positions. Existence and valuation of inventories areconsequently of significance to an understanding of
the financial statements.

We mainly performed the following audit procedures:

Inventory is recognized at acquisition or manufacturingcosts and periodically assessed in terms ofrecoverability. For work in progress and finishedgoods that include a significant value added, thedetermination of manufacturing costs partly requires
judgment.

—

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

—

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

2

144 FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS

Report of the statutory auditor

Additionally, there is a risk that for work in progress
and finished goods the manufacturing costs exceed
the actual sales price less selling, distribution andadministrative costs (net realizable value).
Furthermore, determining valuation allowances
involves a degree of judgment.

—

We analyzed the valuation basis of individual
inventory items by reference to the costcalculation of the inventory for different materials,
assessed changes in the valuation basis andmethod and challenged changes in unit costs.

—

We critically assessed the adequacy of theprocesses to identify, as well as the basis and themethod to value, obsolete inventories. We
recalculated the valuation allowance for obsolete
inventories and, based on a sample, reconciled it
to the underlying documentation. Furthermore, intesting the valuation of inventories at lower of costor net realizable value, we compared costs andsales prices by reference to a sample.

For further information on inventories refer to the following:—

Note 2 – Summary of significant accounting policies: inventories, page 102—

Note 16 – Inventories, page 116

Other Information in the Annual Report
The Board of Directors is responsible for the other information in the annual report. The other information
comprises all information included in the annual report, but does not include the consolidated financial
statements, the stand-alone financial statements of the Company, the remuneration report and our auditor’sreports thereon.
Our opinion on the consolidated financial statements does not cover the other information in the annual report and
we do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the otherinformation in the annual report and, in doing so, consider whether the other information is materially inconsistent
with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to bematerially misstated. If, based on the work we have performed, we conclude that there is a material misstatementof this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibility of the Board of Directors for the Consolidated Financial Statements
The Board of Directors is responsible for the preparation of the consolidated financial statements that give a trueand fair view in accordance with IFRS and the provisions of Swiss law, and for such internal control as the Boardof Directors determines is necessary to enable the preparation of consolidated financial statements that are freefrom material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Board of Directors is responsible for assessing the Group’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using thegoing concern basis of accounting unless the Board of Directors either intends to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.

3

FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS 145

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as awhole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with Swiss law, ISAs and Swiss Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Swiss law, ISAs and Swiss Auditing Standards, we exercise professional
judgment and maintain professional skepticism throughout the audit. We also:—

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion,forgery, intentional omissions, misrepresentations, or the override of internal control.

—

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of theGroup’s internal control.

—

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimatesand related disclosures made.

—Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of accounting and,based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions
that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that amaterial uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosuresin the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the Group to cease to continue as a going concern.

—

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

—

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

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

4

146 FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS

Report of the statutory auditor

Report on Other Legal and Regulatory Requirements
In accordance with article 728a para. 1 item 3 CO and the Swiss Auditing Standard 890, we confirm that aninternal control system exists, which has been designed for the preparation of consolidated financial statements
according to the instructions of the Board of Directors.
We recommend that the consolidated financial statements submitted to you be approved.
KPMG AG

Rolf Hauenstein
Licensed Audit Expert
Auditor in Charge

Regula Tobler
Licensed Audit Expert

Zurich, 28 February 2018

KPMG AG, Badenerstrasse 172, PO Box, CH-8036 Zurich
KPMG AG is a subsidiary of KPMG Holding AG, which is a member of the KPMG network of independent firms affiliated with KPMG International Cooperative(“KPMG International”), a Swiss legal entity. All rights reserved.

5

FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS 147

148 FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS

Consolidated balance sheets
2013 – 2017
AssetsCHF mCurrent assets
Cash and cash equivalents
Other current financial assets
Trade receivables
Other receivables
Accrued income and deferred expenses
Inventories
Non-current assets
Other non-current financial assets
Deferred tax assets
Property, plant, and equipment
Intangible assets and goodwill
Total assets

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

31.12.201731.12.2016

31.12.2015

31.12.2014

31.12.2013

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

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

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

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

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

31.12.201731.12.2016

31.12.2015

31.12.2014

31.12.2013

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

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

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

244.2
0.6
86.5
30.0
18.9
108.2
112.6
1.4
26.5
24.2
60.5
356.8
738.8
0.2
– 0.1
738.7
1,095.6

241.1
0.7
87.2
32.9
14.5
105.8
99.1
1.2
20.0
26.1
51.8
340.2
786.8
0.2
– 0.1
786.7
1,127.0

FORBO ANNUAL REPORT 2017 – CONSOLIDATED FINANCIAL STATEMENTS 149

Consolidated income statements
2013 – 2017
CHF m
Net sales
Cost of goods sold
Gross profit
Development costs
Marketing and distribution costs
Administrative costs
Other operating expenses
Other operating income
Operating profit
Financial income
Financial expenses
Group profit before taxes
Income taxes
Group profit for the year from continuing operations
Group profit for the year from discontinued operations after taxes
Group profit for the year

2017

2016

2015

2014

2013

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

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

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

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

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

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

151
152
153
154
159
160

152 FORBO ANNUAL REPORT 2017 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY

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

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

31.12.201731.12.2016

16,659,198
1,793,619
14,832,406
33,173423,964,089
118,938,256
305,025,833
440,623,287

31,524,484
24,806,790
6,682,331
35,363437,685,610
117,539,378
320,146,232
469,210,094

31.12.201731.12.2016

6

16,105,779
143,509
11,992,390
324,047
3,645,833
424,517,508
180,000

24,070,499
47,05023,702,949
320,500
0445,139,595
180,000

8

15,600,000
15,302
1,008,066

15,600,000
14,225,906
8,367,183

420,047,659
91,248,219– 103,581,738
440,623,287

227,549,421
203,458,815– 24,241,730
469,210,094

Note

3

2
3

Note

4
5

8

FORBO ANNUAL REPORT 2017 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY 153

Income statement for Forbo Holding Ltd

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

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

2017

2016

54,679,844
47,234,377
101,914,221

211,245,653
6211,245,659

2017

2016

6,001,204
440,710440,710578,255
3,645,833
10,666,002
91,248,219

5,573,164
2,213,680
2,213,680
007,786,844
203,458,815

Note

9
10

Note

11
12
3
5

154 FORBO ANNUAL REPORT 2017 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY

Notes to the financial statements
for Forbo Holding Ltd
1 Accounting

2 Loans to Group companies

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

Loans to Group companies, amounting to EUR 97.8 million and CHF 12.7 million, are unchanged. The loans
were valued at the rate prevailing on the balance sheet
date; unrealized exchange losses were booked, while
unrealized exchange gains were not recognized.

3 Investments in Group companies
Investments in Group companies are measured at thecost of acquisition less necessary valuation allowances.
The investments in Group companies decreased in thereporting year due to the sale of the subsidiary Forbo
Project Vinyl AB within the Group. The receivable arising from the sale, amounting to CHF 14.5 million, wasstill outstanding at year-end 2017 and is reported under ‘Other receivables from Group companies’. The sale
resulted in a book loss of CHF 0.6 million, reported under ‘Other expenses’.
As at December 31, 2017, Forbo Holding Ltd held thefollowing direct investments:

Investments in Group companies
Currency

Share capital(in 1,000)

Equityinterest

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

USD
EUR
CHF
CHF
SEK
GBP
CHF

19,957
15,400100
10,0008,000
22,262
100

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

Holding/Services
Manufacturing and Sales
Sales

EUR
MXN
THB

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

Company

Registered office

Activity

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

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

FR-Reims
MX-Tlalnepantla
TH-Samut Prakan

FORBO ANNUAL REPORT 2017 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY 155

4 Other liabilities to Group companies

7 Conditional capital

Other liabilities to Group companies as at December
31, 2017, include in particular advances from Forbo
Finanz AG in connection with its cash pool.

Originally, conditional capital of CHF 8.5 million for the
exercise of shareholder options and warrants in connection with a bond issue was created by a resolution of theAnnual General Meeting held on April 27, 1994. Following the exercise of options in 1994, 1995 and 1997 andreductions in the par value by CHF 22 per share in 2003,
CHF 8 per share in 2004, CHF 6 per share in 2007, CHF
10 per share in 2008, and CHF 3.90 per share in 2009, theconditional capital on December 31, 2017, remained
unchanged against the previous year at CHF 16,645.

5 Taxes
The tax burden rose in the year under review because
gains on the sale of treasury shares reported in the financial statements of Forbo Holding Ltd under commercial law were subject to federal tax, thus reducing
the participation deduction on dividend income.

6 Share capital
As at December 31, 2017, the share capital of Forbo
Holding Ltd totaled CHF 180,000 (2016: CHF 180,000),
divided into 1,800,000 registered shares with a par value of CHF 0.10 each. 21,419 registered shares without
voting or dividend rights are at the disposal of theBoard of Directors.
Treasury shares
As at January 1, 2017
Additions
Disposals
As at December 31, 2017

8 Treasury shares
The treasury shares in Forbo Holding Ltd amounting to
CHF 103.6 million on the balance sheet date corres­
pond to the value of all treasury shares valued at cost.
The item ‘Reserve for treasury shares’ reflects the valueof the treasury shares held by subsidiaries of Forbo
Holding Ltd, amounting to CHF 1.0 million. Overall, thetreasury shares held directly and indirectly developed
as follows over the period under review:

Cost
CHF
32,608,913
103,344,465– 31,361,433
104,591,945

Number ofregistered shares
90,156
72,142– 66,742
95,556

156 FORBO ANNUAL REPORT 2017 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY

9 Financial income from investments
in and loans to Group companies

12 Financial expenses from investments
in and loans from Group companies

Financial income from investments in and loans toGroup companies amounting to CHF 54.7 million(2016: CHF 211.2 million) consists of dividend incomeof CHF 52.2 million (2016: CHF 211.1 million), exchange
rate gains on foreign currency loans of CHF 2.3 million(2016: CHF 0.0 million), and interest of CHF 0.2 million(2016: CHF 0.2 million).

Expenditure comprises turnover taxes on the sale oftreasury shares amounting to CHF 0.4 million and interest expenses for liabilities to Group companies
amounting to CHF 0.1 million (2016: 0.9 million). The
previous year there were in addition exchange rate
losses of CHF 1.3 million.

10 Financial income from securities
and current investments
Financial income from securities and current investments is equivalent to the net proceeds from the saleof treasury shares. The Group placed 63,000 shares ofForbo Holding Ltd at a price of CHF 1,450 per share aspart of an accelerated bookbuilding process. Of theshares sold, 48,000 treasury shares were held directly by
Forbo Holding and 15,000 treasury shares were held
indirectly by Forbo International SA.

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

13 Contingent liabilities
Guarantees and letters of support to third parties in favor of Group companies amounted to CHF 9.9 million
at year-end 2017 (2016: CHF 9.0 million), of which as in
the previous year none were utilized.
The Group companies in Switzerland are treated for
purposes of value-added tax as a single-entity subject
to value-added tax (group taxation regime, Article 13,
Federal Act on Value-Added Tax). If one of the Group
companies is unable to meet its payment obligations
to the Federal Tax Administration, the other Group
companies bear joint and several liability.

14 Significant shareholders
According to information available to the Board of­Directors, the following shareholders or groups ofshareholders with restricted voting rights constituted
significant shareholders in the company pursuant to
Article 663c Swiss Code of Obligations as at the reporting date:

Michael Pieper, Hergiswil, and Artemis Beteiligungen I AG, Hergiswil
Forbo Holding Ltd, Baar, together with its two subsidiaries
Forbo International SA, Baar, and Forbo Finanz AG, Baar

Number of shares
486,217
95,556

As percentage
27.01%
5.31%

FORBO ANNUAL REPORT 2017 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY 157

Shareholdings
IN 2017
As at December 31, 2017, the individual members of
the Board of Directors and the Executive Board (including related parties) held the following number of sharesin Forbo Holding Ltd:
Shareholdings 2017
SharesName and function
This E. Schneider, Executive Chairman
Michael Pieper, Vice Chairman
Dr. Peter Altorfer, Vice Chairman
Claudia Coninx-Kaczynski, member
Dr. Reto Müller, member
Vincent Studer, member
Total Board of Directors
Stephan Bauer, Chief Executive Officer
Matthias P. Huenerwadel, Executive Vice President Flooring Systems
Urs Uehlinger, Chief Financial Officer
Jean-Michel Wins, Executive Vice President Movement Systems
Total Executive Board

47,892486,217
1,227
170
590
866
536,962
2,639
2,856
18
195
5,708

158 FORBO ANNUAL REPORT 2017 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY

IN 2016
As at December 31, 2016, the individual members of
the Board of Directors and the Executive Board (including related parties) held the following number of sharesin Forbo Holding Ltd:
Shareholdings 2016
SharesName and function
This E. Schneider, Executive Chairman3)
Michael Pieper, Vice Chairman
Dr. Peter Altorfer, Vice Chairman
Claudia Coninx-Kaczynski, member
Dr. Reto Müller, member
Vincent Studer, member
Total Board of Directors
Stephan Bauer, Chief Executive Officer
Matthias P. Huenerwadel, Executive Vice President Flooring Systems
Andreas Spreiter, Chief Financial Officer
Jean-Michel Wins, Executive Vice President Movement Systems
Total Executive Board

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

3) The share portion for the Executive Chairman of the Board of Directors includes the 19,483 shares from the employment contract
for the period from May 1, 2013, to December 31, 2016. The shares
are subject to lock-up periods of three, four, and five years. The last
third of the shares will be available on May 1, 2018, at the earliest.

2) Subscription ratio.

For further information regarding granted shares tothe Board of Directors and the Executive Board we refer to pages 84 and 85 of the remuneration report.

15 Events after the balance sheet date
Between the balance sheet date and the date of publication of this annual report no event occurred that
could have a significant effect on the 2017 annual financial statements.

Options1)
2012 series
1:12)

46,221
544,176
1,174
133
553
812
593,069
2,041
2,098
1,398
195
5,732

500

500

FORBO ANNUAL REPORT 2017 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY 159

Proposal for appropriation of available
earnings of Forbo Holding Ltd
The Board of Directors proposes to the Ordinary General Meeting that the available retained earnings, consisting of:2017
CHF
Net profit
Retained earnings
Treasury shares
Total at the shareholders’ meeting’s disposal1)

91,248,219
420,047,659– 103,581,738
407,714,140

be appropriated as follows:
2017
CHF
Distribution ordinary dividend
To be carried forward
Total at the shareholders’ meeting’s disposal1)

1) At the Ordinary General Meeting of April 6, 2018, the Board of Directors will propose an ordinary gross dividend of CHF 19.00 per
registered share (2016: withholding-tax-free distribution from capital contribution reserves of CHF 8.30 per registered share, as wellas an ordinary gross dividend of CHF 10.70 per registered share).
No distribution will be made for treasury shares held by Forbo
Holding Ltd. or any of its subsidiaries on the record date, which
explains why the amount of ordinary dividends may therefore stillchange.

32,384,436
375,329,704
407,714,140

160 FORBO ANNUAL REPORT 2017 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY

Report of the statutory auditor

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

Report on the Audit of the Financial Statements
OpinionWe have audited the financial statements of Forbo Holding Ltd, which comprise the balance sheet as at
31 December 2017, and the income statement for the year then ended, and notes to the financial statements,
including a summary of significant accounting policies.
In our opinion the financial statements (pages 152 to 158) for the year ended 31 December 2017, comply with
Swiss law and the company’s articles of incorporation.
Basis for Opinion
We conducted our audit in accordance with Swiss law and Swiss Auditing Standards. Our responsibilities underthose provisions and standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Statements section of our report. We are independent of the entity in accordance with the provisions of Swiss law
and the requirements of the Swiss audit profession and we have fulfilled our other ethical responsibilities inaccordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Report on Key Audit Matters based on the circular 1/2015 of the Federal Audit Oversight Authority
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of
the financial statements of the current period. We have determined that there are no key audit matters tocommunicate in our report.
Responsibility of the Board of Directors for the Financial Statements
The Board of Directors is responsible for the preparation of the financial statements in accordance with theprovisions of Swiss law and the company’s articles of incorporation, and for such internal control as the Board of
Directors determines is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the Board of Directors is responsible for assessing the entity’s ability tocontinue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the Board of Directors either intends to liquidate the entity or to cease
operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are freefrom material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes ouropinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted inaccordance with Swiss law and Swiss Auditing Standards will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of thesefinancial statements.

1

FORBO ANNUAL REPORT 2017 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY 161

As part of an audit in accordance with Swiss law and Swiss Auditing Standards, we exercise professional
judgment and maintain professional skepticism throughout the audit. We also:—

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control.

—

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness ofinternal control.

— Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimatesand related disclosures made.
— Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of accounting and,based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions
that may cast significant doubt on the entity’s ability to continue as a going concern. If we conclude that amaterial uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosuresin the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future events orconditions may cause the entity to cease to continue as a going concern.
We communicate with the Board of Directors or its relevant committee regarding, among other matters, theplanned scope and timing of the audit and significant audit findings, including any significant deficiencies ininternal control that we identify during our audit.
We also provide the Board of Directors or its relevant committee with a statement that we have complied with
relevant ethical requirements regarding independence, and to communicate with them all relationships and othermatters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Board of Directors or its relevant committee, we determine thosematters that were of most significance in the audit of the financial statements of the current period and are
therefore the key audit matters. We describe these matters in our auditor’s report, unless law or regulationprecludes public disclosure about the matter or when, in extremely rare circumstances, we determine that amatter should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements
In accordance with article 728a para. 1 item 3 CO and the Swiss Auditing Standard 890, we confirm that aninternal control system exists, which has been designed for the preparation of financial statements according to
the instructions of the Board of Directors.
We further confirm that the proposed appropriation of available earnings complies with Swiss law and thecompany’s articles of incorporation. We recommend that the financial statements submitted to you be approved.
KPMG AG

Rolf Hauenstein
Licensed Audit Expert
Auditor in Charge

Regula Tobler
Licensed Audit Expert

Zurich, 28 February 2018

KPMG AG, Badenerstrasse 172, PO Box, CH-8036 Zurich
KPMG AG is a subsidiary of KPMG Holding AG, which is a member of the KPMG network of independent firms affiliated with KPMG International Cooperative(“KPMG International”), a Swiss legal entity. All rights reserved.

2

material
uncertainty
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suchdisclosuresareattention
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modify our
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communicate
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162 FORBO ANNUALWeREPORT2017 – ANNUAL
THE HOLDINGCOMPANYWe
communicate
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Report of the statutory auditor

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— Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
KPMG AGappropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
KPMG AG
internal control.
—

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimatesand related disclosures made.
Rolf Hauenstein
Regula Tobler—
Conclude
the appropriateness of the Board of Directors’
useof thegoing concern basis of accounting and,
Rolf
Hauenstein
RegulaTobler
Licensed
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on theaudit evidence obtained, whether a material
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LicensedExpertLicensed
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cast significant doubt on the entity’s ability to continue as a going concern. If we conclude that a
AuditorChargematerial uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosuresin theor, if such disclosures are inadequate, to modify our opinion. Our conclusions are
Zurich,28 financial
Februarystatements
2018
based
on the audit
evidence obtained up to the date of our auditor’s report. However, future events or
Zurich,28 February
2018
conditions may cause the entity to cease to continue as a going concern.
We communicate with the Board of Directors or its relevant committee regarding, among other matters, theplanned scope and timing of the audit and significant audit findings, including any significant deficiencies in
KPMG AG, Badenerstrasse 172, PO Box, CH-8036 Zurichinternal control that we identify during our audit.

KPMG AG, Badenerstrasse 172, PO Box, CH-8036 Zurich
KPMG AG is a subsidiary of KPMG Holding AG, which is a member of the KPMG network of independent firms affiliated with KPMG International Cooperative(“KPMG International”), a Swiss legal entity. All rights reserved.
KPMGalso
AG is provide
a subsidiarytheof KPMG
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Boardof AG,
Directors
its relevantwith afirms
statement
that
weInternational
have complied(“KPMG International”), a Swiss legal entity. All rights reserved.

relevant ethical requirements regarding independence, and to communicate with them all relationships and othermatters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

2
2

From the matters communicated with the Board of Directors or its relevant committee, we determine thosematters that were of most significance in the audit of the financial statements of the current period and are
therefore the key audit matters. We describe these matters in our auditor’s report, unless law or regulationprecludes public disclosure about the matter or when, in extremely rare circumstances, we determine that amatter should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements
In accordance with article 728a para. 1 item 3 CO and the Swiss Auditing Standard 890, we confirm that aninternal control system exists, which has been designed for the preparation of financial statements according to
the instructions of the Board of Directors.
We further confirm that the proposed appropriation of available earnings complies with Swiss law and thecompany’s articles of incorporation. We recommend that the financial statements submitted to you be approved.
KPMG AG

Rolf Hauenstein
Licensed Audit Expert
Auditor in Charge

Regula Tobler
Licensed Audit Expert

Zurich, 28 February 2018

KPMG AG, Badenerstrasse 172, PO Box, CH-8036 Zurich
KPMG AG is a subsidiary of KPMG Holding AG, which is a member of the KPMG network of independent firms affiliated with KPMG International Cooperative(“KPMG International”), a Swiss legal entity. All rights reserved.

2

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

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