ANNUAL REPORT 2020

CONNECT.
AMBIENCE
COOPERATIONFORBO – IN EVERYDAY LIFE

AMBIENCE.

Our floor coverings lend every room its own particular appeal.
The design solutions can be individually tailored, ensuring theunique aesthetics of each space – creativity at every step! But
our floor coverings also help shape a room’s acoustic features.
Functionality is at the heart of it all: our floor coverings are com­
fortable and easy to maintain, durable and robust.

CO­
OPERATION.

Every product has its own demands on our conveyor belts interms of functionality, hygiene, and release or grip properties.
What is crucial is how the individual belts work together to­ensure everything runs smoothly. We therefore always create
our solutions in cooperation with the customer so that wecan present tailored solutions to satisfy individual needs.

4This E. Schneider

Stephan Bauer

Executive Chairman

CEO‘We successfully implemented our strategy despite these excep­
tionally difficult times, although the COVID-19 pandemic and thechallenges to which it has given rise impacted business perfor­
mance substantially as of February. Business activity declined owing
to the general uncertainty on the markets and a whole range of
pandemic-related restrictions. In addition, our result was affectedby negative currency effects.
We took measures to protect our employees, safeguard supply
chains, and increase efficiency in order to counteract this decline.
Despite the negative market trends, we increased our investments and launched attractive products. Although the markets
recovered toward the end of the year and profitability improved
significantly in the second half of the year, the year as a whole
has been dominated by the effects of the pandemic.’

FORBO ANNUAL REPORT 2020 – LETTER TO SHAREHOLDERS5

TO OURSHAREHOLDERS
Dear Madam, dear Sir,
The year under review at Forbo was dominated by the economic effects of the COVID-19 pandemic and by
negative currency effects; both factors led to a decrease in sales and earnings.
We saw the first signs and negative effects in our Asian markets as early as the extended Chinese New Yearholiday. COVID-19 then spread successively to Europe and shortly thereafter to the Americas region, adversely
affecting our business activity primarily in the second and third quarters. Some markets showed clear signsof recovery toward the end of the year.
A large number of our production sites and assembly centers worldwide had to be closed for periods of time
mainly in the first half of the year in order to comply with government regulations or to protect our employees.
Many markets saw building sites shut down at short notice, while construction projects in the commercial
sector were either postponed indefinitely or canceled altogether owing to the exceptional situation. Numerous
projects and investments of our Movement Systems customers such as the expansion of airport facilities orrenewals of industrial manufacturing sites were deferred. Customers and business partners were temporarily
unreachable owing to local lockdown measures, especially in Europe and the USA. Coordinating our efforts
centrally, we did everything possible to protect our employees by providing hygiene and protection concepts
and adjusting work processes whilst at the same time we sought to maintain business continuity. Safeguarding
our delivery capability was a particular challenge since we faced major restrictions and exceptionally difficult
conditions also for global supply chains.
In order to cushion the negative impact of the current business climate, since springtime we reduced third-­
party costs, adjusted operational structures, and cut back new hires to an absolute minimum. At the same time,
we implemented a range of measures to increase efficiency and reduce costs, and these had a significantly
positive effect on earnings, especially in the second half of the year. Forbo’s solid financial structure has enabled
us to pursue all the strategic plans necessary to safeguard our market position for the future too, even in thisdifficult year. Important operational and strategic projects, such as targeted investments in growth markets,
product launches, and innovative product developments for the future as well as digitization were implemented
on the same or an even larger scale. On balance, we increased investments versus the previous year.
Owing to the stronger Swiss franc, the translation of local results into the corporate currency resulted in anegative currency effect compared with the previous year. The effect came to about CHF 61 million in sales andCHF 8 million in operating profit. Many of our main currencies were affected, in particular the US dollar, butalso the euro, the pound sterling, the Chinese renminbi, and the Japanese yen were impacted notably.

Global slump in demand toward the endof the first quarter
Recovery in some markets as of the fourth quarterIn the year under review, Forbo generated net sales of CHF 1,117.7 million (previous year: CHF 1,282.2 million),
representing a decrease of 8.1% in local currencies; owing to negative currency effects, this equated to a decline
in sales of 12.8% in the corporate currency. However, starting in the fourth quarter some markets and customer
segments embarked on an increasingly recognizable recovery.

6

FORBO ANNUAL REPORT 2020 – LETTER TO SHAREHOLDERS

Net sales at Flooring Systems declined by 8.4% in local currency terms to CHF 757.0 million (previous year:
CHF 870.5 million). In the corporate currency, this corresponded to a decrease of 13.0%. The timing and scaleof the downturn varied in the different local markets. At times we suffered strong drops in demand in ourcore markets France, the United Kingdom, and the USA, as well as in Italy and Spain.
Movement Systems generated net sales of CHF 360.7 million (previous year: CHF 411.7 million), representing adecline of 7.4% in local currencies and a decrease of 12.4% in the corporate currency. All markets with a few
exceptions reported a decline in sales, but to varying extents. China, an important core market for Movement
Systems, was very hard hit in the first quarter but recovered in the course of the year. Other key markets suchas the USA, Japan, Italy, Spain, the United Kingdom, and France reported percentage declines that were higher
than average for the division.

Profitability impacted by sales downturnand strong Swiss franc
Measures taken in springtime in combination with higher capacity utilization
lifted earnings above average in the second half of the year
Both the decrease in sales and the strong Swiss franc impacted profitability negatively during the year onbalance. However, profitability in the second half far outpaced earnings in the first six months owing to theextensive measures undertaken in springtime to optimize operating and cost structures plus the steps thatwere implemented to increase efficiency.
Positive operational leverage effects were felt from the higher capacity utilization of production plants and theimproved productivity resulting from scaled-back and optimized operating structures. Further impetus wasadded by the downtrend in raw material prices, which however rose sharply again toward the end of 2020. On
balance, lower raw material prices in the first half for manufactured products plus price increases realized in
the second half generated higher margins in the second six-month period. Not least of all, active management
contributed to reducing doubtful receivables and to negotiation of legal cases, which were solved in our favor.
Operating profit before depreciation and amortization (EBITDA) declined by CHF 41.7 million, or 17.8%, to
CHF 192.0 million (previous year: CHF 233.7 million). Group operating profit (EBIT) decreased by CHF 39.3
million, or 22.3%, to CHF 137.0 million (previous year: CHF 176.3 million). Although operating profit margins inboth divisions improved significantly in the second half compared with the first, for the full year under review
the EBITDA margin came to 17.2% (previous year: 18.2%) and the EBIT margin to 12.3% (previous year: 13.7%).

Group profit lower than previous year
Lower earnings reflected in Group profit
Group profit decreased by 23.2%, or CHF 32.1 million, to CHF 106.2 million (previous year: CHF 138.3 million)
owing to the decline in operating profit (EBIT) and a slightly higher tax rate of 22.0% (previous year: 21.1%).

7

Solid balance sheet
High liquidity and robust equity base
Net cash at year-end 2020 came to CHF 255.9 million (previous year: CHF 217.5 million); this was due to aslight increase in investments against a backdrop of a strong operating cash flow given the current circum­
stances. In addition, as at December 31, 2020, Forbo held 70,765 of its own shares valued at CHF 107.4
million at year-end.
The equity ratio remains solid and stands at 61.5% (previous year: 61.7%).
The undiluted earnings per share reflect the lower earnings and have accordingly reduced by 22.9% to
CHF 66.60 (previous year: CHF 86.33).

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.
Dividend adjusted to the decline in earnings
In view of the negative impact of COVID-19 on our activities, the Group’s solid cash flow and its high equity
ratio, the Board of Directors will propose to the Ordinary General Meeting that the dividend for the 2020
business year be reduced by about 13 percent versus the previous year to CHF 20 per share (previous year:
CHF 23 per share).

Outlook for 2021
Strategy confirmed even in challenging times
Forbo has a solid capital structure, good liquidity, a robust cash flow, and has no debt. Our global presence
and strong market positions, plus our broad, innovative and sustainable product portfolio, will enable us tocontinue implementing our strategy. We will focus on development in growth markets, targeted strengthen­ing of our distribution organizations, selective capacity expansion in product lines with better-than-average
growth, promoting innovations coupled with digitization advances, and capitalizing on external growth
opportunities. However, as in the past, we will make acquisitions only if we can thereby create added value
for our shareholders.
Guidance for 2021
Owing to the constantly changing market conditions dictated by the COVID-19 pandemic, it is difficult to makea forecast for 2021. A great deal of uncertainty will be with us in the new year too.
Assuming that overall conditions do not deteriorate, we expect an increase in net sales in local currencies and asomewhat higher Group profit for the full year 2021.

8

FORBO ANNUAL REPORT 2020 – LETTER TO SHAREHOLDERS

Thank youThanks to employees, business partners, and shareholders
To successfully and efficiently meet the various challenges facing us in the current market situation, ouremployees have had to demonstrate even more thorough-going commitment and even greater flexibility. We
wish to express our heartfelt thanks to them for their dedication and understanding and for their supportof the various measures and decisions that have been taken.
We also wish to thank our customers, business partners, and suppliers for their excellent cooperation in these
exceptional times.
On behalf of the Board of Directors and the Executive Board, we thank you too, our dear shareholders, for yourongoing loyalty and the trust you place in our company.

Baar, March 2021

This E. Schneider
Executive Chairman

Stephan Bauer
CEO

Financial calendar
Ordinary General MeetingPublication of 2021 Half-Year Report
Publication of 2021 Annual Report

Thursday, April 1, 2021
Friday, July 30, 2021
Thursday, March 3, 2022

9

CONTENTS
At a glance

12

Forbo in figures
Investments despite pandemic
Sustainable engagement

13
18
22

Activity report

27

Two divisions with leading market positions
Flooring Systems: Broad-based investments
Movement Systems:
Attractive and versatile innovations

28
30
36

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

44
46
48

The Forbo share

51

Corporate governance report

55

Remuneration report

73

Forbo Group financial report

91

Consolidated balance sheet
92
Consolidated income statement
93
Consolidated comprehensive income statement
94
Consolidated statement of changes in equity
95
Consolidated cash flow statement
96
Notes – accounting principles
97
Notes107
Group companies
134
Report of the statutory auditor
138
Consolidated balance sheets 2016 – 2020
144
Consolidated income statements 2016 – 2020
145

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

147
148
149
150
155
156

10

11

AT A GLANCE
Forbo in figures
Investments despite pandemic 
Sustainable engagement

13
18
22

12

2020 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 about 5,300 people andhas an international network of 25 production
and distribution ­companies, 6 assembly oper­
ations and 49 pure sales organizations in a totalof 39 countries. Forbo is headquartered in Baarin the canton of Zug, Switzerland.

14

FORBO ANNUAL REPORT 2020 – AT A GLANCEFORBO IN FIGURES
Forbo is a global player, and its twodiv­­isions supply a wide range ofindustries. The Group’s global reachmeans that it is close to dynamic
markets, making Forbo the first choice
as a local partner for customers thathave similar global requirements. The
quality, longevity, and perfor­manceof our products and systems reflect
the quality and stability of our relations
with our business partners.

Flooring Systems
15 production facilities in 7 countries and distribution
companies in 27 countries. Sales offices in Europe,
North, Central, and South America as well as Asia/
Pacific.
Floor coverings
Building and construction adhesives
Movement Systems
10 production sites and 6 assembly operations in 9
countries and distribution companies in 32 countries.
Over 300 sales and service offices worldwide.
 Production facilities andassembly operations

15

Net sales 	 CHF 1,117.7 million
EBIT 		 CHF 137.0 million
EBIT margin 	
12.3%
Group profit	 CHF 106.2 million
Earnings per share	
CHF 66.60
undiluted

16

FORBO ANNUAL REPORT 2020 – AT A GLANCE

Net sales by division
Change on previous year
2020 CHF m
757.0
360.7
1,117.7

Flooring Systems
Movement Systems
Total

in %
– 13.0– 12.4– 12.8in localcurrencies in %
– 8.4
– 7.4
– 8.1

In % of total
67.7
32.3
100.0

32.3%

Movement Systems

67.7%
Flooring Systems

Employees by division2020 number
2,967
2,309
41
5,317

Flooring Systems
Movement Systems
Corporate Functions
Total

2,309

Movement Systems

2,967

Flooring Systems

41

Corporate Functions

Change onprevious year in %
– 5.2
– 5.4
– 4.7
– 5.3

In % of total
55.8
43.4
0.8
100.0

FORBO ANNUAL REPORT 2020 – AT A GLANCE

17

Financial overview Forbo Group
2020

2019

2020

2019

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

CHF m
1,117.7
757.0
360.7
192.0

CHF m
1,282.2
870.5
411.7
233.7

EUR m1)
1,044.0
707.1
336.9
179.3

EUR m1)
1,152.4
782.4
370.0
210.0

Operating profit (EBIT)Group profit

137.0
106.2

176.3
138.3

128.0
99.2

158.5
124.3

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

CHF m
1,110.8
809.3
683.5
255.9

CHF m
1,097.4
834.1
676.6
217.5

EUR m1)
1,037.5
755.9
638.4
239.0

EUR m1)
986.3
749.7
608.1
195.5

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

CHF m
171.4
– 38.9
132.5

CHF m
185.1
– 34.5150.6

EUR m1)160.1– 36.3123.8

EUR m1)166.4– 31.0135.4

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

%
17.2
61.5
– 37.4%18.2
61.7– 32.1

Employees (as at December 31)
Total employees

Number
5,317

Number5,614

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

CHF
66.60
428.6420.04)

CHF
86.33
422.3623.005)

EUR1)
62.21
400.3718.684)

EUR1)
77.59
379.6220.675)

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

CHF m
2,504.7

CHF m
2,719.2

EUR m1)
2,339.5

EUR m1)
2,444.0

1) Euro values translated at the average annual exchange rate of CHF
1.0706/1 EUR (2020) and CHF 1.1126/1 EUR (2019).
2) Liquidity plus financial assets less financial liabilities, excluding
leasing liabilities.
3) See note 11 ‘Earnings per share’ on page 114 of the financial­report.

4) The Board of Directors proposes to the Ordinary General Meetingof April 1, 2021, the distribution of a dividend in the amount of
CHF 20.00 per registered share.
5) Approval of a dividend of CHF 23.00 per registered share at theOrdinary General Meeting of April 3, 2020.
6) Total number of shares multiplied by year-end share price.

18

FORBO ANNUAL REPORT 2020 – AT A GLANCEINVESTMENTS
DESPITE PANDEMIC
The year under review was dominatedby far-reaching COVID-19 challenges
that tested us at various times and withvarying degrees of severity all over theworld. We had to act fast and remain
flexible: we adjusted internal operatingprocesses to protect our employees
while at the same time taking steps to
optimize communication with custom­ers and suppliers and to organize thesmooth functioning of supply and pro­curement chains.
At times, demand was significantly cur­tailed by restrictions on activities inmany markets and customer segments,
by building construction sites freezes,
and by postponement of projects; com­bined, these factors seriously impacted
our sales in the second and third quar­
ter. Operational efficiency and profit­

ability suffered as a result. The targetedmeasures we took in springtime werebroadly and systematically implemented,
and they had a positive effect on earn­ings especially in the second half.
Forbo’s solid financial base enabled us
to successfully pursue our strategic proj­
ects despite these restrictions, and ourinvestments were above average. With
the aim to be well positioned for a
post-pandemic upswing, both divisions
expanded their product portfolio with
innovative offerings for specific custom­
er segments. At the same time, they­targeted growth markets for expansion;
they invested in operational renewals toenhance efficiency; and they boosted
digitization through IT systems that pro­vide optimum support.

Net sales by geographic area
Change on previous year

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

%
13.1
11.1
10.9
8.5
6.0
2.3
13.0
64.9
16.7
3.6
20.3
14.8
100.0

in %
– 6.1
– 21.4– 6.4– 4.1– 25.3– 5.1– 9.5– 11.6– 15.6– 23.0– 17.0– 12.1– 12.8in local currencies in %– 2.4
– 18.3– 2.7
0.0– 21.3
– 5.1
– 2.7
– 7.5
– 10.5– 14.4– 11.3
– 6.0
– 8.1

2020
CHF m
145.9
124.3
122.2
94.6
67.2
26.2
145.3
725.7
186.7
40.1
226.8
165.2
1,117.7

25

50

75

100

125

150

175

200

225

250

275

19

Global slump in demand toward
the end of the first quarter
After a good start in 2020, we felt the first negative­effects caused by the COVID-19 pan­demic on demandin China in February, and these spread fairly quickly tofurther markets and regions around the world. As of the
fourth quarter we began to notice a recovery in somemarkets and customer segments. On balance for 2020,
net sales came to CHF 1,117.7 million (previous year:
CHF 1,282.2 million); sales in local currencies were thus
8.1% lower, and this equates to a sales decline of 12.8%
in the corporate currency owing to negative currency
effects. Overall, the Americas region was hardest hit(a low double-digit percentage decline), the impact inEurope and Asia/Pacific was slightly less.

The Flooring Systems division generated net sales of
CHF 757.0 million in the 2020 business year (previous
year: CHF 870.5 million), which reflects a decrease of
8.4% in local currencies (– 13.0% in the corporate cur­rency). All three regions reported a decline in sales,with the Americas being hardest hit. Europe and Asia/
Pacific decreased by about the same amount but lesssignificantly.
The Movement Systems division generated net salesof CHF 360.7 million in the year under review (previous
year: CHF 411.7 million), which reflects a decline of
7.4% in local currencies (– 12.4% in the corporate cur­rency). All three regions reported a decrease in sales
to varying degrees, the strongest affected being theAmericas, Europe somewhat less so and Asia/Pacificleast of all.

EBITDA by division

Flooring Systems
Movement Systems
Corporate

2020
CHF m
144.6
55.0
– 7.6

Change onpre­vious year in % – 25
– 16.2– 20.6
7.3

0

25

50

75

100

125

150

Profitability hit by the sales downturnand the strong Swiss franc
Profitability was impacted negatively both by the de­crease in sales and by negative currency effects owing
to the strong Swiss franc. The effect of Forbo’s far-reach­ing and targeted measures to optimize operating andcost structures along with steps taken to improve effi­
ciency was increasingly felt in the second half of theyear.

Group operating profit (EBIT) was 22.3% lower, de­creasing to CHF 137.0 million (previous year: CHF 176.3
million). The Group EBIT margin declined from 13.7%
the previous year to 12.3% in the year under review.

Group operating profit before depreciation and amor­
tization (EBITDA) therefore reduced by 17.8% to CHF
192.0 million (previous year: CHF 233.7 million). EBITDA
at Flooring Systems declined by 16.2% to CHF 144.6
million (previous year: CHF 172.6 million). EBITDA at
Movement Systems decreased by 20.6% to CHF 55.0
million (previous year: CHF 69.3 million).

Taxes and financial income
The tax rate in the year under review was 22.0% (previ­
ous year: 21.1%), in line with the long-term average.

Although operating profit margins in both divisions
improved significantly in the second half comparedwith the first, for the full year under review the GroupEBITDA margin came to 17.2% (previous year: 18.2%).
The EBITDA margin at Flooring Systems declined from
19.8% the previous year to 19.1%, while at Movement
Systems the EBITDA margin reduced by 1.6 percentage
points to 15.2% (previous year: 16.8%).

Group profit reduced by 23.2%, or CHF 32.1 million, to
CHF 106.2 million (previous year: CHF 138.3 million)
owing to the decline in operating profit (EBIT) and aslightly higher tax rate.

Financial expense in 2020 came to CHF 1.6 million­(previous year: CHF 1.8 million), consisting of interest
expense of CHF 0.9 million for leasing liabilities recog­
nized in the balance sheet. Apart from that financial
expense remained close to the previous year’s levelowing to minor currency losses. Offsetting this was­financial income, comparable with the previous year,of CHF 0.7 million (previous year: CHF 0.8 million),
which consisted of interest income on liquidity. On
balance, the net financial result improved to CHF – 0.9
million (previous year: CHF – 1.0 million).

20

FORBO ANNUAL REPORT 2020 – AT A GLANCE

Free cash flow
2020
CHF m
171.4
– 38.9132.5

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

Solid cash flow performance
In the reporting year, cash flow from operating activi­
ties was down by CHF 13.7 million to CHF 171.4 million(previous year: CHF 185.1 million); this factors in a slight
reduction in operating working capital, which is in linewith performance. Cash flow from investing activities
rose by CHF 4.4 million owing to the ongoing high­level of investment volume and stood at CHF – 38.9
million (previous year: CHF – 34.5 million). Free cash
flow thus totaled CHF 132.5 million (previous year: CHF
150.6 million).

2019
CHF m
185.1
– 34.5
150.6

– 50

0

50

100

150

200

50

60

Healthy balance sheet
Total assets at December 31, 2020, increased by CHF
13.4 million and rose to CHF 1,110.8 million (previous
year: CHF 1,097.4 million), mainly due to the positive
cash flow and despite the negative currency effects.
Net liquidity rose by CHF 38.4 million to CHF 255.9 mil­lion (previous year: CHF 217.5 million); particularly inthe present circumstances, this is a cushion providing
security and independence for entrepreneurial deci­
sions. Equity rose by CHF 6.9 million and stood at CHF
683.5 million on December 31, 2020 (previous year:
CHF 676.6 million). The main factors in this increase
were Group profit less the dividend payout, the pur­chase of treasury shares, and currency losses. The eq­uity ratio remains solid, standing at 61.5% (previous
year: 61.7%).

Investments 2016 – 2020

2020
2019
2018
2017
2016

Flooring
Systems
CHF m

Movement
Systems
CHF m

Corporate
CHF m

Total
CHF m

21
23
25
22
20

19
13
13
36
17

0
0
0
0
3

40
36
39
58
40

Value-adding investments
Our investments are wide-ranging, combining the de­mands of sustainability with efficiency gains in operat­ing processes. In the reporting year, both divisions con­centrated their resources on key activities and strategic
projects in the areas of product portfolio, technology,
efficiency and optimization of operating processes, in­frastructures, and targeted market and capacity expan­
sion. Total Group investments in property, plant, andequipment and intangible assets in 2020 came to CHF
39.7 million, which was CHF 3.7 million, or 10.3%, high­er than the previous year (CHF 36.0 million) despite thenegative currency effects.

10

20

30

40

In the reporting period, Flooring Systems invested
CHF 20.5 million (previous year: CHF 22.8 million). This
amount includes various upgrades and technologicalexpansions of production plants, new product devel­
opments, and innovations in the areas of design, sur­face structure and surface coatings. State-of-the-art
process control systems, automated equipment forspe­cific production steps, and optimized and expand­ed plant infrastructures serve to improve efficiency.
Significant amounts were invested in renewing thedrying kilns for linoleum floor coverings, the buildingof a new research and development center for vinyl
floor coverings, and in a new plant for reactive building
and construction adhesives in Russia. The division con­tinued to roll out digital platforms to support sales.

21

Investments in property, plant, and equipment at
Movement Systems came to CHF 19.1 million (previ­
ous year: CHF 13.2 million), which marked a significant
increase. The division invested larger-than-averageamounts in the development and construction of anew product line for homogeneous belts, which in­volved erecting a new plant in a custom-built pro­duction site in Germany. It also invested in injection
molding machines for the production of new series ofProlink plastic modular belts in Denmark and in a cus­
tom-built plant including warehousing and logistics
facilities, quality control, and administration. In addi­
tion to digital programs, upgrades, and technologicalexpansion of production plant, the division also imple­
mented infrastructure projects such as a new thermal
oil plant, a new roller bearing system for 5-meter wide
belts, and the development of assembly facilities inColombia.

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

%
21.9
12.1
9.6
7.5
3.4
3.3
13.3
71.1
15.0
10.5
3.4
13.9
100

Change onpre­vious year in %
– 5.5
– 8.9
– 8.1
– 4.6
1.1
– 2.8
– 0.6
– 5.0
– 4.1
– 8.8
– 4.2
– 7.8
– 5.3

2020
number
1,162
646
512
397
179
174
713
3,783
796
557
181
738
5,317

Operating structures and headcount adjusted
At year-end 2020, the Forbo Group employed 5,317
people. This is a total of 297 fewer employees than at
the end of the previous year. To cushion the negative
impact of the current economic situation, Forbo was
taking wide-ranging measures including the reductionof overtime and unused holidays, different forms of
furlough or short-time working, and the adjustmentof operating structures. To do so, we mainly reduced
flexible resources at major production sites, reachedagreements for early retirement, and scaled back newhires to the absolute minimum. A few new positions
were filled but only in growth markets where demandis expanding.

200

400

600

800

1,000

1,200

1,400

The individual percentage changes in staffing levels
mostly reflect market developments in the different
countries and regions and mirror the situation on thebalance-sheet date at the end of the year.

22

FORBO ANNUAL REPORT 2020 – AT A GLANCESUSTAINABLE
ENGAGEMENT
The responsible use of resources of ev­
ery kind is a guiding principle at Forbo.
We are committed to the protection of
the environment and we invest in con­cepts that contribute to a sustainable
future for us and for the society. As a re­sponsible manufacturer and employer,
Forbo sets benchmarks for health andsafety, the environment, and quality.
Social dimension
Forbo promotes a high-performance culture in order tomeet the high demands of our customers and business
partners as well as the requirements we impose on
ourselves. This is why we promote the necessary capa­
bilities and competences at all organizational levels,and support this internally with seminars and further
training activities.
This means that the divisions provide internal training
in a wide range of areas regarding products and appli­
cations, sales and marketing, finance, operations, pro­
ject management, strategy implementation, and For­bo’s values. Continuous intensive training in the areaof health and safety includes measures on the topics ofaccident prevention, risk awareness, and occupational
health and safety, as well as general ongoing preven­tive measures.
At the Group level, Forbo has established an internalmanagement training program in collaboration with
the University of St. Gallen as well as other external
partners and internal experts. This practice-oriented
advanced training program for senior managers andpersons in key positions consists of a first training weekthat includes various modules in areas ranging frommanagement and sales to marketing and operations.
A second training week expands on this and includes
leadership modules, focusing on strategic implemen­tation and leadership topics such as dealing with or­
ganizational and team changes as well as performance
management. A third training week, building on thisfoundation, deals mainly with leadership topics regard­
ing the implementation of strategy across various or­
ganizational levels. This is combined with relevant tools
for communication challenges and cooperation in in­
ternational, cross-cultural teams.

23

Ecological dimension
Protection of the environment and the generation of
ecological added value are important factors in all of
Forbo’s development and investment decisions. Our
customers also demand efficient and sustainable prod­
ucts and services. Both divisions are meeting these­demands by offering purely natural products in theirproduct portfolio.
With linoleum, Flooring Systems offers a floor covering
made of 98% renewable raw materials of which 73%
are renewable within ten years. Linoleum is CO2-neutral
and made from the natural raw materials linseed oil,natural resin, wood flour and limestone as well as juteand pigments. A natural product through and through,which, in view of its long service life and positive eco­logical balance, is regarded as the most environmen­
tally friendly resilient floor covering available. At theend of its long service life it can be composted, as it is100% biodegradable. In addition to this, linoleum ismade 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 usingphthalate-free plasticizers of the latest 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, we collect off-cuts of ourvinyl coverings as well as waste material from our own
production and put these back into the production of
new coverings, for example for the substrate layer ofcarpet tiles and Flotex – the washable textile flooring.
Flooring Systems gets 100% of the electricity used at its
production locations from renewable en­ergy sources.
At Movement Systems, too, we are working on the fur­ther development of phthalate-free plasticizers in the
manufacture of PVC conveyor belts.

24

FORBO ANNUAL REPORT 2020 – AT A GLANCESUSTAINABLE
ENGAGEMENTWith the BioBelt, Movement Systems has developed abiodegrad­able conveyor belt whose physical and dy­
namic properties are equal to standard belts. The same
applies to its performance and long service life. In the
BioBelt, oil-based raw materials and synthetic-techni­
cal materials have been largely substituted by materi­als made from renewable, plant-based raw materials. At
the moment, demand for a conveyor belt of this kindis still rather weak.
In order to maximize environmental compatibility andat the same time increase the product advantages,
Movement Systems has patented a special coatingthat significantly reduces the friction between the un­derside of the belt and the slider bed compared withconventional conveyor belts. In the meantime, Move­ment Systems launched new generations of these en­
ergy-saving conveyor belts that are even more efficient.
These AmpMiser conveyor belts display their advan­
tages 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 thistype of application, energy savings of up to 50% areachieved for the overall systems.

We have also made it our aim to continually make ourown activities more sustainable and efficient. We do
this by using less material and energy to realize equi­va­
lent or even better solutions. Both divisions are work­
ing constantly on the optimization of production pro­
cesses in terms of water and energy consumption,
reduction of emissions, reuse of heat generated in the
production process, and the reduction and efficient re­cycling of waste material in order to reduce the burden
on the environment. A wide range of certifications con­firm these efforts. At the same time, we are working
on innovative ideas regarding the materials used in the
production process as well as new application tech­niques.
FLOORING SYSTEMS
Floor coverings are part of our everyday lives and de­fine our living, leisure, and working spaces. Whether as
a direct end customer, builder of a major project, archi­
tect or installer, for every stakeholder group the topic
of sustainability plays an important role in the deci­sion-making process. This is why it is important for
Flooring Systems to differentiate itself from its com­
petitors with comprehensible and convincing argu­
ments, including in terms of sustainability.

25

To do this, we apply the holistic approach of a ‘circular
economy’, placing great emphasis on CO2 neutrality
and foregrounding the concepts of reduce, reuse, re­
new and recycle especially in operational contexts.
MOVEMENT SYSTEMS
Movement Systems’ resource management is basedon the continuous improvement of consumption effi­
ciency through the development and the targeted­implementation of measures for the optimization ofelectricity, gas, oil, and water consumption. Alongsideongoing energy-saving measures, energy recovery is
an important factor, i.e. the use of energy released in
the downstream incineration plant for the purposesof heating. In order to reduce water consumption
and avoid unnecessary waste, Movement Systems isincreasingly using closed water circulation systems.
Some of the waste water can be used in another pro­duction step in order to minimize water requirements.
The reduction and productive reuse of waste material
is increasingly the focus of Kaizen and sustainability ini­
tiatives. Cut-offs from the belts we produce in certain
countries are sold to other companies to be reused intheir production. The locations in North America col­lect sanding dust in filters which is then processed asmaterial by external partners in their production. Someof the waste from plastic modular belts as well as poly­
urethane and polyamide cut-offs from flat belts is recy­cled back into our own production.
Economic dimension
As a listed company, Forbo also engages intensively
with the economic dimension of sustainability. Com­
pliance is enormously important for the reputationand positioning of a company. We are successful as acompany when we meet the expectations of custom­ers, when employees are enthusiastic and committed,
and when we create added value in the long term forour shareholders.
Also in the year under review, we constantly main­tained our efforts to ensure responsible conduct: wecontinued to strengthen awareness especially of theCode of Conduct through e-learning modules and todeepen understanding of competition law, anticorrup­
tion guidelines, IT security as well as data protection.
We also systematically implemented risk management
processes.

26

27

ACTIVITYREPORT
Two divisions with leading market positions

28

Flooring Systems:
Broad-based investments

30

Movement Systems:
Attractive and versatile innovations

36

28

FORBO ANNUAL REPORT 2020 – ACTIVITY REPORTTWO DIVISIONSWITH LEADING
MARKET POSITIONSForbo aims to operate primarily in bu­si­
ness areas in which it has or can achievea leading global market po­sition – some­thing it has achieved for both Flooring
Systems and Movement Systems.

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

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

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

AMBIENCE.

COOPERATION.

FLOORINGSYSTEMSAMBIENCE

IN GOOD
HANDS
Every space has its own particular requirements andcalls for individual flooring. In ski regions, it is essentialthat floor surfaces prevent slipping and that they dry
as quickly as possible. Our Flotex floor coverings are
the perfect answer for such needs. Optimum soundabsorption is also indispensable for creating a pleas­
ant atmosphere. Needless to say, our floor coverings
provide outstanding resilience and durability, while
preventing dust and allergens from collecting. They
make everyone feel good all around.

32

FORBO ANNUAL REPORT 2020 – ACTIVITY REPORTFLOORING SYSTEMS:BROAD-BASED INVESTMENTS‘After getting off to a gratifying start in
the reporting year, we were impacted
in the spring – especially at production
sites in Europe – by the rapid spreadof the COVID-19 pandemic. Flexibility
was essential – we needed to decideand act fast by adjusting operating pro­
cesses, especially for the protection of
our employees, and by devising new
and creative communication channels
Jean-Michel Wins
with our customers. We also had to take Executive Vice President
action on the cost side owing to the Flooring Systems
sudden slump in demand, which wassignificant at times, in order to bring
European markets showed a very mixed trend. Our­operating and cost structures into line The
core markets France and the United Kingdom borewith the situation. The benefit was felt the brunt of the slump in demand, which was steep atincreasingly in the second half. Never­ times. Spain, Italy, and Portugal were also seriously
theless, we held on to our planned ­affected. Sales in Switzerland, Poland, and in somecountries also declined, but not to the­investments, continued with strategic Scandinavian
same extent. By contrast, some of our key markets suchprojects, and launched attractive collec­ as Germany and the Netherlands remained practicallytions.’
at the year-back level. Russia posted above-average
growth.
The Flooring Systems division generated net sales of
CHF 757.0 million in the 2020 business year (previous
year: CHF 870.5 million), which reflects a decrease of
8.4% in local currencies (– 13.0% in the corporate cur­rency). The division’s share of Group sales was 67.7%.
Seen over the whole year, COVID-19-related building
freezes and postponements of major projects alongwith the slump in demand that they caused affected
our country organizations to varying degrees. Operat­ing profit (EBIT) decreased by 19.1% to CHF 109.9 mil­lion (previous year: CHF 135.8 million), mainly becauseof the decline in sales, reduced capacity utilization of
production plants, decreased production efficiency,
and negative currency effects. The EBIT margin re­duced by 1.1 percentage points to 14.5% (previous
year: 15.6%).
Mixed sales trends
While some markets closed out the year at or even
above the previous year’s sales level, all three regions
together posted a decline in sales revenue. The Amer­
icas was hardest hit, Europe and Asia/Pacific less so.

In the Americas region, the main market, the USA, re­ported a decline in sales in line with the division as awhole. Canada, where we grew strongly the previous
year, was hit very hard by lengthy building freezes­especially in the key regions Quebec and Toronto. Bra­
zil and other, smaller, markets in South America also
reported sales decreases.
The picture in Asia/Pacific was just as mixed. In China,
demand dropped significantly at times, which wasdue mainly to project postponements. Most markets
in Southeast Asia and Turkey were also weaker. Japan
maintained its good performance from the previous
year. Australia reported solid growth, as did the growthmarket South Korea.
The building and construction adhesives activity re­corded a gratifying sales growth on the whole. This ismainly based on the fact that building and construction
adhesives are also sold in the do-it-yourself sector, andthis sector hardly felt any impact from the pandemic in
our three main markets, the Netherlands, Germany, andRussia.

33

Attractive new collections
In the year under review, despite the exceptional cir­
cumstances, we developed and launched attractive,
high-quality collections.

The linoleum drying kilns at the production plant in
the Netherlands were renewed by means of a sustain­
able ventilation system that further reduces both ener­
gy consumption and CO2 emissions. Each kiln is 50 m
long, 5 m wide and 20 m high and lends the freshly
In the linoleum unit, we supported the collection produced floor coverings the right hardness and flexi­
launched the previous year with a global online cam­ bility in accordance with the product specifications. At
paign that underligned sustainability and CO2 neutral­ the same time, various process control systems were
ity in particular. At the same time, we worked on vari­ modernized with the latest technologies, and the coat­ous attractive innovations that will be incorporated ing plants at the facilities in the Netherlands and in
into future collections.
Scotland underwent technological renewals.
Our greatly expanded ‘allura’ collection of luxury vinyl A new building was erected at the manufacturing site
tiles offers new color ranges, trendy designs, sound-­ for vinyl floor coverings in France; it brings together
absorbing versions, and additional formats that enable under one roof all quality control and research & devel­
us to meet the growing demand for simple floor-laying opment operations with labs, test rooms and offices
options. There are three different installation methods: and it serves at the same time as a global center of ex­
fully adhered, click systems, or loose lay. This maximizes cellence for vinyl floor coverings. New equipment for
flexibility for attractive design and rapid installation special embossing effects for vinyl floor coverings at­especially in retail, hospitality and office buildings. In the Netherlands site will increase efficiency since in fu­
our new collection ‘under control’, for the first time ture it will save one entire process step.
we are offering an all-round solution of homogeneous At the building and construction adhesives production­vinyl floor coverings that dissipate or remove electro­ site in Russia, a new plant for the manufacture of reac­
static charges.
tive adhesives was built; these adhesives are used for
In textiles, Flotex ‘naturals’ – our washable, high-tech installing wood and sports flooring as well as artificial
floor covering – convinces with new, high-quality wood turf.
designs in digital printing quality. Two new carpet tile
collections – Tessera ‘earthscape’ with a comfortable pile Furthermore, we continued to pursue targeted growthand ‘structure 1’, based on an innovative microtufting opportunities by founding a sales company in Ukraine
technology – are designed primarily for the office seg­ and opening a new warehouse in Poland.
ment.
Good foundation for renewed growth
Varying development among product groups
In addition to the known challenges and volatile mar­
In line with the sales trend, the different product groups ket conditions brought about by COVID-19, we will also
also reported lower sales, though to differing degrees. have to deal in particular with the consequences of
Linoleum floor coverings and the versatile and appli­ Brexit. As we are directly affected by reason of our pro­cation-specific vinyl floor covering collections posted duction setup in the United Kingdom, we have madesmaller sales decreases than textile floor coverings did. extensive preparations in order to minimize negative
Homogeneous vinyl floor coverings developed posi­ consequences from Brexit.
tive; having recorded steady growth since their intro­ Our focus is on ensuring global availability of a varied
duction over the last three years, their sales in 2020 product portfolio with attractive and some new collec­
were on a par with the previous year.
tions for 2021, combined with a reliable customer anddelivery service as the basis for sustainable growth. At
the same time, we must remain flexible through pru­
Targeted investments in diverse areas
In addition to numerous initiatives to enhance the dent cost management that is adapted to the current
product portfolio, we invested in renewals at various circumstances.
production plants with the aim of developing new
products and promoting innovations but also of mod­ernizing and streamlining production processes. Thisinvariably also involved ecological improvements.

34

FORBO ANNUAL REPORT 2020 – ACTIVITY REPORTDESIGN AND
FUNCTIONALITY
Floor coverings from Forbo combinefunctionality and high product quality
with innovative designs, and thus ensurea sustainable enhancement of interiors
that are created to meet the needs of theusers. With every new development wemake our products and production pro­
cesses more environmentally-friendly,
while fulfilling the maximum in function­
al requirements. Thanks to the active ex­change with designers, architects, build­ing owners and suppliers, we have ourfinger on the pulse of technical innova­
tion and design trends.

FLOTEX ‘NATURALS’

Many of our new developments are aimed at the pri­vate sector commercial segment, based on tried-andtested and new production and digital print tech­
nologies. They combine trendy designs, diverse color
ranges and embossed textures in sustainable materials.
Inspired by trends and nature, in the reporting year we
also developed some attractive innovations for diverse
applications.
Textile diversities
Through the combination of a flocked surface with arobust, water-proof vinyl back, Flotex combines theadvantages of textile and elastic floor coverings togive it very diverse and functional properties suchas hardwearing, dirt-repellant, noise-absorbent, aller­
gy-friendly, anti-slip and easy cleaning. The new col­lection Flotex ‘planks’ consists of planks in the format 100 × 25 cm in natural colors and tone-in-tone­designs that can be harmoniously coordinated orlaid as a deliberate contrast. Flotex ‘naturals’ is asheet product with trendy designs in natural colors
and high-quality wood designs as tiles or in plank
look, created with the aid of high-resolution digitalprint technology. Preferred application areas include

FLOTEX ‘PLANKS’35

HOMOGENEOUS VINYL FLOOR COVERINGS ‘SPHERA’TESSERA CARPET TILES ‘EARTHSCAPE’of­fi ces, care facilities, gastronomy and the retail in­
dustry.
The two new carpet tile collections are also conceived
for heavily frequented commercial areas and meet thehighest demands in terms of design and functionality.
Tessera ‘earthscape’ offers a comfortable and highgrade pile in different heights and twelve natural, warm
color shades, and contains 57 percent recycled materi­al. It can also be perfectly combined with luxury vinyl
tiles. Tessera ‘struktur 1’ is based on a microtufting tech­
nology which is flat, very compact and robust, and per­fect for timeless and minimalistic designs. It is available
in 18 various colors and contains 65 percent recycledmaterial. Both collections are perfect for office areas,and ‘struktur 1’ in particular for gastronomy environ­ments too.

Special vinyl floor coverings forparticular applications
The new collection ‘under control’ is a complete solu­
tion of homogeneous vinyl tiles that can lead off elec­
trostatic charges horizontally or dissipate them, fulfills
the maximum requirements in terms of hygiene, andis extremely resistant and hardwearing. The collection
combines established and new Colorex and Sphera
floor coverings used for specific applications in thehealthcare sector or in the producing industry withelectronic components. The brownish color Assuan isused mainly in operating theaters so that stains of afrequently used disinfecting agent remain invisible.
Colorex ‘glow’ continues to give off phosphorescentlight for up to four hours after the light is switched off.

‘NATURE –A CONTINUING TREND’MOVEMENTSYSTEMSCOOPERATIONSEAMLESSLY
CLEAN
Dairy and dairy products have very special demands
on our belts, particularly with regard to hygiene. By
sealing the belt edges, for instance, we reduce the riskof product contamination. Good release properties are
essential, as is ­resistance to hydrolysis. With individual
surface textures and structures we develop the ideal
conveyor belt for every step in the process – from por­tioning to filling and packaging – and ensure that eve­rything is perfectly hygienic and runs smoothly.

38

FORBO ANNUAL REPORT 2020 – ACTIVITY REPORTMOVEMENT SYSTEMS:ATTRACTIVE AND VERSATILEINNOVATIONS‘At Movement Systems too we had tocope with a whole range of local
COVID-19 situations at different times.
Given our global production setup, ourmain concern was to protect the healthof our employees at our manufacturing
and assembly plants, and at the sametime we faced the challenge of main­taining operational flexibility and func­
tioning supply chains. The absence ofMarc Deimling
personal contact with our customers for Executive Vice President
the crucial step of technical consulting Movement Systems
on our innovative products was an add­
ed restriction. Furthermore, we had toslumped in China as early as theimplement individual measures to mini­ Demand
extended Chinese New Yearmize the negative impact on productiv­ Given our global production setup, we felt the first ef­
ity and costs. We continued at the same fects of the pandemic as early as the spring of 2020,
time to carry out strategic projects by which then triggered local slumps in demand. While
markets closed out the year at or even above theexpanding capacity of the successful someprevious year’s sales level, all three regions together
product line of plastic modular belts posted a decline in sales revenue. The Americas waswhile developing and building up a new hardest hit, Europe less so, and Asia/Pacific least of all.
product line for homogeneous belts.’
The Movement Systems division generated net sales of
CHF 360.7 million in the year under review (previous
year: CHF 411.7 million), which reflects a year-on-year
decrease of 7.4% in local currencies (– 12.4% in the cor­porate currency). The division’s share of Group sales was
32.3%. With only a few exceptions, all markets reported
a decrease in sales, though to varying degrees. Operat­ing profit (EBIT) reduced by 27.9% to CHF 35.9 million(previous year: CHF 49.8 million), as a result of the de­cline in sales, negative currency effects, and the highproportion of fixed costs. We optimized shift work andoperating structures in production and assembly in linewith the reduced capacity utilization and instituted
prudent cost management; together, these measures
made themselves felt mainly in the second half. The
EBIT margin declined by 2.1 percentage points in thereporting year to 10.0% (previous year: 12.1%).

In Europe, the key market Germany posted a declinethat was by and large in line with the division as awhole. Italy was confronted with very strong falls in de­mand at times but managed to recover somewhat in
the fourth quarter. Other key markets such as Spain,
France, and the United Kingdom endured the slump
until the end of the year; Switzerland and the Scandi­
navian countries were less affected. Russia deserves
mention as a positive exception.

The Americas region was dominated by trends in thecore market, the USA, which was very hard hit especial­
ly in the second and third quarters. Sports treadmills – avery important segment in the USA – stalled at times,
as did other activities in airports and in industrial manu­
facturing. On the other hand, Canada posted a slightdecrease, while Mexico, a growth market, stayed at theprevious year’s level owing to the high proportion ac­
counted for by the food segment.

39

Trends in Asia/Pacific were dominated by the mainmarket, China, which was hit very hard in the first quar­ter, though it recovered completely in the second half
and reported sales growth for the year as a whole.
­Japan showed increasing signs of a slump in the sec­
ond half and was down for the year as a whole. Australia
remained more or less at the year-back level. Even
growth markets such as India were very seriously im­
pacted at times; Thailand and Turkey are positive ex­
ceptions.
The food segment defies the pandemic
The food segment, which is the most resistant to eco­nomic fluctuations, reported marginal growth. Sales in
the logistics segment trended near the previous year’slevel. On the one hand, we felt a marked slump in de­mand in the area of airport infrastructure but, on theother, this decline was offset by strong growth frompackage distribution centers, an upturn that was driv­
en by e-commerce. The pandemic-related restrictions
at times seriously affected an equally important seg­ment for us, industrial manufacturing, especially theautomotive industry. Paper and printing, raw material
processing, and textiles were three segments thatposted close to a double-digit percentage decline indemand. One segment that was particularly affected
was sports treadmills, which are widely used in fitness
centers owing to their durability. The tobacco segment
reported a slight increase in sales owing to large-scale
projects in Asia/Pacific.
Application-specific innovations
Despite all the many challenges in the year under re­view, we launched innovative products for a very wide
range of customer segments in all product groups.
Deserving of particular mention are the Extremultus
and Transtex belts for logistics applications, which aresuitable for use in low-temperature areas, particularly
in open, unheated distribution centers or cold-storage
rooms. We also innovated in Transilon belts for customerspecific industrial applications: a highly conductive belt
for the manufacture of flat screens and smartphones;a robust and wear-resistant belt for ultrasound cutting
machines for cutting floor coverings, leather or sport­
ing goods such as snowboards; a belt featuring
above-average cut resistance for use in the processingof sharp-edged materials in the steel, automotive, andrecycling industries; and, not least, innovations for the
food industry. Here we developed two new belt types
suitable for the transport of unpackaged foods, which

are particularly advantageous for processing doughin industrial bakeries. The new Prolink plastic modular
belt series 18, which has a porous surface ensuring
good air circulation and drainage, also has a multitudeof uses in the food industry.
Investments in growing product groups
While continuing to invest in development and expan­
sion in growth markets, we also invested in new tech­
nologies and efficiency-enhancing measures in various
assembly and production plants.
A major manufacturing plant in the USA was compre­
hensively modernized so as to be able to produce new
articles for the logistics segment. In Germany, we in­stalled a new roller bearing system in the fabric ware­house of the production plant for 5-meter wide Transi­
lon belts. At the Extremultus site in Switzerland, thethermal oil plant for the presses and coating equip­
ment was completely overhauled and retrofitted witha new control unit and pump.
The division invested substantial amounts in the devel­
opment and construction of a new product line for­homogeneous belts, which involved erecting a newplant at a custom-built production site in Germany. The
market rollout is planned for mid-2021, and the new
products are aimed primarily at the food industry. In
Denmark, we installed additional injection molding
machines for the production of Prolink plastic modular
belts, a product line that is growing faster than averageand features a focused offering for the food industry.
The construction of a new building for warehousing/logistics, quality control, and administration will ensure
space for a future expansion of capacity.
The companies founded in Poland and Colombia by
end of 2019 were built up successfully. In Poland, we
took over the operations of a former distributor in mid2020, while our new local assembly plant in Colombia
now supplies neighboring countries.
The focus is on a return to growthBased on the wide-ranging and above-average invest­
ments made both in the reporting year and in past
years, we will continue to launch innovative products
for growing customer segments and further expand
our service offering even in the currently difficult mar­ket conditions. We will also focus on streamlining andoptimizing the planning of our operating structures,
optimizing material flows, and implementing strict costmanagement.

40

FORBO ANNUAL REPORT 2020 – ACTIVITY REPORTAPPLICATIONSPECIFICINNOVATIONS
Wherever drive forces are transmitted
and automated production and con­veyance processes running smoothly,
Movement Systems is usually not far
away. Our solutions for different constel­lations and requirements in various in­dustries are known for their innovation,
precision, reliability and economy. With
our know-how we have profiled our­selves as a competent partner for thedevelopment of industry-specific andindividual solutions.
Our application know-how in customer-specific pro­duction and processing offers customers the corre­
sponding advantages and helps them to improve effi­
ciency. Inspired by these experiences, in the reporting
year we also developed various innovations for very
different customer segments.

TRANSILON CONVEYOR BELT

Hygiene-sensitive applicationsin the food-processing industry
As diverse as the foods are that are conveyed on belts
in production, processing and packaging, the various
belt solutions and surface coatings are just as specificfor these individual requirements, ensuring efficiency,
quality, hygiene and the gentle conveyance of thefoods. Our innovations combine these advantages
over various product lines:
The new Series 18 of Prolink plastic modular belts islightweight and suitable for straight systems and forprocess lines with curves. With its permeable surface
for good air circulation and drainage, it is especially ver­satile, with a narrow grid structure suitable for the con­veyance of small food articles packed or unpacked. It
is especially suitable for use in industrial bakeries forbread, cookies and sweet pastries, on packaging lines
or in the processing of meat, vegetables and seafood.

PROLINK PLASTIC MODULAR BELT SERIES 18

41

TRANSILON CONVEYOR BELT

TRANSILON CONVEYOR BELT FOR THE ELECTRONICS INDUSTRY

Two new Transilon belt types with semi-elastic fabricand varying surface textures were developed for theconveyance of unpacked foods that demonstrate theiradvantages in particular in industrial bakeries for doughprocessing such as croissants, pastries and breads. The
belt material is resistant to hot water and especiallysuitable for frequent cleaning.

assemblies. This protects the components from elec­
trical damage and accumulation of dust so that pro­duction interruptions that this might otherwise cause
can be prevented. The grip offered by the matt surface­allows exact positioning, and the color contrast is easyon the eyes so that the usually small and dark compo­
nents can be readily recognized in the quality control.

Customer-specific industrial applications
Other newly developed Transilon belt types have veryvaried and robust properties for specific industrial­applications. In the electronics industry a highly con­ductive green belt avoids electrostatic discharges in
the production of flat screens, Smartphones or chip

Two beige belts with above-average cut-resistance areproving themselves in various production applications
and in the steel, automotive and recycling industry. An
especially hardwearing belt for ultrasound cutting ma­chines with a thick polyurethane surface is used in sys­
tems for cutting composite materials, floor coverings,
leather and sport articles such as, for example, snow­
boards. The surface structure prevents slipping of the
product on the belt. Another belt is used in the pro­duction of often small and angular metal parts to carry
off stamping waste or pressed parts.

‘SURFACES THAT MAKE
THE DIFFERENCE’

42

43

ORGANIZATION
Executive BoardGroup structure
Board of Directors

44
46
48

44

FORBO ANNUAL REPORT 2020 – ORGANIZATIONEXECUTIVE BOARD

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

45

Stephan Bauer

Urs Uehlinger

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

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

Jean-Michel Wins

Marc Deimling

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

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

Chief Executive Officer

Executive Vice President Flooring Systems

Chief Financial Officer

Executive Vice President Movement Systems

46

FORBO ANNUAL REPORT 2020 – ORGANIZATIONGROUP STRUCTURE
Forbo has performed better than average in comparison with other listedcompanies in recent years. Today, with
its two focused divisions and their
attractive product portfolios, Forbo isa world leader in its markets. The
company has no debt and possesses
significant resources necessary forfurther strategic development. Its
strategy aims to continue the success­ful trend of recent years on the one
hand and, with the available resources,
to further strengthen our positions in
the global marketplace on the other.

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

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

47

BOD / HRNC / RC / AFC

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

Executive Chairmanof the Board of Directors

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

Executive Vice President
Flooring Systems

Executive Vice President
Movement Systems

CFO

Northern/Central/Eastern
EuropeEurope/Middle East/Africa

Corporate Controlling
and Reporting

Southern Europe/
Middle East/Africa

AmericasAsia/PacificCorporate Treasury andInsurances

Americas

Conveyor and Process Belts

Corporate Tax

Asia/Pacific

Plastic Modular Belts

Risk Management

Linoleum Floor Coverings

Flat Belts

Corporate Legal Services

Vinyl Floor Coverings

Operational Areas

Corporate IT

Textile Floor Coverings

Business andProduct Development

F & A Managers
Group Companies

Building and Construction
Adhesives

MarketingOperational Areas

FinanceBusiness Development andMarketingIT

Finance and IT
Human Resources

Human Resources

Member of the Executive Board

48

FORBO ANNUAL REPORT 2020 – ORGANIZATIONBOARD OF DIRECTORS

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

49This E. Schneider
Executive Chairman

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

Michael Pieper
Vice Chairman

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

Dr. Peter Altorfer

Vice Chairman, Lead Independent Director
Partner at the law firm Wenger & Vieli AG, Zurich
Member of the Board of Directors of BIH SA, Rapperswil-JonaMember of the Board of Directors of Privatbank Bellerive AG, Zurich
Vice Chairman of the Board of Directors of Nomura Bank (Schweiz) AG, Zurich
Member of the Board of Directors of H. Kracht’s Erben AG, Zurich
Member of the Board of Directors of Sanatorium Kilchberg AG, Kilchberg
Further mandates with non-listed investment and real estate companies
as well as charitable foundations in Switzerland

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

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

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

50

51

THE FORBO
SHARE

52

FORBO ANNUAL REPORT 2020 – THE FORBO SHARETHE FORBO SHARE
2020 started with prices rising on the stock market. The trend weakened appreciably toward the end of February
when news of the COVID-19 pandemic began to unsettle the markets. For a while in March, the stock markets
were even trading far below the previous year’s year-end levels, but then they rallied in the same month and by
the summer they had already made up the losses from earlier in the year. Thereafter the markets moved side­
ways, a trend that was only briefly interrupted at the end of October by a further round of bad news occasionedby the second COVID-19 wave. However, the markets already recouped their losses by the first half of November.
The Swiss Performance Index (SPI) was up 5 percent after mid-February 2020 – and less than four weeks later it
was down 22 percent. By July, the SPI had climbed back to the level it had reached at the start of 2020, but a few
months later, in October, the index was once again in the red, this time by more than 6 percent. A strong rally
then set in at the beginning of November, and the SPI closed out the year 2020 at 13,328 points.
The Forbo share largely tracked the performance of the SPI. The price losses in March, however, were higher
than average, and the share was unable to catch up completely by year-end. The Forbo share closed out the year
at CHF 1,518.
For a number of years now the performance of the Forbo share has been steady and above average. Since theend of 2005, the share has outperformed the SPI on average in two years out of three. In this period, the Forboshare has generated four times as much value growth as the SPI (taking dividend distributions into account).

The Forbo share in comparison to the SPIForbo share
SPI
60%

2,000
1,800

30%

1,600
1,400

0%

1,200
1,000

– 30%

800
31.12.2016

31.12.201731.12.2018

31.12.2019

31.12.2020

53

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

2020
number
1,650,000

2019
number
1,650,000

2018
number1,800,000

2017
number1,800,000

2016
number1,800,000

1,579,235
049,346
21,4191,601,315
027,266
21,4191,601,718
150,000
26,863
21,4191,704,444
63,105
11,032
21,4191,709,844
068,737
21,419CHF
165,000

CHF
165,000

CHF
180,000

CHF
180,000

CHF
180,000

157,924
0
4,935
2,142

160,132
0
2,727
2,142

160,172
15,0002,686
2,142

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

170,984
0
6,874
2,142

CHF
429
66.6
20.04)
1.24)
1.94)
30

CHF
422
86.3
23.0
1.35)
1.75)
27

CHF
354
82.4
21.00
1.35)
1.65)
25

CHF
383
22.4
19.00
1.15)
1.45)
85

CHF
364
74.7
19.00
1.45)
2.05)
25

CHF
1,729
1,044
1,518
2,853
1,723
2,505

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

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

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

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

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

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

High
Low

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

High
Low
Year-end
High
Low
Year-end

1) Par value per share in 2020, 2019, 2018, 2017 and 2016: CHF 0.10.
2) Based on the weighted average of the number of shares as set out innote 11 ‘Earnings per share’ on page 114 of the financial report.
3) See note 11 ‘Earnings per share‘ on page 114 of the financial report.
4) Proposal of the Board of Directors to the 2021 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 2020 – CORPORATE GOVERNANCE REPORTCORPORATEGOVERNANCE
BERICHTAt 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 Direc­
tive on Information relating to Corporate Governance (‘DCG’) and the relevant publi­
cations of SIX Swiss Exchange.

Group structure and shareholders
Group structure
Forbo Holding Ltd, domiciled at Lindenstrasse 8, 6340 Baar, is a limited company under Swiss law. The holding
company holds all subsidiaries, directly or indirectly, that belong to the Forbo Group. The shares of Forbo Holding
Ltd (security number 000354151/ISIN CH0003541510) are listed on SIX Swiss Exchange. A financial overview of
the Forbo Group (including market capitalization) can be found on page 17. The operational structure of theGroup is shown in the organizational chart on page 47. The scope of consolidation of Forbo Holding Ltd does
not include any listed companies. The non-listed companies within the scope of consolidation of Forbo Holding
Ltd are listed in the section ‘Group companies’ starting on page 134 in the financial report section. The company
name and domicile, share capital, and percentage of participation, along with information relating to the alloca­
tion of the Group company to the Group’s businesses, can also be found in that section of this Annual Report.
Significant shareholders
As of December 31, 2020, 4,026 shareholders were listed in the share register of Forbo Holding Ltd, or 63 (1.6%)
more than in the previous year. As of December 31, 2020, Forbo Holding Ltd knew of the following significant
shareholders with a holding of more than 3%:
31.12.2020
as a percentage
Michael Pieper1)
Forbo Holding Ltd2)UBS Fund Management (Switzerland) AG
Credit Suisse Funds AG

29.51%
4.29%
3–5
3–5

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

Disclosure of significant shareholders and significant shareholder groups and their holdings is effected in accor­
dance with the disclosure notices made in the year under review pursuant to Article 120 of the Financial Market
Infrastructure Act (FMIA) and the provisions of the Ordinance of the Swiss Financial Market Supervisory Authority
on Financial Market Infrastructures and Market Conduct in Securities and Derivatives Trading (FMIO-FINMA).

57

Below is a summary of the current notified shareholdings published in the year under review:
On March 12, 2020, Forbo Holding Ltd reported that it had reached the threshold of 3% and that it held 49,500
of its own shares, corresponding to 3.00% of the voting rights, directly or indirectly via Forbo International SA,
Baar, Switzerland, and Forbo Finanz AG, Baar, Switzerland.
On April 24, 2020, Credit Suisse Funds AG reported that it had exceeded the 3% threshold and held 49,851 shares,
corresponding to 3.02% of the voting rights.
On August 29, 2020, UBS Fund Management (Switzerland) AG reported that it had fallen below the 5% thresholdand held 82,355 shares, corresponding to 4.99% of the voting rights.
On September 17, 2020, BlackRock, Inc. reported that it had fallen below the 3% threshold and that it held 47,231
shares and 836 voting rights for exercise at its own discretion, corresponding to 2.91% of the voting rights.
BlackRock Inc. further reported that it held 31 sales positions in connection with contracts for difference, corre­
sponding to 0.002% of the voting rights.
Full disclosure reports and all further published disclosure notices can be consulted on the publication platformof the disclosure office of the SIX Swiss Exchange (www.ser-ag.com � Fundamentals � Notices Market Partici­
pants � Significant Shareholders).
For further information on significant shareholders or shareholder groups, we refer the reader to the table on
page 56 and to page 152 of the financial report (duty of disclosure pursuant to Article 663c of the Swiss Code ofObligations [CO]).
Cross-shareholdings
Forbo Holding Ltd has not entered into any cross-shareholdings with mutual capital shareholdings or voting
rights.

Capital structure
Share capital
As of December 31, 2020, Forbo Holding Ltd had a fully paid up share capital of CHF 165,000, divided into
1,650,000 listed registered shares, each with a par value of CHF 0.10. Of this amount:– 70.49% were registered in the name of 4,000 shareholders with voting rights– 24.85% were shares of banks or of SIX SIS AG pending registration of transfer– 4.66% were registered in the share register without voting rights
There are no different categories of shares. Each share entitles the owner to one vote. Further information on the
Forbo share can be found on pages 52 and 53. Further information on the rights of participation associated with
the Forbo share can be found on pages 67 and 68 of this Annual Report.
By resolution of the Ordinary General Meeting of Forbo Holding Ltd on April 5, 2019, the Board of Directors was
furthermore authorized to buy back 10% of the share capital over a period of three years either via a second
trading line on SIX Swiss Exchange or by another means. These shares will be definitively canceled. The Board of
Directors had not made use of this authorization by December 31, 2020.

58

FORBO ANNUAL REPORT 2020 – CORPORATE GOVERNANCE REPORT

Conditional and authorized capital
Pursuant to Clause 4 of the Articles of Association (www.forbo.com � Investors � Ordinary General Meeting),
Forbo Holding Ltd has a maximum conditional capital of CHF 16,645, corresponding to 166,450 registeredshares to be paid up in full with a par value of CHF 0.10 each. If the conditional capital were drawn on in full, theshare capital would increase by CHF 16,645, or 10.09%, from the current level of CHF 165,000 to CHF 181,645.
The capital increase takes place in accordance with the Articles of Association through the exercise of option
and convertible rights granted in connection with the bonds issued by the company or one of its subsidiaries,or through the exercise of option rights granted to shareholders. Except for shareholder options, shareholders
have no right of subscription. Holders of option or convertible rights are entitled to subscribe to new share­issues. The registration of new shares is subject to the general restriction set out in Clause 6 of the Articles of
Association (www.forbo.com � Investors � Ordinary General Meeting), which stipulates that shareholders areentered in the share register with voting rights only if they declare expressly that they have acquired the sharesin 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 2020.
The Ordinary General Meeting of Forbo Holding Ltd on April 5, 2019, decided, based on the audit report of a­licensed audit expert, to reduce the ordinary share capital of the company by CHF 15,000 from CHF 180,000 to
CHF 165,000 by canceling 150,000 shares with a par value each of CHF 0.10. It was further resolved to amend the
Articles of Association accordingly. The capital reduction was effected, and the new share capital of CHF 165,000
was entered in the Commercial Register on June 27, 2019.
No changes to the capital of Forbo Holding Ltd were made in 2018.
Participation certificates and non-voting equity securities (‘Genussscheine’)
Forbo Holding Ltd has issued neither participation certificates nor non-voting equity securities.
Limitations on transferability and nominee registrations
Forbo Holding Ltd does not have any percentage limitations on voting rights. The Board of Directors may only
refuse to register shares in the share register if the purchaser of the shares does not expressly declare that he/she
has acquired the shares in his/her own name and for his/her own account.
Pursuant to Clause 6 of the Articles of Association (www.forbo.com � Investors � Ordinary General Meeting),
nominees may be entered in the share register with voting rights for up to a maximum of 0.3% of the registeredshare capital entered in the Commercial Register. Over and above this limit, nominees are only entered provided
the name, address, and shareholding of those persons are disclosed for whose account the nominee holds a totalof 0.3% or more of the registered share capital entered in the Commercial Register.
No statutory privileges exist and there is no restriction on the transferability of the shares of Forbo Holding Ltd.
Convertible bonds and warrants/options
Forbo Holding Ltd has no outstanding convertible bonds nor has it issued any marketable warrants/options.
­Details on the long-term incentive plan for the Executive Board, introduced in 2017, under which future sub­scription rights are outstanding, can be found on pages 82 to 86 as well as on pages 124, 125 and 133 of thisAnnual Report.

59

Board of Directors
Members of the Board of Directors
The cut-off date for the following information is December 31, 2020.
The Board of Directors brings together expertise and competencies in all the relevant areas (in particular entre­
preneurial skills and leadership, industry and technology, sales and distribution, international markets, sustain­
ability, innovation, digitization, risk management, audit and financial know-how).
With the exception of This E. Schneider, Executive Chairman of the Board of Directors, none of the members of
the Board of Directors listed below holds or has held any operational management positions for Forbo Holding Ltd or its Group companies. In the three business years preceding the reporting period, no member of theBoard of Directors was a member of the Executive Board of Forbo Holding Ltd and, with the exception of This
E. Schneider, no Board of Directors member sat on the Executive Board of any of its subsidiaries. There are no
significant business relationships between the members of the Board of Directors and Forbo Holding Ltd or its
Group companies. The tasks of the Executive Chairman of the Board are described on page 46 of the Annual
Report.
This E. Schneider, Executive Chairman
This E. Schneider, born in 1952, is a Swiss citizen. He studied economics at the University of St. Gallen (lic. oec.
HSG) and at the Graduate School of Business, Stanford University, California, USA. After holding various manage­
ment functions in Europe and the USA, he joined the Executive Board of Schmidt Agence AG, where he was
responsible for strategic planning, operations and logistics from 1984 to 1990. From 1991 to 1993, he was Chair­
man and CEO of the publicly listed company SAFAA, Paris. In 1994, he became a member of the Executive Boardof Valora, with responsibility for the canteen and catering division. From 1997 to 2002, he was Delegate and Vice
President of the Board of Directors of Selecta Group. From March 2004 to December 2013, This E. Schneider wasDelegate of the Board of Directors and CEO, and from January to April 2014 Delegate of the Board of Directorsof 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 in Winterthur
and Autoneum Holding Ltd in Winterthur.
Michael Pieper, Vice Chairman
Michael Pieper, born in 1946, is a Swiss citizen. He studied economics (lic. oec. HSG) at the University of St. Gallen.
He has been with the Artemis Group (formerly the Franke Group) since 1988 and has been its owner and CEO
since 1989. Among others, he is a member of the Boards of Directors of Arbonia AG in Arbon, Bergos Berenberg
AG in Zurich, Rieter Holding AG in Winterthur, Autoneum Holding AG in Winterthur and Reppisch-Werke AG in
Dietikon. He was first elected to the Board of Directors of Forbo Holding Ltd in 2000.
Dr. Peter Altorfer, Vice Chairman and Lead Independent Director
Peter Altorfer, born in 1953, is a Swiss citizen. He studied law at the University of Zurich, where he took his doctor­
ate in law (Dr. iur.). He was admitted to the bar as attorney-at-law in 1982. He attended the PED program at the
IMD, Lausanne. Until 1988, he worked at Bank Leu AG. He subsequently joined the law firm Wenger & Vieli in Zurich,where he is now a partner, specializing in bank and company law as well as estate planning. Peter Altorfer sits on
the Boards of Directors of several companies, including BIH SA in Rapperswil-Jona, Privatbank Bellerive AG in­Zurich, Nomura Bank (Schweiz) AG in Zurich, Kracht’s Erben AG in Zurich, Sanatorium Kilchberg AG in Kilchberg,
and further non-listed investment and real estate companies as well as charitable foundations in Switzerland. He
has been a member of the Board of Directors of Forbo Holding Ltd since March 2005.

60

FORBO ANNUAL REPORT 2020 – 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 (LSE).
From 2006 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 TX Group AG (formerly Tamedia AG), where in 2017 she was appointed Chairwomanof the Pool of Majority Shareholders. She is a member of the Board of Directors of Swisscontent AG in Zurich aswell as of Awina AG in Zurich and sits on other Boards of Trustees. She has been a member of the Board of Direc­
tors of Forbo Holding Ltd since April 2014.
Dr. Reto Müller
Reto Müller, born in 1951, is a Swiss citizen. He took a first degree in economics and completed his doctorate(Dr. oec. HSG) at the University of St. Gallen. He also completed the Stanford Executive Program and additional
training at IMD, INSEAD and the Harvard Business School. He is a founding partner of the Helbling group of com­panies, for which he worked from 1984 to 2016. From 2000 to 2011, he was the CEO and Chairman of the Boardand from 2011 to 2016 the full-time Chairman of the Board of Helbling Holding AG. Between 2002 and 2010,
Reto Müller was either a member or Chairman of the Regional Economic Advisory Board (Zurich) of the Swiss
National Bank. He was a member of the Council of SWISSMEM between 2008 and 2016. He is partner at BLR & Part­ners AG in Thalwil as well as Chairman of the Board of Directors of Utz Group in Bremgarten and is on other 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 indus­
tries. In 2001, he was appointed a partner in the area of Auditing. Since 2008, he has been a partner and memberof the management and since 2015 a member of the Board of the accountancy and auditing firm T + R AG,
Gümligen/Berne, where he heads the Auditing business unit. Vincent Studer is a member of the Board of Direc­
tors of Bank EEK AG in Berne. He holds further directorships in other companies and foundations. He has been amember of the Board of Directors of Forbo Holding Ltd since April 2009.

61

Board of Directors of Forbo Holding Ltd
as per December 31, 2020
Executive Chairman
THIS E. SCHNEIDER
Executive Director
Vice Chairmen
MICHAEL PIEPER
Non-executive Director
DR. PETER ALTORFER
Non-executive Director and Lead Independent Director
Members
CLAUDIA CONINX-KACZYNSKI
Non-executive Director
DR. RETO MÜLLER
Non-executive Director
VINCENT STUDER
Non-executive Director
Secretary of the Board of Directors
NICOLE GRAF
Non-member

OGM:
AFC:
HRNC:
RC:		
V: 		
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 2020 – CORPORATE GOVERNANCE REPORT

Statutory regulations governing the number of permissible activities
pursuant to Article 12 Paragraph 1 Section 1 OaER
In accordance with Clause 22 of the Articles of Association (www.forbo.com � Investors � Ordinary General
Meeting), members of the Board of Directors may hold no more than five mandates in listed and twenty man­dates in non-listed legal entities. A mandate is defined as any activity on the senior managerial or supervisory
bodies of legal entities that are entered in the Swiss Commercial Register or comparable foreign registers anddo 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 Gen­
eral Meeting of the following year. The Board of Directors may, however, approve exceptions. In determining thecomposition of the Board of Directors, importance is attached to the election of independent individuals withinternational experience in industrial companies as well as in the financial and consultancy sectors.
The Articles of Association of Forbo Holding Ltd do not contain any regulations that deviate from the statutory
provisions for the appointment of the Chairman, the members of the Remuneration Committee, and the inde­
pendent proxy.
Internal organizational structure
The allocation of tasks within the Board of Directors and the composition of the Board committees are shown in
the table on page 61.
Decisions are as a general rule taken by the full Board of Directors. The Board constitutes three standing commit­
tees from its own ranks – the Audit and Finance Committee (AFC), the Human Resources and Nomination Com­mittee (HRNC), and the Remuneration Committee (RC) – to deal with clearly defined subject areas of overriding
importance. These three committees have mainly advisory and control functions. The members of the AFC and
HRNC are elected by the Board of Directors on an annual basis and can be dismissed at any time. The membersof the RC are elected annually by the Ordinary General Meeting.
As a rule, the Executive Chairman of the Board of Directors chairs the meetings of the Board and the General Meet­
ing. 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 section ‘Areas of responsibility’ on
pages 64 and 65.
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 2020, the Board of Directors held two
meetings with members physically in attendance, as well as one virtual meeting and two telephone conference
calls. The meetings, both physical and virtual, each lasted a whole day, while the conference calls took about twohours each. Every Board member participated in all five meetings.
The Executive Chairman may invite members of the Executive Board or other senior employees to attend Board
meetings for individual items. In the 2020 business year, members of the Executive Board and other senior em­
ployees participated in the physical and virtual meetings of the Board of Directors for the agenda items that
affected them. No members of the Executive Board nor any other senior employees participated in the Board
meetings held by conference call. External consultants may participate in the meetings of the Board of Directors,
the AFC, the RC or the HRNC only in exceptional circumstances to deal with particular items. In the 2020 business
year, no external consultants participated in the meetings of the Board of Directors. Participation of external con­sultants in meetings of the AFC, RC and HRNC are listed in the chapters on the AFC, RC and HRNC on pages 63,
74, 75 and 76.
Audit and Finance Committee
The AFC advises the Board of Directors in respect of its duties on behalf of the Group in the areas of financial
reporting, the accounting standards and systems used, and decisions with significant financial implications. The
AFC monitors the activities of the internal auditors and the external auditors. Moreover, it establishes the audit
program of the internal auditors and proposes to the Board of Directors the choice of the external auditors forthe attention of the General Meeting. The CEO and the CFO are regularly requested to attend meetings in anadvisory capacity, while representatives of the internal and external auditors may attend on special invitation.
The AFC convenes as often as business requires, but at least twice a year. In the 2020 business year, two meetings
were held, each lasting about half a day. All members of the AFC were present at both meetings. The external
auditors were present for selected items on the agenda of the AFC’s meeting on the financial statements and at
the meeting to discuss the scope of the audit and the audit fee. The Ernst & Young representatives responsiblefor internal audit attended the discussions of the internal audit reports at both meetings. No external consultants
participated in the meetings of the AFC in the year under review.
The AFC brings together expertise and competencies in the areas relevant for the committee on the basis of
executive functions in other companies, current directorships in other firms, and previous responsibilities/­
mandates. The relevant information can be found on pages 59 and 60 of this Annual Report.
Human Resources and Nomination Committee
We refer to the explanations in the remuneration report on pages 74 and 75.
Remuneration Committee
We refer to the explanations in the remuneration report on pages 75 and 76.

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FORBO ANNUAL REPORT 2020 – CORPORATE GOVERNANCE REPORT

Areas of responsibility
The Board of Directors bears ultimate responsibility for the management of Forbo Holding Ltd. The main dutiesof the Board of Directors are the following non-transferable and inalienable tasks pursuant to the Swiss Code ofObligations and the Articles of Association:– overall management of the company and issuing of the necessary directives– definition of the organizational structure– determination of accounting, financial controlling, and financial planning principles– appointment and dismissal of persons entrusted with the management of the company– overall supervision of the persons entrusted with managing the company, particularly with respect
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
The Board of Directors bears ultimate responsibility for supervising and monitoring the management of thecompany and is responsible for the corporate strategy. It issues guidelines for business policy and is regularly
briefed on the current state of business.
Business to be dealt with by the Board of Directors is regularly submitted in advance to the AFC, HRNC, and RC,
ad hoc committees or individual members, depending on the subject, for review or an opinion. With the excep­
tion of its non-transferable and inalienable tasks, the Board of Directors may transfer tasks and responsibilities infull or in part to individual members of the Board or to third parties.
The Board of Directors is empowered to take decisions on all matters which are not reserved or transferred to
the General Meeting or another body of Forbo by law, the Articles of Association, or regulations.
Tasks of the Executive Chairman of the Board of Directors:– chairing of the Board of Directors– preparation and monitoring of the execution of the decisions of the Board of Directors– representation and positioning of the Group in the public– overall management of strategy development and involvement in realizing key strategic projects– management of relationships with key accounts and with business, sector and capital market partners
Tasks of the Chief Executive Officer:– operational management of the Group– chairing of the Executive Board– development and operational implementation of strategies– implementation and monitoring of multi-year planning and budgets– supporting of the Executive Chairman of the Board of Directors in preparing important projects relating tostrategy, personnel, and finances for discussion and decision-taking by the Board of Directors

65

The CEO reports to the Executive Chairman of the Board of Directors and as a rule participates in all Board meet­ings dealing with topics that are relevant for the exercise of his function. He is not a member of the Board of­Directors, though. All business management tasks that are not allocated to the Board of Directors or the Executive
Chairman of the Board and that do not require the approval of the Board of Directors are delegated to the CEO
and are carried out by him on his own responsibility. The CEO is responsible for ensuring compliance with theprovisions of the law, the Articles of Association, and regulations throughout the Forbo Group.
In carrying out his tasks, the CEO is supported by the members of the Executive Board, who report to him. The
Executive Board comprises the CEO, CFO, and the Executive Vice Presidents of both divisions; it is responsible forthe long-term success and market-driven management of the Forbo Group.
The members of the Executive Board are responsible for their particular area of activity and also bear joint respon­
sibility for safeguarding the interests of the Group and achieving the financial Group result.
Information and control instruments vis-à-vis the Executive Board
At the meetings of the Board of Directors, any member may request information about any matter concerning theForbo Group. Outside the meetings, such requests for information are to be addressed to the Executive Chairman.
The CEO and the other members of the Executive Board inform the Board of Directors at each regular meeting
about the current state of business, important business events, and significant deviations from the budget.
The Chairmen of the AFC, the HRNC, and the RC report at the Board of Directors meetings on the activities of theircommittees and express the opinions and recommendations of the AFC, HRNC or RC on the business items on
which decisions are to be taken. Each member of the Board of Directors has the right to inspect the minutes of theAFC, HRNC, and RC meetings. The Executive Board reports to the AFC through the CFO in consultation with theCEO; it reports to the HRNC and RC through the CEO.
The Board is also regularly briefed outside meetings about events and challenges the Group is facing and 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 2020 business year, elevenmeetings were held, with the meetings usually lasting half a day.
The CEO chairs the meetings of the Executive Board. For details concerning the participation of members of the
Executive Board in meetings of the Board of Directors and its committees, refer to the sections on internal organi­zation and on the AFC, HRNC, and RC on pages 62 and 63, as well as 74 to 76.
The Board of Directors fulfills its supervisory and monitoring obligations also by means of financial reporting and
its role in the planning cycle. The internal and external auditors may assist the Board in this task. However, neither
the external auditors nor the internal auditors were invited to any meetings of the Board of Directors in 2020 asthere 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.

66

FORBO ANNUAL REPORT 2020 – CORPORATE GOVERNANCE REPORTThe Board of Directors is, moreover, involved in the company’s planning cycle. As a rule, the existing strategy is
subjected to a thorough review by the Board of Directors in the first half of the year. The revised strategy is quan­tified in the three-year medium-term plan, which is normally approved at mid-year by the Board of Directors. Basedon the medium-term plan, the Board of Directors sets the budget objectives for the coming business year. Thesebudget objectives form the basis of the detailed budget, which is discussed and adopted by the Board of Directors
in the fourth quarter.
The current business year is assessed in a first estimate always at the end of May and a second estimate in mid-­
October. On completion of the business year, the extent to which the budget has been met is checked and­deviations are analyzed. This analysis is used to derive appropriate measures, which are then implemented in thenext planning cycle.
Internal audit is effected by Ernst & Young, which has been commissioned for this purpose. Internal audit is­administratively subordinated to the Executive Chairman of the Board of Directors, is functionally independent,
and reports directly to the AFC.
The audits are conducted in accordance with an annual plan approved by the AFC. A distinction is made between
ordinary and special engagement audits. The latter consist of limited reviews, follow-up reviews, compliance audits,and other special engagements. Where necessary, the risks and weaknesses identified in these audits are minimized
or eliminated by measures adopted by management and are constantly monitored.
In 2020, five Group companies were audited by Ernst & Young on the occasion of five internal audits. The internal
audits included, among others, the audit of control points defined in the framework of the internal control system(ICS) as well as various compliance reviews related to the audited business processes. Lastly, additional risks andcontrols in connection with the audited business processes were analyzed. Two companies in Forbo Flooring Sys­
tems and three companies in Forbo Movement Systems were audited in the course of the internal audits.
By means of self-assessments and management controls by division management, the implementation and reli­ability of the controls introduced with the ICS were examined to ensure that deviations were identified and thatappropriate corrective measures were implemented.
Risk management
The ongoing and systematic evaluation of current and future risks invariably involves identifying and capitalizingon opportunities. Forbo regards risk management as a managerial and working tool designed, among otherthings, to safeguard the tangible and intangible assets of the company.
Forbo has a risk-based insurance coverage in line with industry practice and has appropriately insured in partic­
ular operational risks such as property damage, business interruption and liability. The risks specifically in the areasof property damage and business interruption are examined in the context of periodic risk engineering reportsby external experts. For this purpose, production companies are visited at regular intervals, and comprehensive
surveys are worked through with local management. Action plans are drawn up and implemented based on therisks identified. These risk engineering audits have been prepared since 1990.
As regards business risks, Forbo addresses strategic risks as well as market and financial risks. In the area of market
risks, interest and currency risks are centrally monitored and hedged in certain cases. The liquidity and financing
of subsidiaries are also monitored centrally. For more information on this subject, refer to pages 129 to 132 of theAnnual Report.
With regard to the risk management process, refer to the relevant explanations on pages 129 to 132 (note 23 ‘Risk
assessment and financial risk management’) of the Financial Report section of the Annual Report.

67

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

Compensation, shareholdings, and loans
For information on this subject, refer to the remuneration report from page 73.

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

68

FORBO ANNUAL REPORT 2020 – CORPORATE GOVERNANCE REPORT

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

Changes in control and defense measures
Duty to make an offer
The Articles of Association of Forbo Holding Ltd do not contain an ‘opting-up’ clause or an ‘opting-out’ clausepursuant to Articles 135 and 125 of the Financial Market Infrastructure Act.
Clause on changes of control
As per year-end 2020, no clauses on changes of control existed in agreements or plans involving members of theBoard of Directors, the Executive Board or other members of management.

Auditors
Duration of the mandate and term of office of the Auditor in Charge
KPMG has been the Forbo Group’s auditors since 2015. The auditors are elected every year by the Ordinary Gen­
eral Meeting on a proposal by the Board of Directors. Rolf Hauenstein has been the Auditor in Charge since April
24, 2015. The term of office of the auditor in charge is limited to seven years.
Auditing fees
The auditing fees levied by the Group’s auditors for auditing the consolidated financial statements, including thestatutory audit of the individual financial statements of the holding company and the consolidated subsidiaries,
amounted to CHF 0.8 million in the year under review.
Additional fees
The additional consultancy fees that were invoiced by the auditing company amounted to CHF 0.1 million in 2020.
These fees were charged mainly for the provision of tax advice.

69

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

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

70

FORBO ANNUAL REPORT 2020 – CORPORATE GOVERNANCE REPORT

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

71

REMUNERATIONREPORT

74

FORBO ANNUAL REPORT 2020 – REMUNERATION REPORTREMUNERATIONREPORT
Introduction
The report meets the provisions of the Ordinance against Excessive Remuneration in Listed Public Companies(OaER), which came into effect on January 1, 2014, and consequently fulfils the requirements of the Swiss Codeof Obligations.
Once a year, in a separate and binding ballot, the Ordinary General Meeting approves the maximum sum for the
total remuneration to be paid to the Board of Directors for the business year following the Ordinary General
Meeting. In addition, a vote is taken on the maximum total amount of fixed remuneration to be paid to the­Executive Board for the business year following the Ordinary General Meeting, the amount of short-term variable
remuneration (bonus/short-term incentive) to be paid to the Executive Board for the business year preceding
the Ordinary General Meeting, as well as the maximum total amount of the long-term participation (long-term
incentive) for the Executive Board for the year of the respective Ordinary General Meeting.
The variable remuneration model for the Executive Board with the short-term incentive was supplemented bya long-term participation (long-term incentive) component, effective as of January 1, 2017. This long-term­incentive consists of a performance share unit plan. Its aim is to link a significant portion of the Executive Board’s
remuneration even more closely with the company’s long-term success and to make it more responsive to share­
holders’ interests. Details on the long-term incentive can be found in the chapter ‘Elements of remuneration of
the Executive Board’ on pages 81 to 83. An amendment to the Articles of Association concerning this matter wasapproved by a large majority at the Ordinary General Meeting on April 6, 2017.
The shareholders will vote separately on the following four compensation motions at the 2021 Ordinary General
Meeting:– Maximum total remuneration for the Board of Directors for 2022
– Maximum fixed remuneration for the Executive Board for 2022
– Short-term variable remuneration of the Executive Board for 2020 (bonus/short-term incentive)– Maximum total amount of the long-term participation for the Executive Board for 2021
(long-term incentive plan 2021 – 2023)
The total remuneration was approved by a large majority in a consultative vote on the 2019 remuneration reportat the Ordinary General Meeting of April 3, 2020 (agenda item 4.1). Participants in the 2021 Ordinary General
Meeting will also be invited to vote in a consultative ballot on the entire 2020 remuneration report.

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

75

The Human Resources and Nomination Committee meets as often as business requires, but at least twice a year.
In the 2020 business year, the HRNC held two meetings with personal presence, each lasting a couple of hours aswell as two conference calls, each lasting about one hour. No external consultants participated in these meetings.
The Human Resources and Nomination Committee consists of at least two members of the Board of Directors.
The Ordinary General Meeting of April 3, 2020, elected Dr. Peter Altorfer (Chair), Claudia Coninx-Kaczynski andMichael Pieper to the HRNC for the 2020 business year.
The HRNC brings together expertise and competencies in the areas relevant for the committee on the basis of
executive functions in other companies, current directorships in other firms, and previous responsibilities/man­dates. The relevant information can be found on pages 59 and 60 of this Annual Report.
The Remuneration Committee (RC): task and function
The Remuneration Committee supports the Board of Directors in defining the principles of remuneration policy
and in determining the remuneration paid to members of the Board of Directors and the Executive Board out of
the total sum of remuneration as approved by the Ordinary General Meeting. It supports the Board of Directors
in drawing up participation programs and in all other tasks related to remuneration. The Remuneration Commit­
tee formulates appropriate recommendations for submission to the Board of Directors. The Board of Directors
may delegate further duties and powers to the Remuneration Committee. The Executive Chairman of the Boardof Directors is regularly invited to its meetings in an advisory capacity, as is the CEO in certain circumstances.
Agenda items and matters directly affecting the function or the person of the Executive Chairman of the Boardof Directors or the CEO are deliberated in their absence.
The Remuneration Committee meets as often as business requires, but at least twice a year. In the 2020 business
year, the Remuneration Committee held two meetings, each lasting a couple of hours. No external consultants
participated in these meetings.
The Remuneration Committee consists of at least two members of the Board of Directors. The Ordinary General
Meeting of April 3, 2020 elected Dr. Peter Altorfer (Chair), Claudia Coninx-Kaczynski and Michael Pieper to theRemuneration Committee for the 2020 business year. The members of the Remuneration Committee are inde­
pendent (non-executive) members of the Board of Directors, i.e. they have never belonged to the managementof Forbo and have no, or only negligible, business relations with the company, though they may be shareholders.
The RC brings together expertise and competencies in the areas relevant for the committee on the basis of
executive functions in other companies, current directorships in other firms, and previous responsibilities/man­dates. The relevant information can be found on pages 59 and 60 of this Annual Report.
Decision-making process of the Remuneration Committee
The maximum amount of the total remuneration paid to the Board of Directors and the maximum fixed remu­
neration paid to the Executive Board are usually determined by the Remuneration Committee once a year in thespring for the following business year and are submitted to the Board of Directors for acceptance at its February
meeting. The amount of the short-term variable remuneration (bonus/short-term incentive) and the definitionand objectives of the long-term participation (long-term incentive) for the Executive Board are determined by the
Remuneration Committee once a year in November for the following year.

76

FORBO ANNUAL REPORT 2020 – REMUNERATION REPORTThe Executive Chairman of the Board of Directors is regularly invited to the meetings of the Remuneration Com­mittee 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 Board of Directors or the CEO are deliberated in theirabsence. The other members of the Executive Board are not entitled to attend or participate in these meetings.
ProposalAcceptanceApproval

RC
RC
RC

BoD
BoD
BoD

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

RC

BoD

Ordinary General Meeting for the current business year

RC

BoD

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

RC

BoD

Performance targets – CEO

RC

BoD

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

Important changes in 2020
In the business year 2020, no important changes to the remuneration system were made either for the Board of
Directors or for the Executive Board.

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

77

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

Determining the remuneration of the Board of Directors
In order to determine the remuneration of the Board of Directors, the compensation paid to Board members ofForbo Holding Ltd is compared periodically with that paid to Board members of comparable industrial companies
based on information that is available from publicly accessible sources and from respected market data providers
or is known to Board members from their experience of office in similar companies. Industrial companies are­regarded as comparable if they are globally active and domiciled in Switzerland, report sales of between CHF 0.5
and 2.5 billion, have a market capitalization of CHF 1 to 4 billion and employ 2,000 to 10,000 people or if they areglobally active, publicly listed corporations operating in the same business areas as Forbo. The remuneration for
the Executive Chairman of the Board of Directors takes into account that the remuneration is predominantly inblocked shares with a vesting period for three years to ensure a long-term orientation for the company. 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

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FORBO ANNUAL REPORT 2020 – REMUNERATION REPORT

Elements of remuneration for the Board of Directors
Non-executive members of the Board of Directors
The non-executive members of the Board of Directors receive a fixed remuneration, the amount of which is­determined based on whether the member is Board Chairman, a simple Board member, or also a member of the
Audit and Finance Committee (AFC), the Remuneration Committee (RC) or the Human Resources and Nomina­tion Committee (HRNC). Of the remuneration, 40% is paid to the Board of Directors in shares of Forbo Holding
Ltd. The portion paid in shares is derived from a fixed remuneration amount. These shares have a lockup periodof three years. The number of shares issued is determined on the basis of the average price in the ten stock mar­ket days after distribution of a dividend or repayment of par value. If no dividend is distributed or no par value
repayment made, the average price during the first ten stock market days starting on June 1 of the relevantbusiness year applies. The settlement or payment of the shares usually takes place in November.
For the purpose of reporting the remuneration, the shares issued are valued at fair value on the date of allocation.
The total compensation for the non-executive members of the Board of Directors also includes a lump sum for
expenses plus employer contributions to the usual social insurances.
The non-executive Board members do not participate in the management investment plan (MIP).
Executive Chairman of the Board of Directors
The compensation for the Executive Chairman of the Board of Directors is disclosed separately and included u­ ndertotal remuneration to the Board of Directors.
The remuneration is mainly paid in locked up shares, which have a lockup period of three years. The annual cash
payment for the year under review of CHF 290,000 (previous year: CHF 310,000) is used largely for employee con­tributions to the pension fund and social security (AHV and IV) and for other levies. The underlying share priceused to calculate the number of shares is the weighted average price of the first ten days on which Forbo Holding
Ltd shares were traded on the stock market in 2020, less the reduced value as a result of locking up the shares (taxvalue 2020: CHF 1,399.14 per share; previous year: CHF 1,189.90 per share). The share package corresponds to an­nual compensation at fair value (excluding the reduction for the lockup period) of CHF 2,262,967 (1,358 shares);previous year: CHF 2,263,250 (1,597 shares).
With this share package and this cash remuneration, all compensations such as short-term and long-term variable
remuneration elements are settled. This share package may not be either pledged or assigned and can be sold inthree years at the earliest. This compensation model is thus also geared to long-term and sustainable corporate
development and is fully consistent with the interests of the company and its shareholders.
The total compensation for the Executive Chairman of the Board of Directors came to CHF 2,990,758 for the year
under review (previous year: CHF 3,005,300). Contained in this amount and reported in the column ‘Other pay­ments’ are employer contributions to the pension fund, other usual social insurances, private use of the company
car, contributions for accident and health insurance, and location expenses. The Executive Chairman of the Boardof Directors is not a party to the management investment plan (MIP) or the share-based compensation programof the Board of Directors.
Remuneration paid
For the remuneration paid to the Board of Directors in the year under review and the details concerning valuationof the shares, the reader is referred to pages 84 to 86 of this remuneration report.

79

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

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FORBO ANNUAL REPORT 2020 – REMUNERATION REPORT

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

2nd quarter3rd quarter

4th quarter

81

Elements of remuneration of the Executive Board
Remuneration of the members of the Executive Board consists of a fixed base salary and two variable compen­
sation components, the bonus/short-term incentive and the long-term incentive.
Fixed remuneration
The fixed base remuneration paid to the Executive Board in the reporting year consists of the gross base salary,
private company car use, and social security payments made by the company. The Remuneration Committee may
also decide that part of the remuneration will be paid in the form of shares in Forbo Holding Ltd (lockup 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 (30%
to 50% of the variable remuneration), EBIT of the Group and/or a division (35% to 50% of the variable remunera­tion), and net working capital of the Group and/or a division (7% of the variable remuneration).
Whereas achievement of the financial (quantitative) objectives (90%) can be objectively measured, assessing
whether some qualitative objectives (10%) have been met may in certain cases involve discretionary decisions.
The qualitative objectives contain a proportion of sustainability elements.
The defined objectives of the short-term variable remuneration are equivalent to 100% target achievement. The
maximum target achievement is 150%. If a given threshold for a particular target is not reached, no bonus for thattarget is paid. Depending on the function, the variable remuneration may be as much as 140% of the fixed remu­
neration if targets are fully met. If the targets are exceeded, the variable remuneration may be as much as 200%of the fixed remuneration.
The amount of the short-term variable remuneration, which is based on achievement of the individual and Grouptargets, is set in March after completion of the business year and is submitted to shareholders for approval at theOrdinary General Meeting.
Conversion of remuneration into shares in the management investment plan (MIP)
The bonus payment from the bonus/short-term incentive is linked to the management investment plan (MIP),
which was introduced in 2006 and amended in 2012. According to this plan, at least 50% of the annual short-term
variable remuneration of Executive Board members must be paid into the MIP. The portion paid in shares is derived
from a fixed remuneration amount.
As for the remaining 50% of the annual short-term variable remuneration, the Executive Board members may­either draw all or part of it in cash or pay it into the MIP. The Executive Board members may redefine the allocationof this remaining 50% every year. The portion paid in shares is derived from a fixed remuneration amount.

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FORBO ANNUAL REPORT 2020 – REMUNERATION REPORT

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

portion in cash
maximum 50%

in cashBonus

portion MIP investment
minimum 50% –maximum 100%

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

in shares
three-year lockup

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; thepercentage may vary from 10% to 50%. 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 of

83

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

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

84

FORBO ANNUAL REPORT 2020 – REMUNERATION REPORT

Disclosure of remuneration for the Boardof Directors and the Executive Board
Remuneration of the Board of Directors
The total remuneration paid to the non-executive members of the Board of Directors came to CHF 809,919 in theyear under review (previous year: CHF 809,444). This sum consists of the base salary in cash (60% of the remuner­
ation), amounting to CHF 413,862 (previous year: CHF 412,175) and the base remuneration in shares (40% of the
remuneration) of CHF 334,842 (previous year: CHF 336,852). This corresponds to 266 shares (previous year: 207
shares) at a market value of CHF 1,258.80 each (previous year: CHF 1,627.30). The portion paid in shares is derived
from a fixed remuneration amount. This total remuneration includes a lump sum for expenses plus employer con­tributions to the usual social insurances, which are reported separately in the column ‘Other remuneration’.
The remuneration paid to the Executive Chairman of the Board of Directors is explained in detail on page 78 of
this remuneration report.
Remuneration of the Executive Board
The total remuneration paid to the members of the Executive Board came to CHF 2,407,100 in the year underreview (previous year: CHF 2,274,552), subject to approval of the variable portion by the 2021 Ordinary General
Meeting. This sum includes a fixed base salary of CHF 1,520,434 (previous year: CHF 1,529,870) and short-term
variable bonus remuneration (short-term incentive) of CHF 140,380 (previous year: CHF 108,412), a long-term
participation (long-term incentive) of CHF 356,345 (previous year: CHF 267,354) plus the private use of the com­pany car, and employer contributions to the pension fund as well as other usual social insurances, which arereported separately in the column ‘Other remuneration’.
The fixed portion of the base salary paid in shares (lockup period of five years) came to CHF 278,961 (previous
year: CHF 326,245). The portion paid in shares is derived from a fixed remuneration amount. The portion of thevariable remuneration (short-term incentive plan) paid in shares in connection with the MIP (lockup period of
three years) came to CHF 111,384 (previous year: CHF 92,054), which is subject to approval by the 2021 Ordinary
General Meeting. The portion paid in shares is derived from a fixed remuneration amount.
For the three actual long-term incentive plans, a total of 545 future subscription rights in the form of perfor­
mance share units were issued.

Plan2018 – 20202019 – 2021
2020 – 2022

Allocationof subscription rights
April 2018
April 2019
April 2020

Performance
period2018 – 20202019 – 2021
2020 – 2022

Vesting
date (PSUs)
April 2021
April 2022
April 2023

Unlockingof shares
April 2024
April 2025
April 2026

Numberof PSUs
allocated
141
189
215

Value PSUs
in CHF(allocation)
221,088
267,354360,350

85

Disclosure of remuneration of the Board of Directors and Executive Board
Remuneration
For the year 20201)

Variable
remunerations

Base salary

CashSharesCash
CHF

Bonus/short-term incentive2)

Long-term incentive3)

Shares

Allocation performance
share units

Name and function

CHF

Number

CHF

CHF

CHF

290,000

1,358

2,262,967

437,7912,990,758

Michael Pieper,
Vice Chairman

80,041

52

65,45812,319157,818

Dr. Peter Altorfer,
Vice Chairman and Lead
Independent Director

104,187

67

84,34015,135

203,662

Claudia Coninx-Kaczynski,
member

71,382

46

57,905

13,766

143,053

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

71,382
86,870703,862
1,241,472
400,000

46
55
1,624
175
127

57,905
69,234
2,597,809
278,961
201,537

11,264
8,731
499,006
389,941
176,781

140,551
164,835
3,800,677
2,407,099
951,027

72
47

CHF

111,384
72,709Number

216
60

CHF

Total

This E. Schneider,
Chairman5)

28,9960

NumberOther
remunera­tion4)

356,345
100,000

1) The remuneration of the Board of Directors and the Executive Board is reported gross before deduction of employee social insurance contri­
butions. The amounts shown in the table are based on the valuation models used and disclosed in the consolidated financial statements.
2) The variable short-term remuneration of the Executive Board (bonus/short-term incentive) corresponds to the actual degree to which targets
were reached in 2020 and will be submitted to the April 2021 Ordinary General Meeting for approval. The criterion for determining the num­
ber of shares issued for the variable remuneration is the unweighted average of the closing prices of the Forbo share in the first 14 trading
days in January of the allocation year in connection with the MIP. The allocation takes place in April (subject to approval by the Ordinary Gen­
eral Meeting) for the period from January to December of the previous year. The value at allocation was CHF 1,547.00. 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 2020 (long-term incentive plan 2020 –2022) and to the number of future subscription rights allocated to the plan in the form of performance share units (PSUs). One PSU corre­
sponds to a future subscription right to one share and is subject to a three-year vesting period.
4) ‘Other remuneration’ includes in particular employer contributions to the usual social insurances, private use of the company car, and lumpsum or on-site expenses.
5) Please refer to page 78 of this remuneration report for details on the structure of the remuneration of the Executive Chairman of the Board of
Directors. These details also contain the criterion for determining the number of shares issued and their lockup 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 1,258.80. The allocation is made at the discounted
tax value of CHF 1,056.91. 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 1,673.71 for 2020and for 2021 CHF 1,547.00.
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 2020 will be allocatedin April 2021, subject to approval by the 2021 Ordinary General Meeting. The shares are locked up for a period of three years. The value atallocation was CHF 1,547.00. 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 2020 – REMUNERATION REPORT

Remuneration
For the year 20191)

Variable
remunerations

Base salary

CashName and function

SharesCash
CHF

Bonus/short-term incentive2)

Long-term incentive3)

Shares

Allocation performance
share units

CHF

Number

CHF

CHF

CHF

310,000

1,597

2,263,250

432,050

3,005,300

Michael Pieper,
Vice Chairman

80,34840

65,092

12,140157,580

Dr. Peter Altorfer,
Vice Chairman

103,952

52

84,62014,894203,466

Claudia Coninx-Kaczynski,
member

70,81336

58,583

13,584142,980

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

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

36
43
1,804
207
128

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

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

55
25

CHF

92,054
41,843

Number

189
54

CHF

Total

This E. Schneider,
Executive Chairman5)

16,3580

NumberOther
remunera­tion4)

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

87

Advances and loans
As of December 31, 2020, 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 CO2020 business year
As at December 31, 2020, 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 2020
Name and function

Amountof shares

This E. Schneider, Executive Chairman
Michael Pieper, Vice Chairman
Dr. Peter Altorfer, Vice Chairman and Lead Independent Director
Claudia Coninx-Kaczynski, member
Dr. Reto Müller, member
Vincent Studer, member
Total Board of Directors
Stephan Bauer, Chief Executive Officer
Marc Deimling, Executive Vice President Movement Systems
Urs Uehlinger, Chief Financial Officer
Jean-Michel Wins, Executive Vice President Flooring Systems
Total Executive Board

42,352486,856
1,406
357
714
1,019
532,704
2,345
54
253
275
2,927

88

FORBO ANNUAL REPORT 2020 – REMUNERATION REPORTAs at December 31, 2019, the individual members of the Board of Directors and the Executive Board (including
related parties) held the following number of shares in Forbo Holding Ltd:
Shareholdings 2019
Name and function

Amountof shares

This E. Schneider, Executive Chairman
Michael Pieper, Vice Chairman
Dr. Peter Altorfer, Vice Chairman
Claudia Coninx-Kaczynski, member
Dr. Reto Müller, member
Vincent Studer, member
Total Board of Directors
Stephan Bauer, Chief Executive Officer
Marc Deimling, Executive Vice President Movement Systems
Urs Uehlinger, Chief Financial Officer
Jean-Michel Wins, Executive Vice President Flooring Systems
Total Executive Board

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

89

Report of the statutory auditor

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

We have audited the accompanying remuneration report of Forbo Holding Ltd for the year ended 31 December
2020. The audit was limited to the information according to articles 14 – 16 of the Ordinance against Excessivecompensation in Stock Exchange Listed Companies (Ordinance) on pages 85 to 88 of the remuneration report.
Responsibility of the Board of Directors
The Board of Directors is responsible for the preparation and overall fair presentation of the remuneration reportin accordance with Swiss law and the Ordinance against Excessive compensation in Stock Exchange Listed
Companies (Ordinance). The Board of Directors is also responsible for designing the remuneration system anddefining individual remuneration packages.
Auditor's Responsibility
Our responsibility is to express an opinion on the accompanying remuneration report. We conducted our audit inaccordance with Swiss Auditing Standards. Those standards require that we comply with ethical requirements
and plan and perform the audit to obtain reasonable assurance about whether the remuneration report complies
with Swiss law and articles 14 – 16 of the Ordinance.
An audit involves performing procedures to obtain audit evidence on the disclosures made in the remuneration
report with regard to compensation, loans and credits in accordance with articles 14 – 16 of the Ordinance. The
procedures selected depend on the auditor’s judgment, including the assessment of the risks of material
misstatements in the remuneration report, whether due to fraud or error. This audit also includes evaluating thereasonableness of the methods applied to value components of remuneration, as well as assessing the overall
presentation of the remuneration report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
OpinionIn our opinion, the remuneration report for the year ended 31 December 2020, 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, 3 March 2021

KPMG AG, Räffelstrasse 28, PO Box, CH-8036 Zurich© 2021 KPMG AG, a Swiss corporation, is a subsidiary of KPMG Holding AG, which is a member firm of the KPMG global organization of independent member
firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

90

FINANCIAL REPORT
Forbo Group financial report
91
Consolidated balance sheet
92
Consolidated income statement
93
Consolidated comprehensive income statement
94
Consolidated statement of changes in equity
95
Consolidated cash flow statement
96
Notes – accounting principles
97
Notes107
Group companies
134
Report of the statutory auditor
138
Consolidated balance sheets 2016 – 2020
144
Consolidated income statements 2016 – 2020
145
Financial statements for Forbo Holding LtdBalance sheet
Income statementNotes to the financial statements
Proposal for appropriation of available earnings
Report of the statutory auditor

147
148
149
150
155
156

92

FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTS

Consolidated balance sheet

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

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

31.12.2020

31.12.2019

668.7
255.8
0.1
141.4
39.7
13.2
218.5
442.1
0.2
45.4
295.7
100.8
1,110.8

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

251.5
14.1
94.4
30.4
16.6
76.2
19.8
175.8
31.1
8.9
46.5
89.3
427.3
683.5
0.2
– 0.1
683.4
1,110.8

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

Note

22
12

13
22
10
14/21
15

Note

22
22

16
17
22
10
17
18

20
20

FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTS

93

Consolidated income statement

1.1. – 31.12.
CHF m
Net sales
Cost of goods sold
Gross profit
Development costs
Marketing and distribution costs
Administrative costs
Other operating expenses
Other operating income
Operating profit
Financial income
Financial expenses
Group profit before taxes
Income taxes
Group profit for the year
Group profit attributable to shareholders of Forbo Holding Ltd
Earnings per share, total
CHF
Basic earnings per share
Diluted earnings per share

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

2020

2019

1,117.7– 707.5
410.2– 15.2– 171.3– 86.4– 15.2
14.9
137.0
0.7
– 1.6
136.1
– 29.9106.2
106.2

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

66.60
66.60

86.33
86.33

Note

5

6

7
8

10

Note

11
11

94

FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTS

Consolidated comprehensive
income statement
1.1. – 31.12.
CHF m
Group 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.

2020

2019

106.2

138.3

– 7.8

– 4.8

– 23.3– 31.175.1
75.1– 12.5– 17.3
121.0
121.0

Note

10

FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTS

95

Consolidated statementof changes in equity
2020

CHF m
January 1, 2020
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, 2020

SharecapitalTreasuryshares0.2– 0.1

Reserves

0.2

– 0.1

1,002.6
106.2
– 7.8
98.4
3.0
– 34.4– 36.81,032.8

SharecapitalTreasurysharesReserves

0.2

– 0.1

0.0

Translationdifferences– 326.1– 23.3– 23.3– 349.4

Translationdifferences

Total

676.6
106.2
– 31.175.1
3.0– 34.4– 36.8
683.5

2019

CHF m
January 1, 2019
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, 2019

0.0
0.2

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

– 0.1

903.7
138.3
– 4.8
133.5
3.2
– 4.1
– 33.7
1,002.6– 313.6– 12.5– 12.5– 326.1

Total

590.2
138.3
– 17.3
121.0
3.2
– 4.1
– 33.7676.6

96

FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTS

Consolidated cash flow statement

1.1. – 31.12.
Cash flow from operating activities
CHF mGroup profit for the year
Tax expense
Financial result
Depreciation of property, plant, and equipment and right-of-use assets
Amortization of intangible assets
Loss/Profit (–) from the sale of non-current assets
Share-based payments
Income tax paid
Increase in provisions and employee benefit obligations
Decrease/Increase (–) in net operating working capital1)
Increase in other net working capital
Net cash flow from operating activities
Cash flow from investing activities
CHF m
Purchase of non-current assets
Proceeds from the disposal of non-current assets
Interest received
Net cash flow from investing activities
Cash flow from financing activities
CHF m
Payment of lease liabilities
Interest paid
Purchase of treasury shares
Dividend payment
Net cash flow from financing activities
Change in cash and cash equivalents
CHF m
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.

2020

2019

106.2
29.9
0.9
50.4
4.6
0.0
3.0
– 37.4
1.0
19.3
– 6.5
171.4

138.3
37.0
1.0
52.4
5.1
– 0.5
3.2
– 39.07.7– 14.1– 6.0
185.1– 39.70.1
0.7– 38.9– 36.10.8
0.8– 34.5– 17.5– 0.9– 34.4– 36.8– 89.6– 18.4– 1.0– 4.3– 33.7– 57.4

42.9
– 4.8
217.7
255.8

93.2
– 2.9
127.4
217.7

Note

10
14
15
9

Note

Note

21
21

Note

FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTS

97

Notes –
accounting principles
1 General information
Forbo Holding Ltd and its subsidiaries (together consti­
tuting the ‘Group’) manufacture floorings, construction
adhesives, and drive and conveyor technology. The
Group has a global network of locations with produc­tion and distribution as well as pure sales companies.
Forbo Holding Ltd is a public limited company under
Swiss law, domiciled in Baar, Switzerland. It is listed on
the SIX Swiss Exchange (FORN).
These financial statements were approved by the
Board of Directors on March 3, 2021, and released for
publication on March 4, 2021. This financial report issubject to approval by the Ordinary General Meetingof April 1, 2021.
For information on the economic impact of the
COVID-19 pandemic, we refer the reader to the Share­
holders’ Letter (pages 4 – 8) and the activity reports ofthe two divisions Flooring Systems (pages 32 – 35) andMovement Systems (pages 38 – 41).

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

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

98

FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTS

Goodwill is the excess of the consideration of the busi­
ness combination and the amount of the non-con­trolling interest over the identifiable net assets as­
sessed at fair value.
Inter-company transactions, balances, and unrealized
gains or losses on transactions between Group com­panies are eliminated.
Associates are all entities over which the Group has­significant influence but not control, generally accom­
panied by a shareholding of 20% to 50% of the voting
rights. Investments in associates are accounted for­using the equity method of accounting and are ini­
tially 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 amountof the investment. When the Group’s share of losses inan associate equals or exceeds its interest in the asso­
ciate, the Group does not recognize further losses, un­less it has incurred obligations or made payments onbehalf of the associate.
Changes in the scope of consolidation
In the reporting period, the sales company TOB ’Forbo
Flooring Ukraine’ was founded in Kiev, Ukraine, within
the Flooring Systems segment. In the Corporate seg­ment, Forbo Finanz AG was merged with Forbo Finan­cial Services AG (renamed Forbo Management SA) inorder to streamline the corporate structure. Forbo Fi­
nanz AG was subsequently deregistred as a result of
the merger. Effective as of January 1, 2021, Forbo Man­
agement SA took over the activities of the Corporate
segment of Forbo International SA, which then moved
its domicile from Baar to Wallbach and was renamed
Forbo Siegling Schweiz AG.
In the previous year, two new distribution and service
companies were founded in the Movement Systems
segment: Forbo Siegling Poland sp. z o.o. in Łódź, Po­
land, and Forbo Siegling Colombia S.A.S. in Bogotá,
Colombia. In the Corporate segment, Forbo Finanz II
AG was liquidated in order to streamline the corporate
structure.
The subsidiaries included in the group of consolidated
companies are listed under ‘Group companies’ (frompage 134 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.
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. 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.

99

FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTS

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

Exchange rates
Euro zone
USA
Great Britain
Japan
China
Sweden

EUR
USD
GBP
JPY
CNY
SEK

1
1
1
100
100
100

Balance sheet(year-end exchange rates)

2020

2019

2020

2019

1.0706
0.93681.20270.878513.5918
10.2186

1.1126
0.99371.26880.911514.3900
10.51641.08400.88221.20110.8552
13.5234
10.7469

1.08590.9682
1.27220.8912
13.9100
10.3745

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

Movement Systems

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

100 FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTS

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

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

FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTS 101

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

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

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

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

102 FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTS

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

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

FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTS 103

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

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

104 FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTS 105

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

4 Application of new or revised
accounting standards
Applied new and revised standards
and interpretations
The following relevant new and revised standards andinterpretations of the International Accounting Stan­dards Board (IASB) were applied for the first time in thebusiness year that began on January 1, 2020:– Amendments to IFRS 3 ‘Definition of a business’– Amendments to IAS 1 and IAS 8‘Definition of materiality’– Amendments to IFRS 9, IAS 39, and IFRS 7‘Interest rate benchmark reform’– Amendments to the references to the conceptual
framework in IFRS standards– Amendments to IFRS 16 ‘COVID-19-relatedrent-concessions’ (since June 1, 2020)
The first-time adoption of the above-mentioned re­vised standards and interpretations had no appreciable
impact on the consolidated financial statements pre­sented here.

106 FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTS

Introduction of new standards
in 2021 and beyond
The following new and revised standards and inter­
pretations that were published by end-2020 but are
not yet mandatory were not applied in advance in thepresent consolidated financial statements.

Standards
New Standards or Interpretations:
IFRS 17 ‘Insurance Contracts’Revisions and amendments of standards and interpretations:
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16‘Interest Rate Benchmark Reform – Phase 2’
Annual Improvements to IFRS Standards 2018 – 2020
Amendments to IAS 16 ‘Property, Plant and Equipment: Proceeds before Intended Use’Amendments to IFRS 3 ‘Reference to the Conceptual Framework’
Amendments to IAS 37 ‘Onerous Contracts – Cost of Fulfilling a Contract’
Amendments to IAS 1 ‘Classification of Liabilities as Current or Non-current’*No significant impact on the consolidated financial statements is expected.

Date effective

Plannedapplication*

January 1, 2023

2023 business year*

January 1, 2021

2021 business year

*
*
*
*
*

January 1, 2022
January 1, 2022
January 1, 2022
January 1, 2022
January 1, 2023

2022 business year
2022 business year
2022 business year
2022 business year
2023 business year

FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTS 107

Notes

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

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

2020
CHF m
Total sales
Inter-segment sales
Net sales to third parties
Operating profit (EBIT)
EBITDA1)
Operating assets
Capital expenditure2)
Number of employees (December 31)

Flooring
Systems
757.0
0.0
757.0
109.9
144.6
487.5
20.5
2,967

Movement
Systems
361.0
– 0.3
360.7
35.9
55.0
303.3
19.1
2,309

Corporate/
Elimination
– 0.3
0.3

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

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

Corporate/
Elimination
– 0.2
0.2

– 8.8
– 7.6
18.5
0.1
41

Total
1,117.7
0.0
1,117.7
137.0
192.0
809.3
39.7
5,317

1) Operating profit before depreciation and amortization
2) Purchase of tangible and intangible assets (excluding leasing)

Segment information on the reportable segments forthe prior year:
2019
CHF m
Total sales
Inter-segment sales
Net sales to third parties
Operating profit (EBIT)
EBITDA1)
Operating assets
Capital expenditure2)
Number of employees (December 31)

1) Operating profit before depreciation and amortization
2) Purchase of tangible and intangible assets (excluding leasing)

– 9.3
– 8.2
13.8
0.0
43

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

108 FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTSManagement reporting is based on the same account­ing principles as external reporting.
The Executive Chairman of the Board of Directors andthe Chief Executive Officer assess the performanceof the reportable segments based on their operating
result (EBIT). The net financial result is not allocatedto the segments since it is Corporate Treasury thatmainly exercises central control over the financial re­sult. Inter-segment sales are transacted at arm’s length.
The segments apply the same accounting principles as
the Group. Sales to third parties, as they are reported to
the Executive Chairman of the Board of Directors andthe Chief Executive Officer, are identical with the sales
reported in the income statement.
Reconciliation of segment information to the income
statement and balance sheet:
2020

2019

137.0
– 0.9
136.1

176.3
– 1.0
175.3

31.12.2020

31.12.2019

809.3
301.5
1,110.8

834.1
263.3
1,097.4

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

CHF m
Total operating assets
Non-operating assets
Total assets

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

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

Flooring Systems

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

Movement Systems

2020
Third-party
sales

2019
Third-party
sales

2020
Third-party
sales

2019
Third-party
sales

585.7
107.9
63.4
757.0

664.7
131.4
74.4
870.5

140.0
118.9
101.8
360.7

156.2
141.9
113.6
411.7

FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTS 109

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

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

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

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

6 Development costs‘Development costs’, which mainly comprise productdevelopment, amounted to CHF 15.2 million in the re­porting year (2019: CHF 16.0 million).

2020
Third-party sales

2019
Third-party sales

26.2
145.9
124.3
122.2
94.6
67.2
145.3
725.7
186.7
40.1
226.8
165.2
1,117.7

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

Operating assets are distributed over the following re­
gions:

31.12.2020
Operating assets

31.12.2019
Operating assets

31.5
91.9
73.5
199.4
33.8
103.8
61.3
595.2
87.3
11.3
98.6
115.5
809.3

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

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

110 FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTS

7 Other operating expenses

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

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

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, 2020, the headcount was 5,317(2019: 5,614). The weighted average headcount over
the year was 5,491 (2019: 5,716).
Personnel expense decreased year-on-year mainly be­cause of the lower headcount. Further contributory
factors were savings owing to the reduction of unused
holidays and overtime and some cases of compensa­
tion from individual programs related to the COVID-19
pandemic.

2020

2019

279.7
73.8
5.8
359.3

308.5
78.8
5.0
392.3

Salaries and wages include share-based payments­expenses of CHF 3.0 million (2019: CHF 3.2 million). A
bonus program is available for around 150 managers,which is linked to achieving financial targets set for theGroup, the divisions, and individual objectives (see also
note 19 ‘Employee participation plan’).
The cost of the contributions to defined contributionplans, which is included in personnel expenses,
amounted to CHF 14.1 million (2019: CHF 14.8 million).

FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTS 111

10 Income taxes

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

2020

2019

30.5
– 0.6
29.9

42.0
– 5.0
37.0

2020

2019

136.1
– 33.124.3%

175.3– 43.8
25.0%

– 0.9
2.4

– 1.8
3.5
2.1

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
Expected tax rate in %Tax effects of:
Non-tax-deductible expenses
Tax-exempt income
Recognition of previously unrecognized tax losses
Utilization of previously unrecognized tax losses
Previous-year taxes and other positions
Effective income tax expenses
Effective income tax rate in %Since the Group operates in various countries with dif­ferent tax laws and rates, the expected and effective tax
expense depends every year on the origin of the profits
or losses in each country. The expected tax expense is
the sum of the expected individual tax income/expense

0.2
1.5– 29.922.0%

3.0– 37.021.1%

of all subsidiaries. The expected individual tax income/expense in a country is calculated by multiplying theindividual profit/loss by the tax rate applicable in the
country concerned.

112 FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTS

Capitalized and non-capitalized tax loss carry-for­wards, by expiry date:
2020
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

0.0
1.8
4.6
3.8

Total
0.0
1.8
4.6
3.8

17.9
28.1

42.2
42.2

60.1
70.3

Not capitalized

Capitalized

Total

45.2
45.2

0.4
2.1
4.6
3.8
67.8
78.7

2019
CHF m
Expiry after:
1 year
2 years
3 years
4 years
5 years
More than 5 years
Total tax loss carry-forwards

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

CHF mDeferred tax assets
Deferred tax liabilities
Deferred taxes, net

0.4
2.1
4.6
3.8
22.6
33.5

that the legal right to offset exists, and they are intend­
ed either to be settled net or to be realized simultan­
eously.
The following amounts are shown in the balance sheet:
31.12.2020

31.12.2019

45.4
– 8.9
36.5

45.4
– 11.2
34.2

FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTS 113

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

CHF mJanuary 1, 2019
Changes recognized in income statement
Changes recognized in other comprehensive income
Translation differences
As at December 31, 2019
Changes recognized in income statement
Changes recognized in other comprehensive income
Translation differences
As at December 31, 2020
Netting with deferred tax liabilities
As at December 31, 2020

Inventories
7.5
1.6

Property,plant, andequipment
1.4
– 0.4

Provisions
10.2
3.6

Loss carryforwards
10.8
2.1

– 0.2
8.9
– 1.0

0.0
1.0
1.4

– 0.3
13.5
– 0.7

– 0.3
12.6
– 0.5

– 0.2
7.7

0.0
2.4

0.0
12.8

– 0.2
11.9

Inventories
2.7
0.3
– 0.1
2.9
0.0
– 0.1
2.8

Property,plant, andequipment
3.2
1.8
– 0.1
4.9
0.7
– 0.1
5.5

Provisions
2.1
– 1.9
– 0.1
0.1
0.0
– 0.0
0.1

Intangible
assets
12.2
– 0.7
– 0.4
11.1
– 2.1
– 0.2
8.8

Employeebenefit­obligations
14.9
– 1.5
1.8
– 0.4
14.8
2.0
– 0.2
16.6

Other
5.0
0.8
– 0.1
5.7
0.0
– 0.1
5.6

Total
49.8
6.2
1.8
– 1.3
56.5
– 0.8
2.0
– 0.7
57.0
– 11.6
45.4

Deferred tax liabilities

CHF mJanuary 1, 2019
Changes recognized in income statement
Translation differences
As at December 31, 2019
Changes recognized in income statement
Translation differences
As at December 31, 2020
Netting with deferred tax assets
As at December 31, 2020
Increase in deferred tax assets 2019
Increase in deferred tax assets 2020

As at December 31, 2020, no deferred tax liabilities
on undistributed profits from consolidated companies
have been recognized, since this income is deemed
to have been reinvested for an indefinite period.

Employeebenefit­obligations
0.0
0.0
0.0
0.0
0.0

Other
1.7
1.7
– 0.1
3.3
0.0
0.0
3.3

Total
21.9
1.2
– 0.8
22.3
– 1.4
– 0.4
20.5
– 11.68.9
6.4
2.3

Should there be a distribution, withholding and othertaxes might be incurred, which upon decision may beprovided for accordingly.

114 FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTS

Tax expense and income recognized directly in theother comprehensive income statement:
2020
CHF m
Actuarial losses (–)/gains on employee benefit obligations
Translation differences
Other comprehensive income

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

2019

Before tax

Tax income

After tax

Before tax

Tax income

After tax

– 9.8
– 23.3– 33.1

2.0– 7.8– 23.3– 31.1– 6.6– 12.5– 19.1

1.8– 4.8– 12.5– 17.32.0

1.8

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

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

2020
106.2
1,594,494
16
1,594,510
66.60
66.60

2019
138.3
1,601,927
42
1,601,969
86.33
86.33

FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTS 115

12 Trade receivables

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

Information with regards to the Group’s credit and mar­ket risks and allowances for doubtful trade receivables

31.12.2020

31.12.2019

134.7
12.8
– 6.1
141.4

149.7
16.7
– 6.0
160.4

are found in note 23 ‘Risk assessment and financial risk
management’.

13 Inventories

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

Expenses for inventories recognized in the reporting
year came to CHF 436.2 million (2019: CHF 495.3 mil­lion).

31.12.2020

31.12.2019

48.7
71.2
131.4
– 32.8
218.5

47.8
80.1
137.5
– 29.9235.5

116 FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTS

14 Property, plant, and equipment

Cost on acquisition

CHF m
As at January 1, 2019
Additions
Disposals
Transfers
Translation differences
As at December 31, 2019
Additions
Disposals
Transfers
Translation differences
As at December 31, 2020

Land andbuildings

Machineryandequipment

Vehicles andotherproperty,plant, andequipment

165.5
7.9
– 1.5
3.2
– 8.2
166.9
27.7
– 7.4
4.8
– 8.0
184.0

723.0
8.3
– 5.9
22.6
– 19.7
728.3
8.0
– 7.7
11.7
– 12.3
728.0

130.2
7.9
– 1.7
1.9
– 3.9
134.4
7.3
– 3.4
1.3
– 2.4
137.2

Land andbuildings

Machineryandequipment

Vehicles andotherproperty,plant, andequipment

29.3
16.2
– 1.3
– 5.6
38.6
15.3
– 3.6
– 4.5
45.8

598.5
26.0
– 5.9
– 16.5
602.1
25.4
– 7.6
– 9.3
610.6

108.6
10.2
– 1.6
– 3.2
114.0
9.7
– 3.2
– 1.5
119.0

0.0

0.0

736.4
52.4
– 8.8
– 25.3754.7
50.4– 14.4– 15.3
775.4

136.2
128.3
138.2

124.5
126.2
117.4

21.6
20.4
18.2

19.2
16.9
21.9

301.5
291.8
295.7

Accumulated depreciation and impairments

CHF m
As at January 1, 2019
Depreciation
Disposals
Translation differences
As at December 31, 2019
Depreciation
Disposals
Translation differences
As at December 31, 2020
Net carrying amountAs at January 1, 2019
As at December 31, 2019
As at December 31, 2020

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

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

Included under property, plant, and equipment areright-of-use assets amounting to CHF 46.9 million(2019: CHF 41.8 million). Further information are foundin note 21 ‘Leasing’.

As at December 31, 2020, there were no assets forwhich interest on borrowed capital was capitalized
during the preparation phase.

Maintenance and repair costs amounted to CHF 22.7
million (2019: CHF 23.7 million). The depreciation ex­pense of CHF 50.4 million (2019: CHF 52.4 million) is

As at December 31, 2020, the Group had outstanding
purchase orders for capital goods amounting to CHF
2.1 million (2019: CHF 8.3 million).

Assetsunderconstruction

19.2
26.0

Total
property,plant, andequipment– 17.8– 0.2
21.9

1,037.9
50.1
– 9.1
– 0.2
– 32.2
1,046.5
66.0– 18.50.0– 22.9
1,071.1

Assetsunderconstruction

Total
property,plant, andequipment– 27.9
– 0.4
16.9
23.0

0.0

FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTS 117

15 Intangible assets and goodwill

Cost on acquisition
CHF m
As at January 1, 2019
Additions
Transfers
Translation differences
As at December 31, 2019
Additions
Disposals
Translation differences
As at December 31, 2020

Accumulated amortization and impairments
CHF m
As at January 1, 2019
Amortization
Translation differences
As at December 31, 2019
Amortization
Disposals
Translation differences
As at December 31, 2020
Net carrying amountAs at January 1, 2019
As at December 31, 2019
As at December 31, 2020

Other
intangible assets

Total

– 0.3
32.5

80.8
0.2
0.2
0.3
81.5
0.3
– 0.1
– 3.7
78.0

199.3
0.2
0.2
– 1.1
198.6
0.3
– 0.1
– 5.2
193.6

Goodwill

Trademarks

Otherintangible assets

Total

9.0

26.3

– 0.2
8.8

0.0
26.3

0.0
8.8

0.0
26.3

50.9
5.1
– 0.4
55.6
4.6
– 0.1
– 2.4
57.7

86.2
5.1
– 0.6
90.7
4.6
– 0.1
– 2.4
92.8

76.8
75.5
74.3

6.4
6.5
6.2

29.9
25.9
20.3

113.1
107.9
100.8

Goodwill

Trademarks

85.8

32.7

– 1.5
84.3

0.1
32.8

– 1.2
83.1

The position ‘Trademarks’ consists mainly of the trade­marks acquired in connection with the acquisition of
Bonar Floors in 2008. ‘Other intangible assets’ consists

primarily of the customer relations and technologies,
as well as software, acquired as part of the acquisitionof Bonar Floors.

Goodwill is distributed among the following groups ofcash-generating units:

Flooring Systems
Movement Systems

31.12.2020
70.3
4.0
74.3

31.12.2019
71.5
4.0
75.5

118 FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTS

The goodwill in Flooring Systems comprises primarily
the goodwill acquired in connection with the acqui­sition of Bonar Floors. The annual impairment test of
goodwill yielded a value in use that was greater thanthe carrying amount.

terminal value equals the expected inflation. During
the detailed planning period, relatively constant EBITDA
margins are assumed, which are around 19% (2019:20%) for Flooring Systems and around 15% (2019: 17%)for Movement Systems.

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).

The discount rate corresponds to the total weighted
cost of capital before taxes including an average risk
charge estimated by management, and is 8.9% (previ­
ous year: 8.7%). The intangible assets with an indefinite
useful life were subject to impairment testing also in
the form of sensitivity analyses.

Cash flows beyond the detailed planning period are
extrapolated to the terminal value by means of using
sustainable earnings. The growth rate underlying the

No change in the basic assumptions that can be re­garded as reasonably realistic will result in the carrying
amounts exceeding the recoverable amounts.

16 Accrued expenses anddeferred income

31.12.2020

31.12.2019

37.4
38.8
76.2

38.5
39.7
78.2

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

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

17 Provisions

Provisions
CHF m
As at January 1, 2020
Additions
Used during the year
Released during the year
Translation differences
As at December 31, 2020
Of which current provisions
Of which non-current provisions

Warranty provisions are linked to product sales and are
based on past experience. The provisions for legal
claims relate in part to product liability claims in which

Provisions
for legal
claims

Personnel
provisions

Other
provisions

13.6
2.0
– 1.5
– 0.8
0.0
13.3

4.0

0.0
8.1

36.6
3.8
– 0.3
– 3.9
0.0
36.2

– 0.5
– 0.1
0.0
3.4

67.3
8.5
– 4.2
– 5.1
– 0.2
66.3

0.0
8.1

0.5
35.7

13.0
0.3

2.3
1.1

19.8
46.5

Warranty
provisions

Environmental
provisions

5.0
2.7
– 1.9
– 0.3
– 0.2
5.3

8.1

4.0
1.3

the Group is involved in the course of its normal busi­
ness. Personnel provisions comprise possible obliga­
tions arising from employment contracts.

Total

FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTS 119

18 Employee benefit obligations
The Group has established several pension plans on
the basis of the specific requirements of the countries
in which it operates. Both defined contribution and­defined benefit plans exist in the Group that insure
employees against the risks of death and invalidity andprovide old-age pensions.
The liabilities and assets under the main defined bene­
fit plans are assessed annually by independent actuar­
ies using the ‘projected unit credit method’.
Pension plans in the United Kingdom
The Group has two defined benefit pension plans in
the United Kingdom. The main one is the Forbo Super­annuation Fund (the FSF), which accounts for about
60% of the Group’s total pension liabilities. The FSF isa pension plan whose benefits are based on the final
salary and which pays out a guaranteed pension forlife to its members. The FSF is closed to new entrants.
The composition of the pension liabilities is as follows:
2% to active employees, 29% to deferred members
and 69% to current beneficiaries. New employees in
the United Kingdom who meet certain criteria are
now offered a defined contribution plan.
The FSF operates under trust law and is managed andadministered by the trustees on behalf of the mem­bers in accordance with the terms of the Trust Deed
and Rules and relevant legislation. The FSF’s assets areheld by the trust. Responsibility for governance of the
FSF – including investment decisions and contribu­
tion schedules – lies jointly with the company and thetrustees. The board of the trustees must be composedof representatives of the company and plan partici­
pants in accordance with the FSF’s regulations andBritish pension law.

The pension plan follows an investment strategy that isgeared to the structure of the pension liabilities (‘liabil­
ity-driven investment’ approach).
The use of any ultimate surplus is not subject to any
restriction under the FSF’s articles of incorporation andbe used freely by the Group. These surpluses are there­
fore recognized in the balance sheet as assets in accor­
dance with IAS 19 revised.
Pension plan in Switzerland
The Group pays contributions to an independent pen­sion fund as part of the occupational pension provision(known in Switzerland as the ‘second pillar’). As a min­imum benefit, this independent pension fund must
provide the beneficiary with an old-age pension at thetime of retirement. This pension is paid out of the retire­
ment savings capital at the start of the pension. The
Group meets these liabilities through agreements withpension funds that cover the pension liabilities in full.
The pension liabilities of the Swiss Group companies
account for about 19% of the Group’s entire pension
liabilities. 95% of the liabilities are to employees and 5%
to beneficiaries.
The Swiss pension system includes guarantees that ex­pose the company to the risk that it may have to pro­vide additional financing, for instance, if the pension
fund is unable to meet its obligations or decides to end
the insurance relationship. The pension fund guaran­
tees a minimum return and is responsible for the pay­
ment of a pension for life once the insurance benefits
fall due. As a result of these guarantees, Swiss pension
plans are treated as defined benefit plans under IFRS,
even though they contain essential elements of de­fined contribution plans.

120 FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTS

The company cannot participate in any surplus of
the pension plan. According to Swiss pension law, allsurpluses belong to the pension plan and hence to its
members.
Other pension plans
Other notable defined benefit plans exist in France,
Germany, Japan, Sweden, and the USA.
The latest actuarial valuations of the present valuesof defined benefit liabilities and of service costs were
performed as at December 31, 2020, by independentactuaries using the projected unit credit method. The
fair value of the plan assets was determined as at De­
cember 31, 2020, based on the information available
when the annual financial statements were prepared.
The weighted average duration of the pension plans(‘plan duration’) is 13.5 years for the United Kingdom,19.1 years for Switzerland, and 16.9 years for the othercountries.
The principal assumptions underlying the actuarial cal­culations are summarized as follows.

2020

2019

Actuarial assumptions
Switzer­
land

UK

Other

Weighted

Switzer­
land

UK

Other

Weighted

0.1
1.8
1.3

1.2
3.6
2.9

1.0
2.7
1.9

1.0
2.4
2.5

0.3
1.9
1.3

1.8
3.7
3.0

1.1
2.8
1.9

1.4
2.4
2.6

23
25

21
23

20
24

21
23

23
25

21
23

20
24

21
23

24
26

22
24

22
25

22
25

24
26

22
24

22
25

22
24

Discount rate (in %)Future increases in salaries (in %)Inflation rate (in %)Life expectancy at age of 65 (in years)
Year of birth 1955
Men
Women
Year of birth 1970
Men
Women

The pension costs for defined benefit plans recog­
nized in the consolidated income statement can besummarized as follows:
2020

2019

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

Switzerland

UK

Other

Total

Switzerland

UK

Other

Total

2.1
0.2
– 0.1
2.2

0.4
3.8
– 3.7
0.5

2.6
0.7
– 0.2
3.1

5.1
4.7
– 4.0
5.8

2.0
0.5
– 0.3
2.2

0.6
5.6
– 5.6
0.6

1.4
1.0
– 0.2
2.2

4.0
7.1
– 6.1
5.0

FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTS 121

Changes in pension liabilities under the defined bene­
fit plans:
2020

2019

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

Switzerland

UK

Other

Total

Switzerland

UK

Other

Total

63.4
2.1
0.9
0.2
– 1.0
3.4

228.9
0.4

353.6
5.1
0.9
4.7
– 12.7
23.7

57.1
2.0
0.9
0.5
– 1.6
4.5

211.3
0.6

3.8
– 9.1
19.8

61.3
2.6
0.0
0.7
– 2.6
0.5

– 12.8
231.0

– 0.5
62.0

– 13.3
362.0

63.4

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

326.6
4.0
0.9
7.1
– 14.6
29.4
– 0.1
0.3
353.6

69.0

5.6
– 9.7
18.9
2.2
228.9

Changes in plan assets of the defined benefit plans atfair value:
2020

2019

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

Switzerland

UK

Other

Total

Switzerland

UK

Other

Total

44.7
0.1
1.6
0.9
– 0.9

224.9
3.7
0.2

275.0
4.0
4.4
0.9
13.9

37.8
0.3
1.6
0.9
5.7

209.5
5.6
0.3

14.9

5.4
0.2
2.6
0.0
– 0.1

5.6
0.2
3.0
0.0
0.0

252.9
6.1
4.9
0.9
22.8

– 1.0

– 9.1

– 2.6

– 12.7

– 1.6

– 9.7

45.4

– 12.6
222.0

– 0.2
5.3

– 12.8
272.7

44.7

2.1
224.9

– 3.3
– 0.1
0.0
5.4

– 14.6
– 0.1
2.1
275.0

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

17.1

Most of the pension plans are financed in full or in partvia outsourced funds. Pension liabilities amounting to
CHF 38.8 million (2019: CHF 39.9 million) out of a totalof CHF 362.0 million (2019: CHF 353.6 million) are un­funded.

122 FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTS

Changes in the net liabilities of defined benefit plans
recognized in the balance sheet:
2020

2019

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

Switzerland

UK

Other

Total

Switzerland

UK

Other

Total

18.7
2.2
– 1.6
4.3

4.0
0.5
– 0.2
4.9
– 0.2
9.0

55.9
3.1
– 2.6
0.6
– 0.3
56.7

78.6
5.8
– 4.4
9.8
– 0.5
89.3

19.3
2.2
– 1.6
– 1.2

1.8
0.6
– 0.3
1.8
0.1
4.0

52.6
2.2
– 3.0
6.0
– 1.9
55.9

73.7
5.0
– 4.9
6.6
– 1.8
78.6

23.6

18.7

Gains and losses of defined benefit pension plans off­
set in the comprehensive income statement for all seg­ments:
2020

2019

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

Switzerland

UK

Other

Total

Switzerland

UK

Other

Total

– 3.4

– 19.8– 0.5– 23.7– 4.5– 18.9– 6.0– 29.4

Based on adjustment ofdemographic assumptions

0.0

– 0.6

0.0

– 0.6

2.1

4.1

0.0

6.2

Based on adjustment offinancial assumptions– 2.6– 19.3– 1.8– 23.7– 7.3– 23.3– 6.4– 37.0Experience adjustment
Return on pension assets (exclud­ing amounts in interest income)

– 0.8
– 0.9

0.1
14.9

1.3
– 0.1

0.6
13.9

0.7
5.7

0.3
17.1

0.4
0.0

1.4
22.8

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

– 4.3

– 4.9

– 0.6

– 9.8

1.2

– 1.8

– 6.0

– 6.6

FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTS 123

Change in the present value of defined benefit liabili­
ties:

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

2020

2019

+ 50bp+ 50bp

Switzerland

UK

Other

Switzerland

UK

Other

– 6.3
1.9
1.4
1.6

– 14.9
0.1
9.0

– 4.8
2.7
4.5

– 6.0
1.7
1.3
1.5

– 14.6
0.1
8.6

– 4.7
2.8
4.4

Sensitivities – 50bp

– 50bp

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

Switzerland

UK

Other

Switzerland

UK

Other

7.2
– 1.8
– 1.4
– 1.5

16.6
– 0.1
– 8.3

5.4
– 2.5
– 4.1

6.7
– 1.7
– 1.3
– 1.5

16.2
– 0.1
– 7.9

5.3
– 2.5
– 3.9

The above table describes the effect of the principal
actuarial assumptions on pension liabilities. The tableshows the effect of an isolated change of a single pa­
rameter, assuming that all other parameters remainunchanged. However, sensitivities may differ for indi­vidual plans. The sensitivity analysis aims to visualize
the uncertainty in valuating pension liabilities undermarket conditions at the date of valuation. The resultscannot be extrapolated owing to possible non-linear
effects in the event of changes to the actuarial as­
sumptions. Moreover, the analysis cannot say anything
about the likelihood of these changes occurring, nor
can it present the view of the Group regarding antici­
pated future changes in pension liabilities. Any mea­sures taken by management to reduce the risks arealso not taken into account in the analysis.

124 FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTS

Weighted average asset allocation of the defined ben­efit plan assets as at December 31:%
Shares
Bonds
Real Estate
Other securities
Cash and cash equivalents
Total plan assets as at December 31‘Shares’, ‘Bonds’, ‘Real Estate’ and ‘Other securities’ werequoted investments. The plan assets did not include
any direct shares or other securities of the Forbo Group.
Future contributions to defined benefit plans in thefollowing year are estimated on the basis of the period
under review.
Other non-current benefits
The Group does not finance any other non-current
benefits. The plans for long-service bonuses and otherbenefits related to years of service are negligible or do
not qualify as plans for other non-current benefits.

2020

2019

5.6
44.5
3.9
42.6
3.4
100.0

5.3
44.5
3.8
39.1
7.3
100.0

19 Employee participation plan
As of December 31, 2020, there existed the following
share-based remuneration elements:
Remuneration of the Executive Board
Long-term incentive plan
The long-term Incentive consists of a performance
share unit plan. At the start of the performance period,
each member of the Executive Board is granted a given
number of future subscription rights in the form of­performance share units (PSUs). One PSU corresponds
to a future subscription right to one share. The PSUs are
subject to a three-year vesting period. 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 perfor­
mance indicators have been reached. Depending on
the degree to which the objectives are reached, a given
percentage of the PSUs will be converted into shares
after the three-year vesting period. Converted sharesare locked up for a period of three years. The relevant
share price for the allocation of PSUs at the start of theperformance period is calculated from the unweighted
average of the closing prices of the Forbo share in thefirst 14 trading days in January of the year in which the
PSUs were allocated.

FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTS 125

Management investment plan
Short-term variable compensation for the Executive
Board is linked to the Management Investment Plan
(MIP). According to this plan, at least 50% of the annual
short-term variable remuneration of Executive Board
members is paid into the MIP. As for the remaining 50%of the annual short-term variable remuneration, the Ex­
ecutive Board members may either draw all or part of
it in cash or pay it into the MIP. They may redefine theallocation of this remaining 50% every year. The sharesare locked up for a period of three years.
The portion of variable remuneration that is settled
in the form of shares is recognized at fair value and­reported as a corresponding increase in equity. The
shares distributed under the MIP are issued at the un­weighted average closing price of the Forbo share forthe first 14 trading days in January of the year in which
they were issued.
The number of shares of Forbo Holding Ltd issued
in the year under review under the MIP was 92 (2019:472). A further 193 shares (2019: 230) were allocated to
Executive Board members in the reporting year as partof the fixed base salary. Within the framework of theLong-Term Incentive Plan launched in 2017, for the firsttime 81 shares were allocated in the year under review
for the period 2017 – 2020. The share price at measure­ment date was CHF 1,673.71 (2019: CHF 1,414.57).

Remuneration of the Board of Directors
The remuneration of the Executive Chairman of theBoard of Directors is mainly in locked-up shares. The
details and figures for this remuneration model are
to be found on page 133 of this Financial Report andon pages 78 and 85 of the Remuneration Report. The
number of shares with a three-year vesting period allo­cated to the non-executive members of the Board of
Directors came to 266 in the reporting year (2019: 207).
The amount charged to the income statement in ap­
plication of IFRS 2 for shares issued came to CHF 3.0
million in the year under review (2019: CHF 3.2 million).

20 Share capital andcapital management
Share capital
As at December 31, 2020, the share capital of Forbo
Holding Ltd stood at CHF 165,000 (2019: CHF 165,000),
divided into 1,650,000 registered shares with a par valueof CHF 0.10 each. Of this amount 21,419 registeredshares without voting or dividend rights are unchanged
at the disposal of the Board of Directors. Consequently,
1,628,581 (2019: 1,628,581) registered shares were eli­gible for dividends as at December 31, 2020.
Change of shares issued and outstanding:

Total shares outstanding
Treasury shares
Treasury shares
Own shares with no dividend rights
Total treasury shares
Total shares issued and outstanding

Capital management
By capital management, the Group means manage­
ment of consolidated shareholders’ equity as well as op­
timization of the capital employed. The former includes
the fully paid up share capital, the positions ‘Treasury
shares’, ‘Reserves’, and ‘Translation differences’ and, as per
December 31, 2020, it amounted to CHF 683.5 million(2019: CHF 676.6 million).

31.12.2020
Number
1,650,000

ChangeNumber

31.12.2019
Number
1,650,000

49,346
21,41970,765
1,579,235

22,08027,266
21,41948,685
1,601,315

22,080– 22,080

126 FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTS

21 Leasing

The table below shows the right-of-use assets recog­
nized under property, plant, and equipment.

The Group is the lessee for various fixed assets, in par­ticular vehicles and buildings.
Right-of-use assets
Vehicles and otherproperty, plant, andequipment

Total property, plant,
and equipment

13.7
6.5
0.0
– 6.8
– 0.3
13.1
5.7
– 0.3
– 6.6
– 0.4
11.5

45.5
14.3
0.0
– 17.1
– 0.9
41.8
26.6
– 4.0
– 16.2
– 1.3
46.9

CHF m
As at January 1, 2019
Additions
Derecognition
Depreciation
Translation differences
As at December 31, 2019
Additions
Derecognition
Depreciation
Translation differences
As at December 31, 2020

Land and buildings

Machinery andequipment

30.2
6.8
0.0
– 9.4
– 0.6
27.0
20.6
– 3.7
– 8.9
– 0.8
34.2

1.6
1.0
0.0
– 0.9
0.0
1.7
0.3
0.0
– 0.7
– 0.1
1.2

Interest from lease liabilities amounted to CHF 0.9 mil­lion in the year under review (2019: CHF 1.0 million).
Expenditure and payments for short-term leases cameto CHF 3.2 million (2019: CHF 3.6 million) and for leasesof low-value assets to CHF 0.9 million (2019: CHF 0.9
million). The recognized lease liabilities came to CHF
45.2 million at year-end (2019: CHF 40.0 million), statedin the current and non-current financial liabilities (seenote 22 ‘Financial instruments’.

The lease payments for recognized lease liabilities, in­cluding interest, came to CHF 18.4 million in the report­
ing year (2019: CHF 19.4 million).
The maturity analysis of the leasing liabilities as at De­
cember 31, 2020, is reported in note 23 ‘Risk assessmentand financial risk management’.

FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTS 127

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

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

Classification of financial instruments

CHF m
31.12.2020
Financial assets valued at fair value:
Derivative financial instruments

Carrying amount

Fair value throughprofit or loss

Fair value through
OCI

Amortized cost

0.0

Total

0.0

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

255.8
0.1
141.4
13.0
0.2

255.8
0.1
141.4
13.0
0.2

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

14.1
94.4
11.1
31.1

14.1
94.4
11.1
31.1

The item ‘Derivative financial instruments’ contains
open foreign exchange hedging and swap transactions
with a contract value at December 31, 2020, totaling
CHF 31.5 million (2019: CHF 41.5 million). The foreignexchange rates can be directly observed or deter­
mined. The derivatives are therefore assigned to hierar­
chy level 2. ‘Current financial liabilities’ and ‘Non-current
financial liabilities’ reflect the li­abilities from leasing.

128 FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTS

Classification of financial instruments

CHF m
31.12.2019
Financial assets valued at amortized costs:
Cash and cash equivalents
Trade receivables
Other receivables
Non-current financial assets
Financial liabilities valued at fair value:
Derivative financial instruments
Financial liabilities valued at amortized costs:
Current financial liabilities
Trade payables
Other current liabilities
Non-current financial liabilities

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

Carrying amount

Fair value throughprofit or loss

Fair value through
OCI

Amortized cost

Total

217.7
160.4
4.7
0.2

217.7
160.4
4.7
0.2

0.2

0.2

13.2
98.1
14.4
26.8

13.2
98.1
14.4
26.8

FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTS 129

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

No hedge accounting was used in this context in 2020
or 2019.
Foreign exchange risk management
Risks arising from short-term currency exposure creat­ed by purchases and sales of goods and services(transaction risks) are identified, and selective hedging
strategies are implemented in line with an ongoing as­
sessment of exchange rate movements. The Group
uses foreign exchange forward and option contracts
with maturities of up to 15 months to hedge against
transaction risk.
Furthermore, risks associated with the translation of­assets and liabilities denominated in foreign currencies(translation risks) are managed by establishing an ap­
propriate financing policy.
A realistic assessment of changes in interest rates for
the US dollar, the euro, the pound sterling and the
Swiss franc has no significant impact on the result andthe equity of the Group from the valuation of transac­
tions with financial instruments.
Interest rate risks
Interest rate risks arise from changes in the fair valueof interest-bearing assets and liabilities caused by fluc­tuations in interest rates. Since these risks may have anegative effect on net financial profit and shareholders’equity, the Group uses derivatives to manage them ona case-by-case basis. A realistic assessment of changes
in interest rates for the US dollar, the euro, the poundsterling and the Swiss franc has no significant impact
on the result and the equity of the Group from the valu­
ation of transactions with financial instruments.
Liquidity risk
Liquidity risk is the risk that the Group may possibly beunable to meet contractually agreed financial obliga­
tions that are settled by delivering cash or other finan­cial assets. Group companies need sufficient cash in or­
der to meet their commitments. Corporate Treasury is
responsible for managing liquidity. The share of the ag­
gregate cash and cash equivalents managed by Corpo­
rate Treasury was around 70% on December 31, 2020.
At present, the Group regards a cash level of roughly
CHF 60 million as sufficient to meet its payment obliga­
tions at all times.

130 FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTS

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

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

As at December 31, 2020

CHF mInterest-free liabilities
Liabilities from leasing
Cash inflow from financial derivatives

Total Cashoutflow/-inflow (–)
105.5
46.8
– 0.0

Remaining term
to maturity
up to
1 year
105.5
15.8
– 0.0

Total Cashoutflow/-inflow (–)
112.5
42.1
0.2

Remaining term
to maturity
up to
1 year
112.5
15.6
0.2

Remaining term
to maturity
1 – 2 years

Remaining term
to maturity
2 – 5 years

Remaining term
to maturity
over 5 years

12.4

14.3

4.3

Remaining term
to maturity
1 – 2 years

Remaining term
to maturity
2 – 5 years

Remaining term
to maturity
over 5 years

13.1

12.2

1.2

As at December 31, 2019

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

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

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

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

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

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

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

FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTS 131

Carrying amounts of trade receivables by currency:

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

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

31.12.2020

31.12.2019

1.2
67.5
22.4
12.0
8.3
6.1
4.1
25.9
147.5

1.2
77.6
24.2
14.7
9.7
5.7
4.0
29.3
166.4

of past experience of default probability and of fu­
ture-oriented expectations based on experience withthe customers and market conditions.

As at December 31, 2020
CHF m
Not due
Overdue ≤ 30 days
Overdue 31 – 90 days
Overdue 91 – 180 days
Overdue > 180 days
Total

Gross carrying
amount
131.6
8.1
4.0
1.7
2.1
147.5

Loss allowance
3.0
0.3
0.3
0.4
1.6
5.6

Weighted averageloss rate
2.3%
3.7%
7.5%
23.5%
76.2%
3.8%

Credit impaired
0.0
0.0
0.2
0.1
0.2
0.5

Gross carrying
amount
142.2
12.8
6.3
2.5
2.6
166.4

Loss allowance
2.8
0.1
0.2
0.4
1.8
5.3

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

Credit impaired
0.2
0.1
0.1
0.1
0.2
0.7

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

132 FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTS

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

CHF mJanuary 1
Additions
ReleaseUse
Translation differences
As at December 31

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

2020

2019

– 6.0
– 1.3
0.3
0.6
0.3
– 6.1

– 6.5
– 1.2
1.2
0.4
0.1
– 6.0

FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTS 133

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

2020
1.45
0.21
0.39
2.05

2019
1.38
0.21
0.47
2.06

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; short-term variable re­muneration under theManagement Investment Plan (MIP) for the reporting
year; and the future subscription rights, awarded pro
rata for the reporting year and weighted in accordancewith target achievement in the reporting year in theform of performance share units for the long-term in­centive plans 2018 – 2020, 2019 – 2021 and 2020 –2022 (see note 19 ‘Employee participation plan’).

25 Events after the balance sheet date
Between the balance sheet date and the date of pub­lication of this annual report no event occurred that
could have a significant effect on the 2020 annual fi­
nancial statements.

Board of Directors
2020
1.01
0.19
2.60
3.80

2019
1.03
0.18
2.60
3.81

Total
2020
2.46
0.40
2.99
5.85

2019
2.41
0.39
3.07
5.87

The remuneration paid to the Board of Directors in­cludes a gross base remuneration in cash, employer
contributions to the usual social insurances, lump sum
and on-site expenses, and private use of the company
car (only for the Executive Chairman).
The share-based remuneration paid to the Board of
Directors includes a gross base remuneration in shares,
consisting on the one hand of a 40% portion of the
remuneration in shares for the non-executive Board
members and, on the other hand, of the share-based
portion of the remuneration for the Executive Chair­man.
As at December 31, 2020 and 2019, the Group had no
significant receivables due from or liabilities to relatedparties.

134 FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTS

Group companies(as at December 31, 2020)

Currency

Share capital

Wetherill Park, NSW
Wetherill Park, NSW

AUD
AUD

1,400,000
7,100,000

100%
100%

S

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

ViennaViennaEUR
EUR

73,000330,000

100%
100%

S

Belgium
Forbo Flooring N.V.

Groot-Bijgaarden

EUR

250,000

100%

S

BrazilForbo Pisos Ltda.
Forbo Siegling Brasil Ltda.

São PauloSão Paulo

BRL
BRL

16,564,200
7,008,746

100%
50%

S

CanadaForbo Flooring Canada Corp.
Forbo Siegling Canada Corp.

Halifax
Halifax

CAD
CAD

500,200
501,000

100%
100%

S

Chile
Forbo Siegling Chile S.A.

Santiago

CLP

313,090,945

50%

S

Colombia
Forbo Siegling Colombia S.A.S.

Bogotá, D.C.

COP

1,500,000,000

100%

S

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

Liberec
PragueCZK
CZK100,000
500,000

100%
100%

Denmark
Forbo Flooring A/SForbo Siegling Danmark A/S

Glostrup
Brøndby

DKK
DKK

500,000
33,000,000

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
6,415,500
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, 2020
D Direct participation of Forbo Holding Ltd

N

N

D

Flooring
Systems

Move­
ment
Systems

Equityinterest

Holding/Services

S

S

MS

S

S
S

MS

H
MS
S
S

FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTS 135

Currency

Share capital

EUR
EUR
EUR
EUR
EUR

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

100%
100%
100%
100%
100%

Derbyshire
Kirkcaldy
Derbyshire
Dukinfield
Derbyshire
Derbyshire

GBP
GBP
GBP
GBP
GBP
GBP

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

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

Hong Kong

HKD

1

100%

Delhi
Pune

INR
INR

15,000,000
26,000,000

100%
100%

Indonesia
PT Forbo Siegling Indonesia

Kabupaten Bandung

IDR

6,344,580,000

100%

Ireland
Forbo Ireland Ltd.

DublinEUR125,000

100%

S

Segrate (Milan)
Paderno Dugnano(Milan)EUR
EUR

60,000120,000

100%
100%

S

Tema S.r.l.

Parma

EUR

50,000

100%

S

Japan
Forbo Siegling Japan Ltd.

Tokyo

JPY

330,000,000

100%

MS

Malaysia
Forbo Siegling SDN. BHD.

Johor Bahru

MYR

2,500,002

100%

S

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

Tlalnepantla

MXN

24,676,404

100%

MS

Group company

Registered office

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

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

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

S Sales
MS Manufacturing and Sales
H Holding/Services
N Not consolidated as at December 31, 2020
D Direct participation of Forbo Holding Ltd

D

D

Flooring
Systems

Move­
ment
Systems

Equityinterest

Holding/Services

H
MS
S
MS
S

MS
H
H
S
H
H

H

S
S

S

S

136 FORBO ANNUAL REPORT 2020 – 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
Forbo Siegling Norge AS

Asker
Oslo

NOK
NOK

1,000,000
100,000

100%
100%

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

PinghuShanghai
Shenyang

USD
CHF
USD

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

100%
100%
100%

PolandForbo Siegling Poland sp. z o.o.

Łódź

PLN

600,000

100%

Portugal
Forbo-Revestimentos, S.A.

Maia (Porto)

EUR

74,850100%

Romania
Forbo Siegling Romania S.R.L.

Bucharest

RON

38,000100%

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

Moscow
MoscowSaint Petersburg
Stary Oskol

RUB
RUB
RUB
RUB

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

100%
100%
100%
100%

Slovakia
Forbo Siegling s.r.o.

Malacky

EUR

1,000,000

100%

South Korea
Forbo Korea Ltd.

Seoul

KRW

900,000,000

100%Group company

Registered office

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

S Sales
MS Manufacturing and Sales
H Holding/Services
N Not consolidated as at December 31, 2020
D Direct participation of Forbo Holding Ltd

Flooring
Systems

MS
MS
MS

Move­
ment
Systems

Holding/Services

H
MS
S

S

S
S

MS
S
MS

S

S

S

S
MS
S
MS

MS

S

S

FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTS 137

Currency

Share capital

Equityinterest

Barcelona
Montcada i Reixac(Barcelona)

EUR
EUR

60,101
1,532,550

100%
100%

S

SwedenForbo Flooring AB
Forbo Siegling Svenska AB

GothenburgKållered (Gothenburg)

SEK
SEK

8,000,000
1,000,000

100%
100%

S

Switzerland
Forbo Management SA
Forbo-Giubiasco SA
Forbo International SA

BaarBellinzona
Baar

D

CHF
CHF
CHF

100,000
100,000
100,000

100%
100%
100%

Thailand
Forbo Siegling (Thailand) Co. Ltd.

Samut Prakan

D

THB

13,005,000100%

Istanbul

TRY17,500,000

100%

S

Ukraine
TOB ‘Forbo Flooring Ukraine’

Kiev

UAH

2,000,000

100%

S

United Arab Emirates
Forbo Flooring Middle East DMCC

Dubai

AED

499,000

100%

S

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

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

USD
USD
USD
USD

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

100%
100%
100%
100%

Group company

Registered office

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

TurkeyForbo Hareket ve Zemin Sistemleri Ticaret
Limited irketi

S Sales
MS Manufacturing and Sales
H Holding/Services
N Not consolidated as at December 31, 2020
D Direct participation of Forbo Holding Ltd

D

Flooring
Systems

Move­
ment
Systems

Holding/Services

S

S

H
MS
MS

H

S

S

H
H
S
MS

138 FORBO ANNUAL REPORT 2020 – 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 2020 and the consolidated income statement,
consolidated comprehensive income statement, consolidated statement of changes in equity and consolidated
cash flow statement for the year then ended, and notes to the consolidated financial statements, including asummary of significant accounting policies.
In our opinion the consolidated financial statements (pages 92 to 137) give a true and fair view of the consolidated
financial position of the Group as at 31 December 2020, 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 International Ethics Standards Board for Accountants’ International Code of Ethics forProfessional Accountants (including International Independence Standards) (IESBA Code), and we have fulfilled
our other ethical 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 2020 – CONSOLIDATED FINANCIAL STATEMENTS 139

Revenue recognition
Key Audit Matter

Our response

Total consolidated net sales of the financial year 2020 We mainly performed the following audit procedures:amounted to CHF 1,117.7 million (2019: CHF 1,282.2
million). The segment Flooring Systems contributed— We analyzed the process from the purchase order
CHF 757.0 million (2019: CHF 870.5 million) or 67.7%
to the receipt of payment and assessed whether(2019: 67.9%) to total net sales, while the segment
transactions are completely and accurately
recorded in the accounts.
Movement Systems realized CHF 360.7 million (2019:
CHF 411.7 million), representing 32.3% of total net
sales (2019: 32.1%).
— Considering the diverse design of internal control
and IT systems of individual subsidiaries, weNet sales are a key performance indicator for Forbotested the operating effectiveness of identified key
and therefore in the focus of internal and external
controls relating to the proper recognition ofrevenue.
stakeholders. Consequently, when performing theaudit we had a focus on existence of revenue— Based on a statistical sample of delivery notes
transactions and their recognition in the appropriate
and payments received, we assessed theperiod.
existence of revenues and their recognition in thecorrect period.
Revenue from contracts with customers is recognizedwhen the control of the goods or services istransferred to the customer. This point in timedepends on specific terms of contracts and may vary
between regions and the industry of the buyer. Owing
to the types of products sold by either segment of theGroup, the contractual sales arrangements are notcomplex. Due to the large number of transactions, theproper recognition of revenue nevertheless depends
on a functioning internal control system, adapted to
local circumstances. Furthermore, accurate data on
volumes and prices are central to revenue recognition.

—

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

For further information on revenue recognition refer to the following:—

Note 2 – Summary of significant accounting policies: net sales and revenue recognition, page 99—

Note 5 – Segment reporting, pages 107 – 1092140 FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTS

Report of the statutory auditor

Valuation of inventories
Key Audit Matter

Our response

Inventory as at 31 December 2020 amounted to
CHF 218.5 million (31 December 2019: CHF 235.5
million) and represents one of the most material asset
positions. Valuation allowance for inventories as at 31
December 2020 amounted to CHF -32.8 million(31 December 2019: CHF -29.9 million). Valuation of
inventories is consequently of significance to anunderstanding of the financial statements.

We mainly performed the following audit procedures:—

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.

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

—

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

—

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

—

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

Furthermore, determining valuation allowances
therefore involves a certain degree of judgment.

For further information on inventories refer to the following:—

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

Note 13 – Inventories, page 115

3

FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTS 141

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

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

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

4142 FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTS

Report of the statutory auditor—

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

—

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

We communicate with the Board of Directors or its relevant committee regarding, among other matters, theplanned scope and timing of the audit and significant audit findings, including any significant deficiencies ininternal control that we identify during our audit.
We also provide the Board of Directors or its relevant committee with a statement that we have complied with
relevant ethical requirements regarding independence, and communicate with them all relationships and othermatters that may reasonably be thought to bear on our independence, and where applicable, actions taken toeliminate threats or safeguards applied.
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.

5

FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTS 143

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, 3 March 2021

KPMG AG, Räffelstrasse 28, PO Box, CH-8036 Zurich© 2021 KPMG AG, a Swiss corporation, is a subsidiary of KPMG Holding AG, which is a member firm of the KPMG global organization of independent member
firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

6

144 FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTS

Consolidated balance sheets
2016 – 2020
AssetsCHF mCurrent assets
Cash and cash equivalents
Current financial assets
Trade receivables
Other receivables
Accrued income and deferred expenses
Inventories
Non-current assets
Non-current financial assets
Deferred tax assets
Property, plant, and equipment
Intangible assets and goodwill
Total assets

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

31.12.2020

31.12.2019

31.12.2018

31.12.201731.12.2016

668.7
255.8
0.1
141.4
39.7
13.2
218.5
442.1
0.2
45.4
295.7
100.8
1,110.8

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

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

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

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

31.12.2020

31.12.2019

31.12.2018

31.12.201731.12.2016

251.5
14.1
94.4
30.4
16.6
96.0
175.8
31.1
8.9
46.5
89.3
427.3
683.5
0.2
– 0.1
683.4
1,110.8

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

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

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

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

FORBO ANNUAL REPORT 2020 – CONSOLIDATED FINANCIAL STATEMENTS 145

Consolidated income statements
2016 – 2020
1.1. – 31.12.
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

2020

2019

2018

2017

2016

1,117.7– 707.5
410.2– 15.2– 171.3– 86.4– 15.2
14.9
137.0
0.7
– 1.6
136.1
– 29.9
106.2
0.0
106.2

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

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

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

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

146

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

147
148
149
150
155
156

148 FORBO ANNUAL REPORT 2020 – 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
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

31.12.2020

31.12.2019

43,320,189
21,103,730
21,914,140
302,319395,379,970
106,022,466
289,357,504
438,700,159

35,302,652
24,028,419
11,274,233
423,918,675
106,208,299
317,710,376
459,221,327

31.12.2020

31.12.2019

6

660,922
158,632
121,707
380,583
438,039,237
165,000

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

8

15,600,000
15,302
4,114,262

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

434,644,705
50,422,233– 66,922,265
438,700,159

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

Note

2

3
4

Note

2

8

FORBO ANNUAL REPORT 2020 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY 149

Income statement for Forbo Holding Ltd

1.1. – 31.12.
IncomeCHF
Financial income:From investments in and loans to Group companies
From securities and current investments
Total income

2020

2019

55,392,500
224,169
55,616,669

31,122,672
31,122,672

2020

2019

11

4,984,068

4,554,734

12
5

231,091– 20,723
5,194,436
50,422,233

303,255– 1,535
4,856,454
26,266,218

Note

9
10

1.1. – 31.12.
Expenses
CHF
Administrative expenses
Financial expenses:
From investments in and loans from Group companies
Taxes
Total expenses
Net profit for the year

Note150 FORBO ANNUAL REPORT 2020 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY

Notes to the financial statements
for Forbo Holding Ltd
1 Accounting

3 Loans to Group companies

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

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

2 Other receivables from andliabilities to Group companies‘Other receivables from Group companies’ comprised
the credit balances on the cash pool accounts. ’Otherliabilities to Group companies’ comprised the current
account liability to Forbo International SA in the report­
ing year and claims on the cash pool accounts the pre­vious year.

The item contained loans at an unchanged level of
EUR 97.8 million.

4 Investments in Group companies‘Investments in Group companies’ are measured at thecost of acquisition less necessary valuation allowances.
Investments in Group companies declined in the year
under review since, for one thing, the subsidiary ofForbo International SA was sold within the Group atbook value to Forbo Management SA (formerly Forbo
Financial Services AG) and, for another, Forbo Finanz
AG was liquidated following the merger with Forbo
Management SA.
As at December 31, 2020, Forbo Holding Ltd held thefollowing direct investments:

Investments in Group companies
Company

Registered office

Activity

Forbo America Inc.
Forbo Beteiligungen GmbH
Forbo Management SA
Forbo Participations S.A.S.
Forbo Siegling, S.A. de C.V.
Forbo Siegling (Thailand) Co. Ltd.

US-Wilmington, DE
DE-Lörrach
CH-Baar
FR-Reims
MX-Tlalnepantla
TH-Samut Prakan

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

Currency

Share capital(in 1,000)

Equityinterest

USD
EUR
CHF
EUR
MXN
THB

19,957
15,400100
5,000
24,676
13,005

100%
100%
100%
100%
< 0.1%
69.1%

FORBO ANNUAL REPORT 2020 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY 151

5 Taxes

7 Conditional capital

As in the previous year, Forbo Holding Ltd was able toclaim the entire participation deduction on dividend
income.

Originally, conditional capital of CHF 8.5 million for the
exercise of shareholder options and warrants in con­nection with a bond issue was created by a resolutionof the Annual General Meeting held on April 27, 1994.
Following the exercise of options in 1994, 1995 and1997 and reductions in the par value by CHF 22 pershare in 2003, CHF 8 per share in 2004, CHF 6 per sharein 2007, CHF 10 per share in 2008, and CHF 3.90 per
share in 2009, the conditional capital on December 31,
2020, remained unchanged against the previous year
at CHF 16,645.

6 Share capital
As at December 31, 2020, the share capital of Forbo
Holding Ltd totaled CHF 165,000 (2019: CHF 165,000),
divided into 1,650,000 registered shares with a par val­ue of CHF 0.10 each. 21,419 registered shares without
voting or dividend rights are at the disposal of theBoard of Directors.

8 Treasury shares
The treasury shares directly held in Forbo Holding Ltd
amounting to CHF 66.9 million on the balance sheet
date correspond to the value of all treasury shares val­ued at cost. The item ‘Reserve for treasury shares’ reflects
the treasury shares held by subsidiaries of Forbo Hold­
ing Ltd, amounting to CHF 4.1 million. Overall, the trea­sury shares held directly and indirectly developed asfollows over the period under review:

Treasury shares
As at January 1, 2020
Additions
Disposals
As at December 31, 2020

Cost
CHF
39,614,023
34,403,192– 2,978,545
71,038,670

Number ofregistered shares
48,685
24,158– 2,078
70,765

152 FORBO ANNUAL REPORT 2020 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY

9 Financial income from investments
in and loans to Group companies

12 Financial expenses from investments
in and loans from Group companies

Financial income from investments and loans to Group
companies amounting to CHF 55.4 million (2019: CHF
31.1 million) consisted mainly of dividend income inboth periods.

The financial expense from investments in and loans
from Group companies contained in the main losses
on foreign currencies amounting to CHF 0.2 million(2019: CHF 0.3 million).

10 Financial income from securities
and current investments

13 Contingent liabilities

The financial income from securities and non-current
investments consisted of the book profit resulting
from the allocation of treasury shares for share-based
compensation.

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

Guarantees and letters of support to third parties in fa­
vor of Group companies amounted to CHF 6.7 million
at year-end 2020 (2019: CHF 6.8 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 of Di­
rectors, the following shareholders or groups of share­
holders with restricted voting rights constituted signi­
ficant shareholders in the company pursuant to Article
663c Swiss Code of Obligations as at the reportingdate:

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

Number of shares
486,856

As percentage
29.51

FORBO ANNUAL REPORT 2020 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY 153

Shareholdings
IN 2020
As at December 31, 2020, 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 2020
Name and function

Amountof shares

This E. Schneider, Executive Chairman
Michael Pieper, Vice Chairman
Dr. Peter Altorfer, Vice Chairman and Lead Independent Director
Claudia Coninx-Kaczynski, member
Dr. Reto Müller, member
Vincent Studer, member
Total Board of Directors
Stephan Bauer, Chief Executive Officer
Marc Deimling, Executive Vice President Movement Systems
Urs Uehlinger, Chief Financial Officer
Jean-Michel Wins, Executive Vice President Flooring Systems
Total Executive Board

42,352486,856
1,406
357
714
1,019
532,704
2,345
54
253
275
2,927

IN 2019
As at December 31, 2019, the individual members of
the Board of Directors and the Executive Board (includ­ing related parties) held the following number of sharesin Forbo Holding Ltd:
Shareholdings 2019
Name and function

Amountof shares

This E. Schneider, Executive Chairman
Michael Pieper, Vice Chairman
Dr. Peter Altorfer, Vice Chairman
Claudia Coninx-Kaczynski, member
Dr. Reto Müller, member
Vincent Studer, member
Total Board of Directors
Stephan Bauer, Chief Executive Officer
Marc Deimling, Executive Vice President Movement Systems
Urs Uehlinger, Chief Financial Officer
Jean-Michel Wins, Executive Vice President Flooring Systems
Total Executive Board

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

154 FORBO ANNUAL REPORT 2020 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY

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 2020 annual fi­
nancial statements.

FORBO ANNUAL REPORT 2020 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY 155

Proposal for appropriation of available
earnings of Forbo Holding Ltd
The Board of Directors proposes to the Ordinary Gen­
eral Meeting that the available retained earnings, con­sisting of:2020
CHF
Net profit
Retained earnings
Treasury shares
Total at the shareholders’ meeting’s disposal1)

50,422,233
434,644,705– 66,922,265
418,144,673

be appropriated as follows:
2020
CHF
Distribution ordinary dividend
To be carried forward
Total at the shareholders’ meeting’s disposal1)

1) At the Ordinary General Meeting of April 1, 2021, the Board of Di­
rectors will propose an ordinary gross dividend of CHF 20.00 per
registered share (2019: CHF 23.00). No distribution will be made fortreasury shares held by Forbo Holding Ltd or any of its subsidiaries
on the record date, which explains why the amount of ordinary
dividends may therefore still change.

31,584,700
386,559,973
418,144,673

156 FORBO ANNUAL REPORT 2020 – 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 2020, and the income statement for the year then ended, and notes to the financial statements,
including a summary of significant accounting policies.
In our opinion the financial statements (pages 148 to 154) for the year ended 31 December 2020 comply with
Swiss law and the company’s articles of incorporation.
Basis for Opinion
We conducted our audit in accordance with Swiss law and Swiss Auditing Standards. Our responsibilities underthose provisions and standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Statements section of our report. We are independent of the entity in accordance with the provisions of Swiss law
and the requirements of the Swiss audit profession and we have fulfilled our other ethical responsibilities inaccordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Report on Key Audit Matters based on the circular 1/2015 of the Federal Audit Oversight Authority
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of
the financial statements of the current period. We have determined that there are no key audit matters tocommunicate in our report.
Responsibility of the Board of Directors for the Financial Statements
The Board of Directors is responsible for the preparation of the financial statements in accordance with theprovisions of Swiss law and the company’s articles of incorporation, and for such internal control as the Board of
Directors determines is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the Board of Directors is responsible for assessing the entity’s ability tocontinue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the Board of Directors either intends to liquidate the entity or to cease
operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are freefrom material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes ouropinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted inaccordance with Swiss law and Swiss Auditing Standards will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of thesefinancial statements.
As part of an audit in accordance with Swiss law and Swiss Auditing Standards, we exercise professional
judgment and maintain professional skepticism throughout the audit. We also:

FORBO ANNUAL REPORT 2020 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY 157—

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient 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 orconditions that may cast significant doubt on the entity’s ability to continue as a going concern. If weconclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to therelated disclosures in 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 or conditions may cause the entity to cease to continue as a going concern.

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

158 FORBO ANNUAL REPORT 2020 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY

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 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, 3 March 2021

KPMG AG, Räffelstrasse 28, PO Box, CH-8036 Zurich© 2021 KPMG AG, a Swiss corporation, is a subsidiary of KPMG Holding AG, which is a member firm of the KPMG global organization of independent member firms
affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

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