ANNUAL REPORT 2016

CONNECT.
ESTHETICS
PROGRESSFORBO – IN EVERYDAY LIFE

ESTHETICS.

Exceptionally good flooring is something you feel not only inyour feet. It has to be robust and functional but also createa spatial feeling for all senses. Our floor coverings provide anap­propriate and prestigious atmosphere that caters to indi­vidual needs. Fundamentally resilient and esthetically pleasing,
they breathe new life into rooms; with their high quality they
put cost-effectiveness at your feet.

PROGRESS.

The pace of life is speeding up, and the world is increa­s­
ingly in motion – packages in transport, people on thego, or goods on conveyor belts. Passing almost unnoticed
but in the background everywhere, conveyor systems
make things run smoothly, and our solutions ensure opti­
mized processes. Our incentive, day in day out, is to­develop even better products and generate even greater
value – making us the ideal partner for industries that
seek to innovate and look to the future.

4This E. Schneider

Stephan Bauer

Executive Chairman

CEO‘Forbo completed a gratifying and solid perform­
ance in 2016 amid mixed market conditions.
We selectively broadened our portfolio with innova­
tive products, considerably increased our ­capacity,and selectively expanded our distribution and­service structures. These developments, in combi­
nation with continuous optimization along the­value chain, are reflected in both increased salesand ­double-digit earnings growth.’

FORBO ANNUAL REPORT 2016 – LETTER TO SHAREHOLDERS5

TO OURSHAREHOLDERS
Dear Madam, dear Sir,
Forbo performed well in 2016 amid challenging and mixed market conditions, posting solid and gratifying
results in both sales and earnings. Both divisions were instrumental in this success. The result was driven
by our investments in developing innovative and high-quality products, selectively expanding our distribution
structures in specific customer segments and growth markets, enlarging our capacity, and upgrading our
production facilities. These are the factors that will underpin our future success.
We gained market share in important market segments despite challenging conditions by systematically
implementing our strategy and generating added value with our products and services for existing andnew customers. Continuous optimization of global processes along the entire value chain are once again
reflected in the positive operating result.
When the results in local currencies were translated into the corporate currency, the foreign exchange situation
produced a slightly positive currency effect compared with the previous year.

Sales up from previous year
Solid sales growth in both divisions
In the year under review, Forbo generated net sales of CHF 1,185.5 million (previous year: CHF 1,139.1 million),a gain of 4.1%; due to positive currency effects, this equates to a sales increase of 3.5% in local currencies.
Both divisions contributed to this solid growth.
Net sales at Flooring Systems rose by 3.4% to CHF 818.0 million (previous year: CHF 791.3 million), both, inthe corporate currency and in local currencies. Our attractive product range of new and innovative collections,especially for customers in the private sector, also had an impact and is successful. We backed this up by
selectively expanding our distribution structures.
Movement Systems reported net sales of CHF 367.5 million (previous year: CHF 347.8 million), a gratifying
increase of 5.7%, or 3.7% in local currencies. The factors driving the repeated increase were high-quality,
application-specific product innovations, generating added value for our customers across a wide range ofindustries, and the further expansion of our sales and service structures, especially in growth markets.

6

FORBO ANNUAL REPORT 2016 – LETTER TO SHAREHOLDERS

Strong operating profit
Profitability continues to growThe increased investments we have made in recent years to optimize the global value chain, boost efficiency,
and grow capacity, plus a greater focus on selling high-quality and high-margin products enabled us to increase
profitability once again.
Double-digit growth in operating profit
Both divisions reported a rise in operating profit before depreciation and amortization (EBITDA), which
increased significantly by 10.4% to CHF 192.9 million (previous year: CHF 174.8 million). The Group’s operating
profit (EBIT) rose by 10.1% to CHF 157.2 million (previous year: CHF 142.8 million).
Further increase in operating margins
The EBITDA margin rose significantly from 15.3% to 16.3%. The EBIT margin was up from 12.5% to 13.3%.

Double-digit growth in Group profit
Above-average profit growth
Owing to the significant improvement in operating profit and the slightly better financial result of CHF 1.9
million (previous year: CHF 1.6 million), Forbo lifted Group profit from continuing operations by a gratifying
10.3% to CHF 127.6 million (previous year: CHF 115.7 million).

Balance sheet remains in great shape
High net liquidity
In the year under review, net liquidity increased by CHF 93.9 million to CHF 209.2 million (previous year:
CHF 115.3 million) despite the continuing high level of investments. The increase was due to the rise inoperating profit and the optimization of net operating working capital. In addition, as at December 31, 2016,
Forbo held 90,156 of its own shares on the first trading line, valued at year-end at CHF 118.4 million (previous year: CHF 108.2 million). The 190,000 shares repurchased as part of the last share buyback program
were canceled in July 2016.
The equity ratio rose from 61.3% the previous year to 62.8% in the year under review.
Earnings per share rose sharply year-on-year owing to the significant rise in the results and the share buybacks
effected in the course of 2015. Earnings per share from continuing operations (undiluted) thus rose by 20.1% to
CHF 74.66 (previous year: CHF 62.14).

7

Solid basis for sustainable growth
Our strong global presence, our solid balance sheet and our systematic implementation of the strategy enable
us to forge ahead with expansion in growth markets and take advantage of any external growth opportunities
that arise. However, we will make acquisitions only if we can thereby create added value for our shareholders.

Proposals to the Ordinary General Meeting
Re-elections to the Board of Directors
All the current members of the Board of Directors will stand for re-election for a further one-year term of office.
Increase in the dividend
In view of the solid balance sheet and higher earnings per share, the Board of Directors will propose to theOrdinary General Meeting that the dividend for the 2016 business year should be increased from CHF 17
to CHF 19 per share. For the last time, CHF 8.30 of this dividend will be paid out to shareholders in the form ofa tax-exempt distribution from capital contribution reserves, while the remaining portion, CHF 10.70, will be
paid out as a normal dividend.
Share buyback program
Owing to the successful business year and our company’s substantial liquidity, the Board of Directors willpropose the repurchase, over a period of three years, of further treasury shares up to a maximum of 10 percentof the share capital on a second trading line on the SIX Swiss Exchange or by another means in order toreduce capital.

In good shape for 2017
Cautiously positive outlook for 2017
For the 2017 business year we expect market conditions to be similar to 2016, though they are difficult topredict. We still face significant challenges, especially as we are present on a range of different global markets.
Economic and political circumstances can change quickly. We will stick to our tried and proven strategy,
convince with our strong brand as well as our high-quality products and services, and further expand our
global presence.
Against this background, and barring any upsets on the foreign exchange markets as well as assuming similar
economic circumstances, we anticipate a slight increase in net sales and Group profit from continuing
operations for 2017.

8

FORBO ANNUAL REPORT 2016 – LETTER TO SHAREHOLDERS

Thank youThanks to employees, business partners, and shareholders
The overall successful business year 2016 was due in large measure to close cooperation at all levels, thecommitted and professional attitude of our employees, and their flexibility in challenging times. Many thanks
for this.
We also wish to thank our customers, business partners, and suppliers for their professionalism and theconfidence they have placed in our company.
On behalf of the Board of Directors and the Executive Board, we especially thank you too, dear shareholders,for the ongoing trust and loyalty you show to Forbo.

Baar, March 2017

This E. Schneider
Executive Chairman

Stephan Bauer
CEO

Financial calendar
Ordinary General Meeting:
Publication of 2017 Half-Year Report:
Publication of 2017 Annual Report:

April 6, 2017
July 28, 2017
March 6, 2018

9

CONTENTS
At a glance

11

Forbo in figures
A solid year
Sustainable engagement

14
18
24

Activity report

29

Two divisions with leading market positions
Flooring Systems: 
An attractive and impressive product portfolio
Movement Systems:
Success driven by innovation and reliability

31
34
40

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

46
49
50

The Forbo share

53

Corporate governance report

57

Remuneration report

75

Forbo Group financial report

93

Consolidated balance sheet
94
Consolidated income statement
95
Consolidated comprehensive income statement
96
Consolidated statement of changes in equity
97
Consolidated cash flow statement
98
Notes – accounting principles
99
Notes109
Group companies
140
Report of the statutory auditor
144
Consolidated income statements 2012 – 2016
150
Consolidated balance sheets 2012 – 2016
151

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

153
154
155
156
161
162

10

11

AT A GLANCE
Forbo in figures
A solid year
Sustainable engagement

14
18
24

12

2016 AT A GLANCE

13

FORBO IS A LEADINGPRODUCER OF
FLOOR COVERINGS,BUILDING AND­CONSTRUCTIONADHESIVES, AS WELL
AS POWER TRANSMISSION AND
CONVEYOR BELT­S OLUTIONS.
The company employs more than 5,300 people
and has an international network of 24 production
and distribution ­companies, 6 assembly operations and 45 pure sales organizations in a total of
36 countries. Forbo is headquartered in Baar in
the canton of Zug, Switzerland.

14

FORBO ANNUAL REPORT 2016 – AT A GLANCEFORBO IN FIGURES
Forbo is a global player, and its two div­i­
sions supply a wide range of industries.
The Group’s global reach means that
it is close to dynamic markets, making
Forbo the first choice as a local partner
for customers that have similar global
requirements. The quality, longevity, andperfor­mance of our products and sys­
tems reflect the quality and stability of
our relations with our business partners.

Flooring Systems
15 production facilities in 6 countries and distribution
companies in 25 countries. Sales offices in Europe,
North, Central, and South America as well as Asia/
Pacific.
Floor coverings
Building and construction adhesives
Movement Systems
9 production sites and 6 assembly operations in 9
countries and distribution companies in 29 countries.
300 sales and service offices worldwide.
 Production facilities andassembly operations

15

Net sales 	 CHF 1,185.5 million
EBIT 		 CHF 157.2 million
EBIT margin 	
13.3%
Group profit	 CHF 127.6 million
from continuing operations

Earnings per share	
undiluted

CHF 74.66

16

FORBO ANNUAL REPORT 2016 – AT A GLANCE

Net sales by division
Change on previous year
CHF m 2016
818.0
367.5
1,185.5

Flooring Systems
Movement Systems
Total

in %
3.4
5.7
4.1

in localcurrencies in %
3.4
3.7
3.5

In % of total
69.0
31.0
100.0

31.0%

Movement Systems

69.0%
Flooring Systems

Employees by division

Number 2016
3,110
2,194
42
5,346

Flooring Systems
Movement Systems
Corporate Functions
Total

41.0%
58.2%

Movement Systems

Flooring Systems

0.8%

Corporate Functions

Change onprevious year in %
3.5
0.9
0
2.4

In % of total
58.2
41.0
0.8
100.0

FORBO ANNUAL REPORT 2016 – AT A GLANCE

17

Financial overview Forbo Group
2016

2015

2016

2015

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

CHF m
1,185.5
818.0
367.5
192.9
157.2
127.6
127.6

CHF m
1,139.1
791.3
347.8
174.8
142.8
115.7
115.7

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

EUR m1)
1,066.2
740.6
325.5
163.6
133.7
108.3
108.3

Balance sheet
Total assets
Operating assets
Shareholders’ equity
Net cash

CHF m
989.3
738.9
621.4
209.2

CHF m
912.1
756.1
559.2
115.3

EUR m1)
907.5
677.8
570.0
191.9

EUR m1)
853.7
707.7
523.4
107.9

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

CHF m
166.5
– 40.3
126.2

CHF m
140.9
11.4
152.3

EUR m1)152.7– 37.0115.8

EUR m1)
131.9
10.7
142.6

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

%
16.3
62.8
– 33.7%
15.3
61.3– 20.6

Number5,346

Number5,222

Ratios per share
Earnings per share (undiluted)2), from continuing operations
Equity (undiluted)
Dividend

CHF
74.66
363.6
19.03)

CHF
62.14
300.4
17.04)

EUR1)
68.49
333.5
17.43)

EUR1)
58.16
281.2
15.9 4)

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

CHF m2,363.4

CHF m
2,352.2

EUR m1)
2,168.1

EUR m1)2,201.6

Employees (as at December 31)
Total employees

1) Euro values translated at the average annual exchange rate of
CHF 1.0901/1 EUR (2016) and CHF 1.0684/1 EUR (2015).

4) Approval of a dividend of CHF 17 per registered share at theOrdinary General Meeting of April 29, 2016.

2) See note 13 ‘Earnings per share’ on page 116 of the financial­report.

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

3) The Board of Directors proposes to the Ordinary General Meetingof April 6, 2017, the distribution of a dividend in the amount of
CHF 19 per registered share.

18

FORBO ANNUAL REPORT 2016 – AT A GLANCEA SOLID YEAR
Forbo performed well in 2016 amid
challenging and mixed market condi­
tions, posting solid results in both sales
and earnings. Both divisions contribu­
ted to this success.

Solid sales growth in both divisions
In the year under review, Forbo reported net sales of
CHF 1,185.5 million (previous year: CHF 1,139.1 million),a gain of 4.1%; due to positive currency effects, thisequates to a sales increase of 3.5% in local currencies.
Both divisions contributed to this solid growth.

The Group selectively broadened its
portfolio with innovative products,
considerably increased its capacity, andselectively expanded its distribution
and service structures. These develop­
ments, in combination with continuous
optimization along the value chain, arereflected in both increased sales anddouble-digit earnings growth.

The Flooring Systems division generated net sales of
CHF 818.0 million in 2016 (previous year: CHF 791.3 mil­lion). This comes to an increase of 3.4% in both the­corporate currency and local currencies. The upturn on
major core markets in the USA and France, along withsigns of a recovery in the Netherlands, were key factors
in this vigorous trend. The attractive product range of
new and innovative collections, especially for custom­ers in the private sector, also had an impact.

Our strong global presence, our robust
balance sheet, and our attractive offer­ing of products and services form astrong basis for further growth.

The Movement Systems division generated net salesof CHF 367.5 million in the year under review (previous
year: CHF 347.8 million), which was equivalent to a
gratifying increase of 5.7%, or 3.7% in local currencies.
Almost all markets contributed to another year of
good sales performance with a variety of growth stim­
uli. Further drivers of this success were application-­
specific product innovations, which provided added
value for our customers in a wide range of industries,
plus the ongoing expansion of the sales and service
structures.

19

Net sales by geographic area
Change on previous year

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

%
21.2
15.0
12.3
11.8
9.8
9.2
8.7
5.4
4.6
2.0
100.0

in %
4.8
7.9
5.2
4.3
7.6
– 11.7
3.0
14.0
14.8
– 11.1
4.1

in local currencies in %
3.5
5.5
3.2
2.2
5.4
– 3.7
2.0
11.6
17.5
– 11.1
3.5

2016
CHF m
251.0
178.0
146.3
139.7
116.6
108.6
103.4
63.7
55.0
23.2
1,185.525

Strong operating profit
We again succeeded in increasing profitability throughhigher investments in recent years. The factors under­
lying the uptrend were sales growth that was driven
by an attractive product portfolio with high-quality,
high-margin products, the expansion of the sales andservice structures, targeted capacity expansion, optimi­
zation along the global v­ alue chain, and further pro­ductivity gains in both divisions.
The Group reported significantly higher operating
profit before depreciation and amortization (EBITDA),
up 10.4% to CHF 192.9 million (previous year: CHF
174.8 million). EBITDA at Flooring Systems rose 12.0%
to CHF 149.1 million (previous year: CHF 133.1 million)
owing to higher sales, optimization along the global
value chain, and the positive effects of raw material
price developments. At Movement Systems, EBITDA
was up 6.3% to CHF 54.4 million (previous year: CHF
51.2 million) on the back of systematic improvements
in global processes and despite additional capacity ex­
pansion in China.

50

75

100

125

150

175

200

225

250

275

The Group increased its EBITDA margin by 1.0 percent­age points to 16.3% (previous year: 15.3%); Flooring
Systems was up by 1.4 percentage points to 18.2%(previous year: 16.8%) and Movement Systems by 0.1
percentage points to 14.8% (previous year: 14.7%).

20

FORBO ANNUAL REPORT 2016 – AT A GLANCEEBITDA by division

Flooring Systems
Movement Systems
Corporate

2016
CHF m
149.1
54.4
– 10.6

Change onpre­vious year in % – 25
12.0
6.3
– 11.6

Group operating profit (EBIT) increased by 10.1% to
CHF 157.2 million (previous year: CHF 142.8 million).
The EBIT margin at Group level rose by 0.8 percentage
points to 13.3% (previous year: 12.5%).
Owing to the significant improvement in operating
profit and the slightly better financial result, Forbo lift­
ed Group profit from continuing operations by a grati­
fying 10.3% to CHF 127.6 million (previous year: CHF
115.7 million).

0

25

50

75

Taxes and financial income
The tax rate in the year under review was 19.8%, slight­
ly below the previous year’s rate of 19.9%.
Financial expenses came to CHF 0.1 million (previous
year: CHF 0.4 million), while financial income was un­changed from the previous year at CHF 2.0 million. On
balance, the financial result worked out at CHF 1.9 mil­lion (previous year: CHF 1.6 million). The increase wasdue to foreign currency effects.

100

125

150

21

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

2016
CHF m
166.5
– 40.3
126.2

Good cash flow performance
In the year under review, cash flow from operating ac­
tivities rose by CHF 25.6 million to CHF 166.5 million(previous year: CHF 140.9 million), mainly driven byhigher net income and the improvement in working
capital efficiency. Cash flow from investing activities
came to CHF – 40.3 million in the year under review(previous year: CHF + 11.4 million). The figure for theprevious year included income from the sale of current
financial assets. Free cash flow thus amounted to CHF
126.2 million (previous year: CHF 152.3 million).

2015
CHF m
140.9
11.4
152.3

– 50

0

50

100

150

200

Balance sheet remains in great shape
Total assets as at December 31, 2016, stood at CHF
989.3 million, which was CHF 77.2 million higher thanin the previous year (CHF 912.1 million). Net liquidity
increased by CHF 93.9 million to CHF 209.2 million (pre­vious year: CHF 115.3 million) owing to the good cash
flow performance. Equity as at December 31, 2016,
stood at CHF 621.4 million, which was CHF 62.2 million
higher than in the previous year (CHF 559.2 million).
The equity ratio increased from 61.3% to 62.8%.

22

FORBO ANNUAL REPORT 2016 – AT A GLANCE

Investment volume remains at a high level
In addition to increasing efficiency and steadily opti­
mizing processes, our focus is on factors that are
geared to promoting future growth. In the year underreview, we concentrated our resources in both divi­
sions on key activities and strategic projects in the are­as of product portfolio, technology, production capac­
ity, and market expansion. Total Group investment inproperty, plant, and equipment, and intangible assets
in 2016 was slightly above the previous year’s level:
CHF 40.0 million compared with CHF 39.5 million in theprevious year.

In the year under review, Flooring Systems invested
CHF 20.5 million (previous year: CHF 30.5 million). Thissum included in particular its share for the constructionof a factory for the manufacture of homogeneous vinyl
floor coverings in the Netherlands and the new digitalprinting facility for high-end Flotex designs in 3-D qual­
ity in France. The funds were also used for expansion of
the product offering with innovative new collections.
At Movement Systems, investment in property, plant,
and equipment came to CHF 16.5 million (previous
year: CHF 8.9 million), which was significantly higher
than in the previous year. The main reason for the in­crease was the start of construction of a new plant in
Pinghu, China, which will provide additional capacity
for Transilon conveyor belts. The funds were also used
for innovative additions to the product range, for spe­cific applications, for a number of additional service
tools, and for the maintenance of fabrication and pro­duction plants.

Investments 2012 – 2016

2016
2015
2014
2013
2012

Flooring
Systems
CHF m

Movement
Systems
CHF m

Corporate
CHF m

Total
CHF m

20
31
30
27
24

17
9
9
7
9

3
0
1
1
1

40
40
40
35
34

10

20

30

40

23

Headcount increased in specific areas
As at the end of 2016, headcount at Forbo Group was
5,346. This represents 124 employees more than at theend of the previous year. The individual percentagechanges in staff levels by and large reflect market de­velopments in the individual regions. The strong in­crease in the Benelux countries can be traced back inparticular to the construction of a new manufacturing
facility in Coevorden, Netherlands, which started pro­ducing high-quality homogeneous vinyl floor cover­ings at the end of 2016. The expansion of the sales anddistribution organizations, particularly in growth mar­kets, resulted in additional hiring in Asia/Pacific. In Ger­
many, following several years of restraint as regards
new hiring, headcount was increased selectively whenneeded. The increase in Southern Europe was due tothe takeover of an existing Movement Systems cus­
tomer in Italy, which is now an additional service point
for Forbo in northern Italy. In most other countries, wehave been more restrained with new hiring given thecurrent market situation, which is characterized byrather muted demand.

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

%
22.0
14.4
13.8
12.1
11.5
9.5
8.0
3.2
3.0
2.5
100.0

Change onpre­vious year in %
8.7
3.1
– 0.3
1.3
0.8
– 1.0
– 0.9
– 3.4
– 3.0
13.9
2.4

2016
1,175
769
739
648
616
507
430
172
159
131
5,346

200

400

600

800

1,000

1,200

24

FORBO ANNUAL REPORT 2016 – AT A GLANCESUSTAINABLE
ENGAGEMENT
A responsible attitude toward the man­agement of resources in all dimensions
is one of the fundamental values at­Forbo. We are committed to protecting
the environment and continuously in­vesting in a sustainable future. As amanufacturer and employer consciousof its responsibilities, Forbo sets very
high standards for health, safety, the­environment, and quality.
Social dimension
Forbo promotes a high-performance culture in order
to meet the high demands of our customers and busi­
ness partners as well as the requirements we impose
on ourselves. This is why we promote the necessarycap­abilities and competences at all organizational lev­
els, 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 ap­
plications, sales and marketing, finance, operations,project management, strategy implementation, andForbo’s values. Continuous intensive training in thearea of health and safety includes measures on the
topics of accident prevention, risk awareness, and oc­
cupational health and safety, as well as general on­
going 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. In the year under review, a third training
week, that builds on the previous course, was intro­
duced; it is devoted mainly to leadership topics thatinvolve implementation of the strategy at various or­
ganizational levels. This is combined with relevant tools
for communication challenges and cooperation in in­
ternational, cross-cultural teams.

25

Ecological dimension
Protection of the environment and the generation of
ecological added value are important factors in all of
Forbo’s development and investment decisions. Our
customers also demand efficient and sustainable prod­
ucts and services. Both divisions are meeting these­demands by offering purely natural products in theirproduct portfolio.

latest generation. They also contain up to 45% recycledmaterial in the substrate layer. Within the framework ofour ‘back to the floor’ program, we collect off-cuts ofour vinyl coverings as well as waste material from ourown production and put these back into the produc­tion of new coverings, for example for the substratelayer of carpet tiles and Flotex – the washable textile
flooring.

With linoleum, Flooring Systems offers a floor covering
made of 97% renewable raw materials of which 72%
are renewable within ten years. Linoleum is made fromthe natural raw materials linseed oil, natural resin, woodflour and limestone as well as jute and pigments. A nat­ural product through and through, which, in view of its
long service life and positive ecological balance, is re­garded as the most environmentally friendly resilient
floor covering available. At the end of its long service
life it can be composted, as it is 100% biodegradable.
In addition to this, linoleum is made from about 45%
recycled material, which lowers the consumption ofprimary raw materials accordingly.

Flotex is produced using only phthalate-free materials.

Vinyl floor coverings receive their elasticity, pliability
and flexibility from plasticizers. Flooring Systems is theleader in the use of phthalate-free plasticizers of the

In order to maximize environmental compatibility andat the same time increase the product advantages,
Movement Systems has patented a special coating

Flooring Systems gets 100% of the electricity used at its
production locations from renewable energy sources.
With the BioBelt, Movement Systems is the first everconveyor belt manufacturer to develop a biodegrad­able conveyor belt whose physical and dynamic prop­
erties are equal to standard belts. The same applies to
its performance and long service life. In BioBelt prod­ucts, oil-based raw materials and synthetic-technicalmaterials have been largely substituted by materials
made from renewable, plant-based raw materials.

26

FORBO ANNUAL REPORT 2016 – AT A GLANCESUSTAINABLE
ENGAGEMENT(AmpMiser) that significantly reduces the friction be­
tween the underside of the belt and the slider bed
compared with conventional conveyor belts. In 2015,
Movement Systems launched a new generation ofthese energy-saving conveyor belts that are even more
efficient. Conveyor belts coated with AmpMiser display
their advantages most clearly where goods are being
continuously conveyed and many belts are in use,for example at airports or in logistics and distribution
centers. For this type of application, energy savings of
up to 50% are achieved for the overall systems.
We have also made it our aim to continually make ourown activities more sustainable and efficient. We do
this by using less material and energy to realize equiva­
lent or even better solutions. Both divisions are working
constantly on the optimization of production processes
in terms of water and energy consumption, reductionof emissions, reuse of heat generated in the produc­tion process, and the reduction and efficient recyclingof 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 in­
novative 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 issueof sustainability plays an important role in the deci­sion-making process. This is why it is important for
Flooring Systems to differentiate itself from its competi­
tors with comprehensible and convincing arguments,
including in terms of sustainability.
With the new approach ‘Committed to the Health ofOne’ Flooring Systems wants, alongside a fully trans­parent product declaration, to highlight the sustaina­
bility features more clearly than it has done up to now
and place them in correlation to each individual. In cre­ating a healthy interior space, we concentrate on all
aspects of our installations that contribute positively tosafety, ­hygiene, and well-being. These include avoiding
asthma triggers and allergens, focusing on light-re­
flecting and acoustic properties, facilitating cleaning
and maintenance, and ensuring the overall quality of
the interior.

27

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 purposes ofheating and/or power generation. In order to reducewater consumption and avoid unnecessary waste,
Movement Systems is increasingly using closed water
circulation systems. Some of the waste water can beused in another production step in order to minimize
water requirements. The reduction and productive re­use of waste material is increasingly the focus of Kaizen
and sustainability initiatives. Cut-offs from the belts we
produce in certain countries are sold to other compa­
nies to be reused in their production. The locations inNorth America ­collect sanding dust in filters which isthen processed as material by external partners in theirproduction. Some of the waste from plastic modular
belts and p­ olyurethane cut-offs is recycled back into
our own production.

Economic dimension
As a listed company, Forbo also engages intensively
with the economic dimension of sustainability. 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.
In the year under review, we constantly maintained
our ­efforts in terms of a conscious attitude to what
we do by reinforcing awareness, particularly regarding
the contents of the code of conduct (by means ofan e-learning module) as well as competition law and­anti-corruption principles, and diligently implement­
ing the risk management process.

28

29

ACTIVITYREPORT
Two divisions with leading market positions

31

Flooring Systems:
An attractive and impressive product portfolio

34

Movement Systems:
Success driven by innovation and reliability

40

ESTHETICS.

PROGRESS.

FORBO ANNUAL REPORT 2016 – ACTIVITY REPORT31

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

Flooring Systems
The Flooring Systems division offers a broad and at­
tractive range of environmentally friendly natural lino­
leum, high-quality vinyl floors, entrance matting sys­
tems for cleaning and drying shoes, carpet tiles, needle
felt, and ­Flotex, the washable textile flooring. Thanks
to their ­excellent technical properties and attractive
designs, these flooring products are invariably the first
choice for public buildings, department stores, hos­pitals, and other healthcare facilities, schools, libraries,
commercial and office spaces, leisure centers, shops,
hotels, restaurants, and cafeterias as well as for applica­
tions in the residential market. With a market share ofover 65 percent, Forbo is the world leader in linoleum.
Flooring Systems also provides ready-made adhesives
for floor covering installations, parquet flooring, andceramic tiles as well as leveling compounds for theconstruction industry under the trade name Eurocol.

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

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

FLOORINGSYSTEMSESTHETICSUNDERLYINGADVANTAGES
Copied from nature, made for people – the bionichigh-tech Flotex floor covering withstands the mostextreme conditions. At 3,000 meters above sea level,
floor coverings have to be able to stand up to wear
and tear caused by snow, water, dirt and outdoor
shoes, and yet still create a warm and cozy atmos­
phere. That’s where Flotex comes into its own. It of­fers acoustic quality, it is safe to walk on even when
wet, binds dust from the air, and protects allergy­sufferers against microbes. As the world’s sole sup­plier, we equip rooms susceptible to high traffic loads
with this resilient and very low-maintenance floor­covering.

34

FORBO ANNUAL REPORT 2016 – ACTIVITY REPORTFLOORING SYSTEMS:AN ATTRACTIVE AND IMPRESSIVEPRODUCT PORTFOLIO‘In the year under review, we signifi­
cantly upgraded our product portfolioand strengthened our collections withattractive new products, particularly for
private sector customers. We expanded
sales resources where appropriate in or­
der to drive growth. The new produc­tion facility for high-quality homoge­
neous vinyl floorings came on stream
as planned at the end of 2016. The three
Matthias P. Huenerwadel
new collections from this plant will en­ Executive Vice President
rich our portfolio starting in 2017. We Flooring Systems
also invested in new technologies, ex­pansion, and efficiency-boosting meas­
sales growthures across a wide range of operational Solid
The upturn in the USA and France, which are major coreareas. Our focus on implementing our markets for us, along with signs of a recovery in thestrategy is reflected in an upturn in sales Netherlands, were the key factors in this vigorous trend.
and earnings. With our current product In the USA, investment in the education sector is pick­up, which accounts for a large part of the sales in
portfolio plus the initiatives to boost ing
that market.
growth, customer focus, and cost con­sciousness, we will reinforce our market In Europe, market conditions remain very mixed. In
position as a leading systems supplier Eastern Europe, especially in Russia, demand in the year
under review developed well, while Southern Europe
in the commercial segment.’
reported firmer demand and Northern Europe and the
The Flooring Systems division generated net sales of
CHF 818.0 million in 2016 (previous year: CHF 791.3
million). This comes to an increase of 3.4% in both thecorporate currency and local currencies. The divisionaccounted for 69.0% of Group sales. The positive sales
trend in the first half of the year slowed down some­what in the second half, while the market environ­ment, especially in Europe, remained mixed. Operating
profit (EBIT) rose by a satisfactory 11.7% to CHF 122.7
million (previous year: CHF 109.8 million) owing tohigher sales, optimization along the global value chain,and the positive effects of raw material price develop­
ments. The EBIT margin rose by 1.1 percentage points
to 15.0% (previous year: 13.9%).

DACH region lifted sales slightly overall. In the UK, de­mand remains muted owing to the economic environ­ment, especially in the public sector and the office seg­ment, specifically in the banking sector. In Switzerland,
we are adapting our business model to changes in mar­ket structures.
In the Asia/Pacific region, China, Japan, Southeast Asia,
and South Korea performed well on the back of major
installation projects in various customer segments.
Following difficult years during a cyclical downturn, thebuilding and construction adhesives activity posted agood recovery and reported firm sales growth on thewhole. New product developments provided addition­
al growth stimuli.

35

Attractive new collections areenriching the portfolio
The steady expansion of the range catering to private
sector customer segments continued in the year underreview with innovative new collections featuring new
formats, a broad spectrum of color and design options,
new effects and materials plus expanded functionali­
ties and floor-installing options.
In the area of linoleum, we expanded the varied range
by adding new formats, special effects and a host ofnew, fresh colors so that we can offer a wide range ofcolor combinations. We worked cocoa bean shells into
our new Marmoleum Cocoa collection to give the floor
covering a warm and natural feel. In the DACH region,
we launched an attractive printed linoleum last sum­mer that features a wide range of wood designs andstone effects. Our goal is to roll it out globally.
Following investments in the production of carpet tiles
with a focus on improved quality and productivity, we
created a new collection that is geared to office spaces
and hotels. For the office segment we assembled a
special range of selected carpet tiles, colors and de­signs with luxury vinyl tiles whose varying pile heights
are matched with each other. Coral entrance matting
systems are now available in tile format.
Owing to the buoyant demand experienced in recent
years, the range of luxury vinyl tiles was completely re­vamped in the year under review for a relaunch in early2017. The new collection is strong on a number ofcounts: it features numerous innovative designs, a great
variety of plank and tile formats and three installation
versions – adhesive, loose lay or click – all of them inuniform designs.
In the building and construction adhesives activity, we
launched two innovative products in the field of liquid
floors and refreshing and dirt-repellent sealants.
Higher sales for all strategic product groups
The luxury vinyl tiles again posted double-digit growthin the year under review in a highly competitive market,
and impressed discerning customers with a variety ofdesigns and applications for interiors. Demand for lino­
leum, which has been subdued in recent years, picked

up in the year under review. The material is widely usedin the healthcare and education sectors where invest­
ment in new builds and renovations depends strongly
on public spending budgets. Vinyl floor coverings forthe commercial sector, entrance matting systems, car­pet tiles and Flotex – our washable, high-tech textile
floor covering – also contributed to sales growth. The
demand for needle felt floor coverings was muted. As
expected and as in previous years, sales of vinyl floor
coverings for the residential sector declined in the year
under review in the wake of strategic portfolio adjust­ments.
Investments to support growth
In addition to all the changes and additions to the
product portfolio, we focused on expanding sales re­sources for private sector customer segments in orderto drive growth. In Southeast Asia, China, and Turkey,
we selectively strengthened sales structures, while in
the United Arab Emirates we set up a local company toserve as a base for expansion in the Middle East.
A digital printing facility that we installed in Châ­teau-Renault, France, in 2016 will enable us to produce
new Flotex designs in 3-D quality and in both roll andtile formats.
A new production plant came on stream in Coevorden,
Netherlands, in the year under review that manufac­
tures high-quality homogeneous vinyl floorings. This
will significantly increase the portfolio of resilient floor
coverings for 2017, a range that is geared to new appli­
cations in both the private and the public sector.
A solid foundation for profitable growth
For 2017 we anticipate mixed market conditions thatwill be challenging for all areas of our organization. Our
strategic initiatives will all be continued in 2017. We will
execute our strategy systematically, develop our attrac­
tive product portfolio with a focus on customers in all
target segments, and gear it perfectly to a wide range
of applications.
We are creating a solid foundation for profitable growthwith our growth initiatives, stronger market focus, andongoing cost consciousness.

36

FORBO ANNUAL REPORT 2016 – ACTIVITY REPORTDIVERSE COLLECTIONSFOR A STYLISH­AMBIENCE
Constantly making products and pro­
cesses more sustainable and environ­mentally friendly as well as having a
positive impact on the ambient air
quality – that is the priority in everychange and new development at
Flooring Systems. Forbo floor coverings
combine attractive and innovative de­sign with long service life and highproduct quality. During the year underreview, Forbo was again working on
new trends and extending its productrange in many different ways.
Extension of the product portfolio with­homogenous premium vinyl floor coverings
If somebody asks for homogenous vinyl, he usually
does not want to be convinced of some alternative
product. These floor coverings are suitable for a wide

SPHERA

range of applications in the public and private sectors.
Homogenous vinyl can be bent into the joint where
the floor meets the wall, thus creating a seamless skirt­
ing. These rounded joints are the perfect hygienic
solution, which offers a certain advantage, particularly
in hygiene-sensitive areas in the healthcare sector.
­After the development of a new production systemfor premium homogenous vinyl floor coverings, at thestart of 2017 Forbo is launching Sphera, an innovativecollection with 3 design lines, offering individuality fora wide range of needs. It is based on a fresh, bright
range of colors with warm, cool and neutral shades toprovide the optimum complement to interior finishes
such as wood and stone, as well as pastel shades andbright, accentuating colors for pulsating areas whereorientation aids or zone divisions are required.
Sphera is completely phthalate-free and offers highlight reflection values to maximize the natural light or
artificial lighting in a room. The SMART surface treat­ment is dirt-repellant and easy to clean, and thus guar­antees safe and hygienic floor coverings.

ALLURA

37

Diversely extended collection
We have also extended the existing product portfoliowith many new additions to collections which will belaunched globally in spring 2017. The trend over thelast few years toward modular floor coverings is contin­
uing. Compared with roll material, these are easierto transport, generally easier to handle in installation,
and are individually replaceable in the event of dam­age. The Allura collection of luxury vinyl tiles – the fast­
est-growing product group for several years now – wascompletely renewed with 3 new design lines. In thestrongly represented wood designs, the current trend
is toward tamer, less flamboyant patterns with sharper
contrasts and shades. The fresh colors and modern de­signs are available in a large v­ ariety of plank and tile
formats, ranging from small planks up to large tiles withan area of one square ­meter, or even an XXL plank ina length of 180 cm. A total of 34 products are available‘FUNCTIONALITY AND
DESIGN IN PERFECTION’COCOA LINESLATE LINEin different qualities in three installation versions: fully
adhered, loose-lay, or click system, all of which are avail­able in uniform designs.
Forbo is also setting new standards in the entrance
area with the Coral entrance matting systems now
available for the first time in tile format.
The renewed linoleum collection Marmoleum Solidcomprises five individual design lines with fresh colors
and special embossed textures aimed at a young andnew target group of architects and designers. Two de­sign lines are new: the Cocoa line, in which shredded
natural cocoa bean husks are integrated, giving thecovering a warm, natural feel and look, as well as the
Slate line, which emphasizes the raw, natural expres­sion of the linoleum, through a special embossment togive the surface a slate-like texture.

MOVEMENTSYSTEMSPROGRESSSMOOTHRUNNING
PROCESSES
A conveyor belt that doesn’t lose energy through fric­tion – hardly likely. But we put it within reach! Amp­
MiserTM 2.0, our innovation in the conveyor industry,boasts a unique and patented sliding coat on thebelt’s underside that reduces energy consumption
by up to 50 percent. Sustainable for the environmentand cost-effective for logistics and distribution cen­ters: we make things run more smoothly.

40

FORBO ANNUAL REPORT 2016 – ACTIVITY REPORTMOVEMENT SYSTEMS:

SUCCESS DRIVEN BY INNOVATION
AND RELIABILITY‘2016 was another successful year for
Movement Systems. The good perfor­
mance was driven by a wide range ofactivities to implement the strategy inall areas of the division’s organizations.
Our innovative and application-specificproduct innovations, which generate
added value for our customers’ produc­tion or logistics processes across a wide
range of industries, further strength­
Jean-Michel Wins
ened our global market position. An­ Executive Vice President
other important factor was the focused Movement Systems
expansion in growth markets that wehave pursued in recent years. We also
sales growth
took great strides in the operational Solid
Almost all markets contributed to the good sales per­­areas. Globally speaking, we optimized formance with a variety of growth stimuli. The Europe
various processes in fabrication, pro­ region remained on the growth path and was able toduction and the supply chain, achieved make the largest contribution. Des­pite a mixed market
all markets played a positive role. In Italy,
efficiency gains owing to a number of environment,
we acquired Tema S.r.l. in Parma, an existing customer
local investments and new tools, and that sells fabric conveyor belts as well as plastic modu­
increased our productivity once more.’ lar belts. This move gives us an additional Forbo service
point in northern Italy.
The Movement Systems division generated net salesof CHF 367.5 million in the year under review (previous
year: CHF 347.8 million), which is equivalent to a grati­
fying year-on-year increase of 5.7%, or 3.7% in ­local
currencies. The division accounted for 31.0% of Groupsales. This sales growth was driven by a convincing
performance in virtually all our markets. The market
downturn in the USA, which began in the first halfof the year, continued into the second half. Higher
sales and consistently executed operational activities
designed to improve global processes across theboard had a positive impact on operating profit (EBIT),
which rose to CHF 45.3 million (previous year: CHF 42.9
million). This is equivalent to an increase of 5.6%, de­spite additional capacity expansion in China. The EBIT
margin was unchanged from the previous year at
12.3%.

The Asia/Pacific region also contributed to the sales in­crease. One reason was above-average growth in South
Korea and Southeast Asia on the back of major orders.
India, Japan and China also reported a steady increasein sales.
The Americas region barely matched the previous
year’s level, due mainly to muted demand in the USA,
caused by business trends in key customer segments
such as industrial manufacturing and raw materials
processing.
All strategic customer segments
posted sales growth
We posted gratifying sales growth in all strategic cus­
tomer segments, even though regional sales and mar­ket trends were very mixed. Demand was well above
average in the food processing and sports treadmill
customer segments across all regions, but the areas oflogistics, textiles, industrial manufacturing, raw materi­als, and paper/printing also performed well. The up­
trend was underpinned by impressive and reliable cus­
tomer-specific solutions based on innovative product41

range extensions with high-quality features. The to­bacco customer segment saw a downturn in demandcompared to the previous year; this was due to lower
investment volumes, especially in Asia/Pacific.

braking play an important role. These belts meet thehighest hygiene standards and feature high chemical
resistance to fats, oils and cleaning agents.

Investments to drive future growth
In various fabrication and production plants we haveinvested in new technologies and measures to boost
efficiency in order to support sustainable growth. After
we brought a further coating facility on stream in the
USA in the second half of 2015, we are now building a
new plant in Pinghu, China, to provide additional pro­duction capacity for Transilon processing belts, aimed
For the textile industry, we have launched a high-­ mainly at the Asia/Pacific market. The plant should be
quality belt for manufacturing nonwovens on special inaugurated in mid-year 2018.
cross-lapper machines. The web is passed at highspeed through the cross-lapper on conveyor belts so Focus on product portfolio and top
that each layer is at right angles to the last, and it is operating performancethen positioned for needle punching. In needle punch­ In 2017, too, we will continue to align our producting barbed needles are pushed through the web layers range specifically with the needs of the customer seg­so that they become bonded with each other. Heating ments and expand of our distribution and service or­in an oven activates the bonding fibers introduced ganizations, also in growth markets. In addition to ourinto the web. During cooling, they stick to the carrier main product group, Transilon conveyor belts, we will
fibers and stabilize the web. The conveyor belts em­ drive expansion of the Prolink plastic modular belts
ployed on the cross-lapper stand out for their low and Extremultus power transmission belts in 2017.
weight, allowing fast processing speeds on highspeed machines, and for their chemical resistance to We will forge ahead with the numerous operational
treatment with greasy materials that are used to in­ measures at all fabrication and production sites and op­
crease gloss and suppleness. They are particularly suit­ timize the integration of the relevant global processes.
able for the manufacture of geotextiles, which are per­meable fabrics.
With all these focused activities, we will continue to
optimize the entire global value chain, increase cus­
Another innovation introduced during the year under tomer satisfaction and further improve both produc­
review is the new Series 13 Prolink plastic modular belt, tivity and efficiency at the same time.
which was developed specifically for conveyor con­figurations in the manufacture of small products. The
transfer gap between two belts is small enough for­angles with a radius of as little as 3 mm to be possible.
This means that tiny products such as candies, coffee
cream portion packs or small pastries can be trans­ferred without difficulty from one belt to another, mini­
mizing the risk of damage to the product or of a goods
backup.
Innovation partner for our customers
Movement Systems not only supplies a wide range of
conveyor and power transmission belts but is also a
reliable source of technical know-how for total solu­
tions and an innovation partner for original equipment
manufacturers and end customers.

The new high-grip coating, which features versatile
use for various types of belts, ensures better adhesionof the goods on the belt. This is especially useful for
inclines when conveying boxes in the meat, poultry
and fish industries, where moisture and grease cancause the cases to slide, or in cutting machines in the
production of sausage or cheese slices, where precise
product positioning, product acceleration or product42

FORBO ANNUAL REPORT 2016 – ACTIVITY REPORTVALUEDINNOVATION PARTNER
Not always visible, but present almost
everywhere nonetheless, Movement
Systems is making sure that a wide
range of production steps run smooth­ly and efficiently. Our solutions are dis­tinguished by high cost efficiency, pre­cision and reliability. In the year underreview, Forbo again profiled itself as acompetent partner in the developmentof industry-specific and future-oriented
solutions for driving, conveying, andproducing.

HIGH-GRIP COATING

Special coating for the food industry
The new high-grip coating was developed especiallyfor various belt types with a wide range of applications,in particular for the food processing industry. The coat­ing allows better adhesion of the goods being con­veyed on the belt. It is especially suitable for the in­clined conveyance of crates and boxes in the fish andmeat industry, where moisture and grease can cause
slippage, and good grip properties help to ensure asmooth process. Another belt is used in cutting ma­chines for slicing meat and cheese, where precise prod­
uct positioning, product acceleration and the reduc­tion of the belt speed all play an important role. The
functional layer in combination with the fine texture
offers optimum product adhesion. These belts also ful­
fill the highest hygiene standards and have high chem­
ical resistance against greases, oils and cleaning agents.

PROLINK

43

Plastic modular belt with a delicate touch
In the product portfolio of Prolink plastic modular
belts, the new Series 13 has belts especially for produc­tion and packing processes in which tiny products
such as sweets, portions of coffee cream, or small pas­
tries, as well as other small goods such as rolls of adhe­sive tape, are conveyed. The transfer gap between two
belts is correspondingly small, so that curves up to aradius of 3 mm can be realized. This means that eventiny products can be passed from belt to belt without
problems, thus minimizing the risk of damage to the
products or of a goods backup. The optimum designof the sprocket teeth and the underside of the belt en­sure excellent sprocket engagement, safe belt tracking
and easy cleaning. The Series 13 is available in two dif­

‘OBVIOUS ADVANTAGESTHAT OFFER
ADDED VALUE’

EL LINEEL LINE

ferent surface structures which ensure optimum prod­
uct release even with sticky or adhesive goods.
Elastic conveyor belts for logistics centers
Logistics and distribution centers are benefiting fromthe newly developed, elastic conveyor belts which canbe used to convey all kinds of piece goods such as par­cels, cardboard boxes, or other goods packed in a var­iety of ways. The belts in the newly developed EL line
are ideal for applications with short axle intervals, forexample in systems with cross-belt sorters, where con­veyor belts join the main flow direction from the sideand transfer the goods there. Due to the innovative belt
construction with a semi-elastic fabric tension mem­
ber, the belts can be stretched or pre-tensioned by up
to 5 percent. There is no need for tensioning devices,which eliminates the costs for complicated tensioning
stations. Due to the thin, single-layer belt construction,
it is possible to realize especially narrow curve radii.
Even very small items can be easily transferred fromone belt to the next.

44

45

ORGANIZATION
Executive BoardGroup structure
Board of Directors

46
49
50

46

FORBO ANNUAL REPORT 2016 – ORGANIZATIONEXECUTIVE BOARD

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

47

Stephan Bauer

Andreas Spreiter

Stephan Bauer was born in 1961 and is a German 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 launch of
new ve­hicle models. From 1991 to 2008 he worked for
Siemens VDO Automotive AG (which became Conti­
nental 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.

Andreas Spreiter was born in 1968 and is both a Swissand a British citizen. He studied at the Federal Instituteof Technology (ETH) in Zurich where he was awarded
his engineering degree in plant production and en­gineering. From 1993 to 1998 he was Business Unit
Controller at Landis + Gyr (Europe) AG. He then worked
for Siemens Metering AG, where he was Head of­Finance and Controlling for two years and was thenappointed to head the Electronic Meters CompetenceCenter. From 2002 to 2012 he was Executive Vice Pres­
ident and Group Chief Financial Officer of Landis +Gyr AG. He is a member of the Board of Directors at­Reichle & De-Massari AG. Andreas Spreiter joined theForbo Group in January 2013 as a member of the Ex­
ecutive Board and Chief F­ inancial Officer.

Chief Executive Officer

Chief Financial Officer

48

Matthias P. Huenerwadel

Jean-Michel Wins

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

Jean-Michel Wins was born in 1967 and is a Belgian
citizen. He studied business administration and lan­
guages at the IPET in Nivelles, Belgium, and began his
professional career in Germany at Calberson GmbH,
where he held various specialist functions. He thenmoved to Simut Sicherheit GmbH for two years, where
he was in charge of sales and marketing. From 1992
to 1996 he was Export Manager at Brabus GmbH andfrom 1996 to 2002 he held various sales and manag­
erial functions at Hirschmann Electronics. In 2002 heswitched to Grammer AG, headquartered in Germany,
where he held a number of international sales and se­nior management positions; in 2009 he was appointed
Vice President responsible for the Offroad Seating­Business Unit. As a member of the Executive Board,
Jean-Michel Wins took over management of the Move­ment Systems division in January 2013.

Executive Vice President Flooring Systems

Executive Vice President Movement Systems

FORBO ANNUAL REPORT 2016 – ORGANIZATION

49

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

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

Board of Directors Office
Investor Relations
Corporate Communications
Internal Audit
CEO

Corporate HR
Corporate Development

Executive Vice President
Flooring Systems

Executive Vice President
Movement Systems

CFO

Northern/Central/Eastern
EuropeEurope/Middle East/Africa

Corporate Controlling
and Reporting

Southern Europe/
Middle East/Africa

Member of the Executive Board

Asia/PacificCorporate Treasury
Corporate Tax

Americas

Plastic Modular Belts

Asia/PacificOperational Areas

Building and Construction
Adhesives

Business andProduct Development

Supply Chain

Marketing

M&A

Business Development

FinanceFinance and IT

IT

F & A Managers
Group Companies

Process Development

Human Resources

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

Americas

Risk Management
Corporate Legal Services
Corporate IT

50

FORBO ANNUAL REPORT 2016 – ORGANIZATIONBOARD OF DIRECTORS

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

51

This E. Schneider
Executive Chairman

Member of the Board of Directors of Galenica SA, Berne
Member of the Board of Directors of Rieter Holding AG, Winterthur
Member of the Board of Directors of Autoneum Holding AG, Winterthur

Michael Pieper
Vice Chairman

Owner of the Artemis Holding AG, 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 Hero AG, Lenzburg
Member of the Board of Directors of advalTech Holding AG, Niederwangen near Berne
Member of the Board of Directors of Arbonia AG, Arbon
Member of the Board of Directors of Berenberg Bank (Schweiz) AG, Zurich
Member of the Board of Directors of Rieter Holding AG, Winterthur
Member of the Board of Directors of Autoneum Holding AG, Winterthur
Member of the Board of Directors of Reppisch-Werke AG, Dietikon

Dr. Peter Altorfer
Vice Chairman

Partner at the law firm Wenger & Vieli AG, Zurich
Member of the Board of Directors of agta record ag, Fehraltorf
Member of the Board of Directors of Abegg Holding AG, Zurich
Member of the Board of other private and foreign banks and non-listed investment andreal-estate companies in Switzerland

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

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

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

52

53

THE FORBO
SHARE

54

FORBO ANNUAL REPORT 2016 – THE FORBO SHARETHE FORBO SHARE
Owing to the economic downturn in China and a number of emerging economies, concerns about world­economic growth weighed heavily on the markets in the first weeks of 2016. The resulting uncertainties hit theequity markets hard. Six weeks into the year, the Swiss Performance Index (SPI) was about 15 percent lower thanat the end of 2015. In the wake of basically steady but very slow growth in the world economy and with interest
rates stuck at low levels, the market subsequently recovered, but by mid-year was still down nearly 5 percent.
Following a further recovery, the SPI temporarily reached levels in August and September that were only about
1 percent lower than the year-end 2015 value. In October, however, the SPI fell sharply again and by early­November was down around 8 percent. On the back of the market rally in November and December, the SPI
closed with an annual performance of – 1.4 percent.
Until the annual results for 2015 were announced in March 2016, the Forbo share price more or less tracked the
SPI, but then posted significant gains, reaching a high of CHF 1,294 by early June – a gain of a good 9 percent
versus the year-end 2015 price of CHF 1,182. Subsequently, the share price declined again before gaining groundon publication of the half-year results. The Forbo share reached an all-time high of CHF 1,367 in early September.
The share closed out the year at CHF 1,313. The gain for 2016 thus comes to 11.1 percent. The Forbo share has
now outperformed the SPI for the fifth year in a row. Since the end of 2005, the Forbo share has outperformed
the SPI by a factor of more than six.

The Forbo share in comparison to the SPIForbo share
SPI
180%

1,400
1,300
1,200
1,100
1,000
900
800
700
600
500
400
300
200

150%
120%
90%
60%
30%
0%
– 30%
31.12.2012

31.12.2013

31.12.2014

31.12.2015

31.12.2016

55

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

2016
Number1,800,000

2015
Number
1,990,000

2014
Number2,150,000

2013
Number2,250,000

2012
Number2,500,000

1,709,844
068,737
21,4191,708,458
190,000
70,123
21,4191,888,850
158,467
81,264
21,4192,032,703
99,47096,40821,4192,052,740
250,000
175,841
21,419CHF
180,000

CHF
199,000

CHF
215,000

CHF
225,000

CHF
250,000

170,984
0
6,874
2,142

170,846
19,0007,012
2,142

188,885
15,8478,126
2,142

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

205,274
25,00017,584
2,142

CHF
364
74.7
19.04)
1.25)
1.85)
25

CHF
300
62.1
17.0
1.45)
2.15)
27

CHF
371
62.0
16.0
1.55)
2.25)
26

CHF
380
56.8
14.0
1.85)
2.45)
26

CHF
329
96.4
12.0
1.85)
2.55)
13

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

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

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

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

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

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

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

High
Low

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

High
Low
Year-end
High
Low
Year-end

1) Par value per share in 2016, 2015, 2014, 2013 and 2012: CHF 0.10
2) Based on the weighted average of the number of shares as set out innote 13 ‘Earnings per share’ on page 116 of the financial report.
3) See note 13 ‘Earnings per share‘ on page 116 of the financial report.
4) Proposal of the Board of Directors to the 2017 Ordinary General Meeting.
5) Calculated on the basis of a cash distribution in the form of a dividend.
6) Gross cash distribution as a percentage of Group profit.
7) Total number of shares multiplied by the corresponding share price.

CORPORATE
GOVERNANCEREPORT

58

FORBO ANNUAL REPORT 2016 – CORPORATE GOVERNANCE REPORTCORPORATEGOVERNANCEREPORTAt Forbo, the concept of corporate governance encompasses the entire set of prin­ciples and rules on organization, conduct and transparency that are designed toprotect the company’s long-term interests. Forbo’s aim is to strike a careful balance
between management and control. The central rules are contained in the Articles
of Association, the Organizational Regulations, and the regulations of the commit­
tees of the Board of Directors. The following information is set out in line with the
Directive on Information relating to Corporate Governance (Directive on Corporate
Governance ‘DCG’) and the relevant publications of SIX Swiss Exchange.

Group structure and shareholders
Group structure
Forbo Holding Ltd, domiciled at Lindenstrasse 8, 6340 Baar, is a limited company under Swiss law. The holding
company holds all subsidiaries, directly or indirectly, that belong to the Forbo Group. The operational structure of
the Group is shown in the organizational chart on page 49. The scope of consolidation of Forbo Holding Ltd does
not include any listed companies. The unlisted companies within the scope of consolidation of Forbo Holding Ltd
are listed under ‘Group companies’ starting on page 140 of the financial report. The company name and domicile,share capital and percentage of participation, along with information relating to the allocation of the Group com­pany to the Group’s businesses, can also be found in that section of this Annual Report.
Significant shareholders
As of December 31, 2016, 2,722 shareholders were listed in the share register of Forbo Holding Ltd, or 765 (39%)
more than in the previous year. As of December 31, 2016, Forbo Holding Ltd knew of the following significant
shareholders with a holding of more than 3%:

Michael Pieper1)
Forbo Holding Ltd2)UBS Fund Management (Switzerland) AG
BlackRock Inc.
Norges Bank (Norwegian Central Bank)

31.12.2016as a percentage
30.23
5.01
3–5
3–5
3–5

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

Disclosure of significant shareholders and significant shareholder groups and their holdings is effected in accord­
ance with the disclosures made in the year under review pursuant to Article 120 of the Financial Market Infra­
structure Act (FMIA) and the provisions of the Ordinance of the Swiss Financial Market Supervisory Authority on
Financial Market Infrastructures and Market Conduct in Securities and Derivatives Trading (FMIO-FINMA).
Below is a summary of the latest disclosure notices published in the year under review:
Norges Bank (Norwegian Central Bank) reported on July 19, 2016, that its shareholding exceeded the 3% threshold
and that it held 59,149 shares, corresponding to 3.29% of the voting rights.

59

Forbo Holding Ltd reported on July 20, 2016, that it had fallen below the threshold of 10% and that it held 90,434
of its own shares, corresponding to 5.02% of the voting rights, directly or indirectly via Forbo International SA,
Baar, Switzerland and Forbo Finanz AG, Baar, Switzerland. Forbo Holding Ltd further reported that it had granted
500 stock purchase rights on 500 registered shares of Forbo Holding Ltd, corresponding to 0.028% of the voting
rights.
UBS Fund Management (Switzerland) AG reported on September 15, 2016, that it had fallen below 5% and thatit held 89,667 shares, corresponding to 4.98% of the voting rights.
Lastly, BlackRock Inc. reported on December 14, 2016, that it had exceeded the 3% threshold and that it held
54,472 shares, 982 voting rights to be exercised at its own discretion, and 3,388 contracts for difference, corres­
ponding to 3.27% of voting rights altogether. BlackRock Inc. further reported that it also held 396 sales positions
in connection with contracts for difference, corresponding to 0.02% of the voting rights.
Full disclosure reports and all further disclosure notices published in the year under review can be consulted on
the publication platform of the disclosure office of the SIX Swiss Exchange (www.six-exchange-regulation.com
� Publications � Significant shareholders).
For further information on significant shareholders or shareholder groups, we refer the reader to the table on page
58 and to page 159 of the financial report (duty of disclosure pursuant to Article 663c, Swiss Code of Obligations).
Cross-shareholdings
Forbo Holding Ltd has not entered into any cross-shareholdings with mutual capital shareholdings or voting
rights.

Capital structure
Share capital
As of December 31, 2016, Forbo Holding Ltd had a fully paid up share capital of CHF 180,000, divided into
1,800,000 listed registered shares, each with a par value of CHF 0.10. Of this amount:–– 68.28% were registered in the name of 2,685 shareholders with voting rights–– 21.42% were shares of banks or of SIX SIS AG pending registration of transfer–– 10.30% were registered in the share register without voting rights
The shares of Forbo Holding Ltd (security number 000354151/ISIN CH0003541510) are listed on SIX Swiss Ex­
change. No different categories of shares exist. Each share entitles the owner to one vote. Further information on
Forbo shares can be found on pages 54 and 55. Further information on the rights of participation associated withshares can be found on pages 69 and 70 of this Annual Report.
The share buyback program launched by the Board of Directors on September 10, 2015, based on the authoriza­tion given by the Ordinary General Meeting of Forbo Holding Ltd of April 24, 2015, was completed on December
23, 2015. The Ordinary General Meeting of April 29, 2016, approved the cancelation of the total of 190,000 sharesacquired through the share buyback program.
Conditional and authorized capital
Pursuant to Clause 4 of the Articles of Association, Forbo Holding Ltd has a maximum conditional capital of
CHF 16,645, corresponding to 166,450 registered shares to be paid up in full with a par value of CHF 0.10 each.
The capital increase takes place in accordance with the Articles of Association through the exercise of option
and convertible rights granted in connection with the bonds issued by the company or one of its subsidiaries,or through the exercise of option rights granted to shareholders. Except for shareholder options, shareholders
have no right of subscription. Holders of option or convertible rights are entitled to subscribe to new share issues.

60

FORBO ANNUAL REPORT 2016 – CORPORATE GOVERNANCE REPORTThe registration of new shares is subject to the general restriction set out in Clause 6 of the Articles of Associa­
tion, which stipulates that shareholders are entered in the share register with voting rights only if they declareexpressly that they have acquired the shares in their own name and for their own account.
There is no authorized capital.
Changes in capital
The Ordinary General Meeting of Forbo Holding Ltd on April 29, 2016, decided, based on the audit report of alicensed audit expert, to reduce the ordinary share capital of the company by CHF 19,000 from CHF 199,000 to
CHF 180,000 by canceling 190,000 shares with a par value each of CHF 0.10. It was further decided to amend the
Articles of Association accordingly. The capital reduction was effected, and the new share capital of CHF 180,000
was entered in the Commercial Register on July 14, 2016.
The Ordinary General Meeting of Forbo Holding Ltd on April 24, 2015, decided, based on the audit report of alicensed audit expert, to reduce the ordinary share capital of the company by CHF 16,000 from CHF 215,000 to
CHF 199,000, by canceling 160,000 shares with a par value of CHF 0.10 each. The Articles of Association wereamended accordingly.
The Ordinary General Meeting of Forbo Holding Ltd on April 25, 2014, decided, based on the audit report of alicensed audit expert, to reduce the ordinary share capital of the company by CHF 10,000 from CHF 225,000 to
CHF 215,000 by canceling 100,000 shares with a par value of CHF 0.10 each. The Articles of Association wereamended accordingly.
Participation certificates and non-voting equity securities (‘Genussscheine’)
Forbo Holding Ltd has issued neither participation certificates nor non-voting equity securities.
Limitations on transferability and nominee registrations
Forbo Holding Ltd does not have any percentage limitations on voting rights. The Board of Directors may only
refuse to register stock in the share register if the purchaser of the stock does not expressly declare at the com­pany’s request that he/she has acquired the shares in his/her own name and for his/her own account.
Pursuant to Clause 6 of the Articles of Association, nominees may be entered in the share register with voting
rights for up to a maximum of 0.3% of the registered share capital entered in the Commercial Register. Over andabove this limit, nominees are only entered provided the name, address, and shareholding of those persons aredisclosed for whose account the nominee holds a total of 0.3% or more of the registered share capital entered in
the Commercial Register.
No statutory privileges exist and there is no restriction on the transferability of the shares of Forbo Holding Ltd.
Convertible bonds and warrants/options
Forbo Holding Ltd has no outstanding convertible bonds nor has it issued any marketable warrants/options. De­
tails on the management investment plan (MIP) for the Executive Board as amended in 2012, under which options
allocated before the amendment are still outstanding, can be found on page 89, as well as on pages 123 and 124of this Annual Report.

61

Board of Directors
Members of the Board of Directors
The cut-off date for the following information is December 31, 2016.
With the exception of This E. Schneider, Executive Chairman of the Board of Directors, none of the members of
the Board of Directors listed below holds or has held any operational management positions for Forbo Holding
Ltd or its Group companies. With the exception of This E. Schneider, none of the members of the Board of­Dir­ectors sat on the Executive Board of Forbo Holding Ltd or the management of its Group companies in the threebusiness years preceding the period under review. There are no essential business relationships between themembers of the Board of Directors and Forbo Holding Ltd or its Group companies.
This E. Schneider, Executive Chairman
This E. Schneider, born in 1952, is a Swiss citizen. He studied economics at the University of St. Gallen (lic. oec.
HSG) and at the Graduate School of Business, Stanford University, California, USA. After various management
functions in Europe and the USA, he joined the Executive Board of Schmidt Agency, where he was responsible
for strategic planning, operations and logistics from 1984 to 1990. From 1991 to 1993, he was Chairman and CEOof the publicly listed company SAFAA, Paris. In 1994, he became a member of the Executive Board of Valora, withresponsibility for the canteen and catering division. From 1997 to 2002, he was Delegate and Vice President of
the Board of Directors of Selecta Group. From March 2004 to December 2013, This E. Schneider was Delegate of
the Board of Directors and CEO, and from January to April 2014 Delegate of the Board of Directors of the ForboGroup. He has been the Executive Chairman of the Board of Directors since the Ordinary General Meeting of2014. This E. Schneider is also a member of the Board of Directors of Galenica SA, Rieter Holding AG and Auto­neum Holding AG.
Michael Pieper, Vice Chairman
Michael Pieper, born in 1946, is a Swiss citizen. He studied economics (lic. oec. HSG) at the University of St. Gallen.
He has been with the Artemis Group (formerly the Franke Group) since 1988 and has been its owner and CEO
since 1989. Amongst others, he is a member of the Board of Directors of Hero AG, advalTech Holding AG, Arbo­
nia AG, Berenberg Bank (Schweiz) AG, Rieter Holding AG and Autoneum Holding AG. He was first elected to theBoard of Directors of Forbo Holding Ltd in 2000.
Dr. Peter Altorfer, Vice Chairman
Peter Altorfer, born in 1953, is a Swiss citizen. He studied law at the University of Zurich and holds a doctorate
in law (Dr. iur.). He attended the PED program at the IMD, Lausanne. Until 1988, he worked at Bank Leu AG. He
subsequently joined the law firm Wenger & Vieli in Zurich, where he is now a partner, specializing in bank andcompany law. Peter Altorfer sits on the Board of Directors of several companies, including agta record ag in Feh­raltorf, Abegg Holding AG in Zurich, and various private and foreign banks, as well as unlisted investment andreal estate companies in Switzerland. He has been a member of the Board of Directors of Forbo Holding Ltd
since March 2005.

62

FORBO ANNUAL REPORT 2016 – 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. From 2006
to 2011, she managed the business of Faerbi Immobilien AG (subsequently Rietpark Immobilien AG) in Zurich asa member of the Board of Directors. Subsequently until 2014, she implemented various projects for P. A. MediaAG and Swisscontent AG in Zurich (M & A amongst others). Between 2013 and 2016, she was a member of theBoard of Directors of Tamedia AG, where in 2017 she was appointed Chairwoman of the Pool of Majority Share­
holders. She is a member of the Board of Directors of Swisscontent AG and sits on other Boards of Trustees. She
has been a member of the Board of Directors of Forbo Holding Ltd since April 2014.
Dr. Reto Müller
Reto Müller, born in 1951, is a Swiss citizen. He took a first degree in economics and completed his doctorate(Dr. oec. HSG) at the University of St. Gallen. He also completed the Stanford Executive Program and additional
training at IMD, INSEAD and the Harvard Business School. He is a founding partner of Helbling group of com­panies, for which he worked from 1984 to 2016. From 2000 to 2011, he was the CEO and Chairman of the Boardand from 2011 to 2016, he was the full-time Chairman of the Board of Helbling Holding AG. Between 2002 and2010, Reto Müller was either a member or Chairman of the Regional Economic Advisory Board (Zurich) of the
Swiss National Bank. He was a member of the Council of SWISSMEM between 2008 and 2016. He is also Chairman,
Vice Chairman or member of other Boards of Directors and advisory boards, and is partner at BLR & Partners AG.
He has been a member of the Board of Directors of Forbo Holding Ltd since April 2011.
Vincent Studer
Vincent Studer, born in 1962, is a Swiss citizen. He completed the University of Applied Sciences, Berne, andtrained as a Swiss certified public accountant. In addition, he has attended various national and international
training courses. From 1991 to 2008, Vincent Studer worked at Ernst & Young AG 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 Dir­
ectors of Bank EEK AG in Berne. He holds further directorships in other companies and foundations. He has beena member of the Board of Directors of Forbo Holding Ltd since April 2009.

63

Board of Directors of Forbo Holding Ltd
as per December 31, 2016
Executive Chairman
THIS E. SCHNEIDER
Executive Director
Vice Chairmen
MICHAEL PIEPER
Non-executive Director
DR. PETER ALTORFER
Non-executive Director
Members
CLAUDIA CONINX-KACZYNSKI
Non-executive Director
DR. RETO MÜLLER
Non-executive Director
VINCENT STUDER
Non-executive Director
Secretary of the Board of Directors
NICOLE GRAF
Non-member

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

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

AFC

HRNC

RC

2004

–

–

–

2000

–

M

M

2005

M

C

C

2014

–

M

M

2011

M

–

–

2009

C

–

–

64

FORBO ANNUAL REPORT 2016 – CORPORATE GOVERNANCE REPORT

Statutory regulations governing the number of permissible activities
pursuant to Article 12 Paragraph 1 Section 1 OaER
In accordance with Clause 22 of the Articles of Association, members of the Board of Directors may hold no morethan five mandates in listed companies and twenty mandates in unlisted legal entities. A mandate is defined
as any activity in the senior managerial or supervisory bodies of legal entities that are entered in the Swiss­Commercial Register or comparable foreign registers and do not belong to the Forbo Group. Mandates withassociated companies outside the Forbo Group are deemed to be a single mandate.
Election and term of office
The members of the Board of Directors will be elected in individual votes for a one-year term of office, in accord­
ance with the Ordinance against Excessive Remuneration in Listed Public Companies (OaER). A year is definedas the period between two Ordinary General Meetings. In accordance with the Organizational Regulations ofForbo Holding Ltd, members who have reached the age of 70 resign from the Board of Directors at the Ordinary
General Meeting of the following year. The Board may, however, approve exceptions. In determining the com­position of the Board of Directors, importance is attached to the election of independent individuals with inter­national experience in industrial companies as well as in the financial and consultancy sectors.
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 63.
Decisions are as a general rule taken by the full Board of Directors. The Board constitutes three standing commit­
tees from its own ranks – the Audit and Finance Committee (AFC), the Human Resources and Nomination Com­mittee (HRNC), and the Remuneration Committee (RC) – to deal with clearly defined subject areas of overriding
importance. These three committees have mainly advisory and control functions. The members of the AFC and
HRNC are elected by the Board of Directors on an annual basis and can be dismissed at any time. The membersof the RC are elected annually by the Ordinary General Meeting.
As a rule, the Executive Chairman of the Board of the Directors chairs the meetings of the Board and the General
Meeting. He plans and conducts the meetings of the Board and the General Meeting. The meetings of the Boardand the relevant items on the agenda are prepared by the Executive Chairman. He monitors the execution of themeasures adopted by the Board. He is the direct superior of the CEO, is in regular contact with him, and has anadvisory and supervisory function. In addition, the Executive Chairman represents the Board and the Forbo Groupvis-à-vis the public, the authorities and the shareholders. The tasks of the Executive Chairman of the Board andthe demarcation of responsibilities from those of the CEO are set out in the chapter ‘Areas of responsibility’.
The Vice Chairmen are tasked with deputizing for the Executive Chairman should the latter be prevented from
attending for any reason. In accordance with the Organizational Regulations and actual practice, the Vice Chair­men have no further duties.
The Vice Chairmen are elected by the Board of Directors.

65

The Board of Directors meets on being convened by the Executive Chairman as often as business requires but atleast four times a year. 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 2016, the Board of Directors met six
times, the meetings usually lasting a whole day.
The Executive Chairman may invite members of the Executive Board or other senior employees to attend Board
meetings for individual items. Regular use is made of this option. External consultants participate in the meetingsof the Board of Directors, the AFC, the RC or the HRNC only in exceptional circumstances to deal with particular
items. As a rule, however, the meetings are held without external consultants.
Audit and Finance Committee
The AFC advises the Board of Directors in respect of its duties on behalf of the Group in the areas of financial re­
porting, the accounting standards and systems used, and decisions with significant financial implications. The
AFC monitors the activities of the internal auditors and the external auditors. Moreover, it establishes the audit
program of the internal auditors and proposes to the Board of Directors the choice of the external auditors forthe attention of the General Meeting. The CEO and the CFO are regularly requested to attend meetings in anadvisory capacity, while the internal and external auditors may attend on special invitation.
The AFC convenes as often as business requires, but at least twice a year. In the 2016 business year, two meetings
were held, each lasting about half a day. The external auditors were present for some items on the agenda of the
AFC’s meeting on the financial statements and at the meeting to discuss the scope of the audit and the audit
fee. The Ernst & Young representatives responsible for internal auditing attended both meetings held to discuss
the internal audit reports.
Human Resources and Nomination Committee
We refer to the explanations in the remuneration report on pages 76 and 77.
Remuneration Committee
We refer to the explanations in the remuneration report on page 77.
Areas of responsibility
The Board of Directors bears ultimate responsibility for the management of Forbo Holding Ltd. The main dutiesof the Board of Directors are the following non-transferable and inalienable tasks pursuant to the Swiss Code ofObligations and the Articles of Association:–– ultimate management of the company and issuing the necessary directives–– definition of the organization–– organization of accounting, financial controlling, and financial planning–– appointment and dismissal of persons entrusted with the management of the company–– overall supervision of the persons entrusted with managing the company, particularly with respect
to compliance with the law, articles of association, regulations, and directives–– preparation of the Annual Report as well as of the General Meeting and implementation of its resolutions–– preparation of the remuneration report–– notification of the court in the event of over-indebtedness

66

FORBO ANNUAL REPORT 2016 – CORPORATE GOVERNANCE REPORTThe Board of Directors bears ultimate responsibility for supervising and monitoring the management of thecompany and is responsible for the corporate strategy. It issues guidelines for business policy and is regularly
briefed on the current state of business.
Business to be dealt with by the Board of Directors is regularly submitted in advance to the AFC, HRNC and RC,
ad hoc committees or individual members, depending on the subject, for review or an opinion. With the 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:–– leading the Board of Directors–– preparing the decisions of the Board of Directors and ensuring they are executed–– representing and positioning the Group in the public–– overall management of strategy development and involvement in realizing key strategic projects–– management of relationships with key accounts and business, sector and capital market partners
Tasks of the Chief Executive Officer:–– operational management of the Group–– leading the Executive Board–– development and operational implementation of strategies–– implementation and monitoring of multi-year planning and budgets–– support for the Executive Chairman of the Board of Directors in preparing important projects relating tostrategy, personnel, and finances for discussion and decision-taking by the Board of Directors
The CEO reports to the Executive Chairman of the Board of Directors and as a rule participates in all Board meet­ings dealing with topics that are relevant for the exercise of his function. He himself though is not a member ofthe Board of Directors. All business management tasks that are not allocated to the Board of Directors or the­Executive Chairman of the Board and that do not require the approval of the Board of Directors are delegated to
the CEO and are conducted by him on his own responsibility. The CEO is responsible for ensuring compliancewith the provisions of the law, the Articles of Association, and regulations throughout the Forbo Group.
In carrying out his tasks, the CEO is supported by the members of the Executive Board, who report to him. The
Executive Board comprises the CEO, CFO, and the Executive Vice Presidents of the two divisions; it is responsible
for the long-term success and market-driven management of the Forbo Group.
The members of the Executive Board are responsible for their particular area of activity and also bear co-respon­
sibility for safeguarding the interests of the Group and achieving the financial Group result.

67

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
the Forbo Group. Outside the meetings, such requests for information are to be addressed to the Executive Chair­man. The CEO and the other members of the Executive Board inform the Board of Directors at each regular meet­ing about the current state of business, important business events, and significant deviations from the budget.
The Chairmen of the AFC, the HRNC, and the RC report at the Board of Directors meetings on the activities of
their committees 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 minutesof the AFC, HRNC, and RC meetings. The Executive Board reports to the AFC through the CFO in consultation
with the CEO; it reports to the HRNC and RC through the CEO.
The Board is also regularly briefed outside meetings about events and challenges facing the Group and the gen­eral performance of the divisions. In addition, the Executive Chairman and the two Vice Chairmen are in regularcontact when essential policy issues are involved. For important, particularly urgent events, the CEO informs the
Executive Chairman of the Board of Directors immediately.
The Executive Board meets as often as business requires, normally once a month. In the 2016 business year, eight
meetings were held, the meetings usually lasting half a day.
The CEO conducts the meetings of the Executive Board. For details concerning the participation of members of
the Executive Board in meetings of the Board of Directors and its committees, see the sections on internal organ­
ization and on the AFC, HRNC, and RC on pages 64 and 65, as well as 76 and 77.
The Board of Directors furthermore fulfils its supervisory and monitoring obligations by means of financial­reporting and its role in the planning cycle. The internal and external auditors also assist the Board in this task.
Neither the external auditors nor the internal auditors, however, were invited to any meetings of the Board of
Directors in 2016 as there were no special incidents or topics for discussion.
As part of financial reporting, the Board of Directors is informed as a rule once a month in writing about the com­pany’s current business performance and earnings situation by means of annotated income statements, key ratios,and deviation analyses.
The Board of Directors is, moreover, involved in the company’s planning cycle. As a rule, the existing strategy is
subjected to a thorough review by the Board of Directors in the first half of the year. The revised strategy is quan­tified in the three-year medium-term plan, which is normally approved at mid-year by the Board of Directors.
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 discussed and adopted by the Board of
Directors in the fourth quarter.
The current business year is assessed in a first estimate always at the end of May and in a second estimate
mid-October. On completion of the business year, the extent to which the budget has been reached is checkedand deviations are analyzed. This analysis is used to derive appropriate measures, which are then implemented
in the next planning cycle.
Internal auditing is effected by Ernst & Young, which has been commissioned for this purpose. Internal auditing is
administratively subordinated to the Executive Chairman of the Board of Directors, is functionally independent,
and reports directly to the AFC.
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

68

FORBO ANNUAL REPORT 2016 – CORPORATE GOVERNANCE REPORTa­ udits, and other special engagements. Where necessary, the risks and weaknesses identified in these audits areminimized or eliminated by measures adopted by management and are constantly monitored.
In 2016, a total of five internal audits were conducted. The internal audits were restricted to selected businessprocesses. In its review of audited Group companies, Internal Audit included any issues that had been defined in
the framework of the internal control system (ICS). Internal audits also involved various compliance reviews re­lated to these processes. Lastly, additional risks and controls in connection with the above-mentioned businessprocesses were analyzed in the audit. At least two companies in each division were audited in the course of theinternal audits.
By means of self-assessments and management controls by division management, the implementation and reli­ability of the controls introduced with the ICS were examined to ensure that deviations were identified and thatappropriate corrective measures were implemented.
Risk management
The ongoing and systematic evaluation of current and future risks invariably involves identifying and capitalizingon opportunities. Forbo regards risk management as a managerial and working tool designed, among otherthings, to safeguard the tangible and intangible assets of the company.
Forbo has a risk-based insurance coverage in line with industry practice and has appropriately insured in particu­
lar operational risks such as property damage, business interruption and liability. The risks specifically in the areasof property damage and business interruption are examined in the context of periodic risk engineering reportsby external experts. For this purpose, production companies are visited at regular intervals, and comprehensive
surveys are worked through with local management. Action plans are drawn up and implemented based on therisks identified. These risk engineering audits have been prepared since 1990.
As regards business risks, Forbo addresses strategic risks as well as market and financial risks. In the area of market
risks, interest and currency risks are monitored centrally and hedged in certain cases. The liquidity and financing
of subsidiaries are also monitored centrally. Please also refer to pages 135 to 139 of the financial report for more
information on this subject.
With regard to the risk management process, the reader is referred to the relevant explanations on pages 135 to
139 (note 32 ‘Risk assessment and financial risk management’) of the financial report.

69

Executive Board
Members of the Executive Board, other activities, and vested interests
The members of the Executive Board, their nationality, function, training and professional career, as well as otheractivities and vested interests, are set out on pages 47 and 48 of this Annual Report.
Statutory regulations governing the number of permissible activities
pursuant to Article 12 Paragraph 1 Section 1 OaER
In accordance with Clause 22 of the Articles of Association, members of the Executive Board may hold no morethan two mandates in listed companies and seven mandates in unlisted legal entities. The acceptance of man­dates by members of the Executive Board is subject to prior approval by the Board of Directors. A mandate isdefined as any activity in the senior managerial or supervisory bodies of legal entities that are entered in the
Swiss Commercial Register or comparable foreign registers and do not belong to the Forbo Group. Mandates
with associated companies outside the Forbo Group are deemed to be a single mandate.
Management contracts
Forbo Holding Ltd has concluded no management contracts with third parties.

Compensation, shareholdings, and loans
For the relevant information we refer to the remuneration report from page 75.

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

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FORBO ANNUAL REPORT 2016 – CORPORATE GOVERNANCE REPORT

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

Changes in control and defense measures
Duty to make an offer
The Articles of Association of Forbo Holding Ltd do not contain an ‘opting-up’ clause or an ‘opting-out’ clause pur­suant to Article 135 and 125 of the Financial Market Infrastructure Act.
Clause on changes of control
As per year-end 2016, 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 head auditor
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.
Auditing fees
The auditing fees levied by the Group’s auditors for auditing the consolidated financial statements, including thestatutory audit of the individual financial statements of the holding company and the consolidated subsidiaries,
amounted to CHF 0.9 million in the year under review.
Additional fees
The additional consultancy fees that were invoiced by the auditing company amounted to CHF 0.1 million in
2016. These fees consist in the main of general tax advice as well as general advice.

71

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

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

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FORBO ANNUAL REPORT 2016 – CORPORATE GOVERNANCE REPORT

Ad hoc communication
Registration for the automated dissemination of ad hoc releases in accordance with the guideline on ad hoc pub­licity of the SIX Swiss Exchange is available at the following addresses:
www.forbo.com � Medien � Medienmitteilung ‘Subscription Service’
www.forbo.com � Media � Media releases ‘subscription service’
Notification to shareholders takes place through publication in the company’s official publication provided noother form of information is stipulated. Written notification to shareholders takes place through a simple letter tothe addresses listed in the share register.
A financial calendar with the key dates can be found on page 8 of this Annual Report. Further information on the
Forbo share is printed on pages 54 and 55 of this Annual Report.
Publications may be ordered by e-mail, fax, or telephone:
E-Mail communications@forbo.com
Phone + 41 58 787 25 25
Fax + 41 58 787 20 25
The contact address for Investor Relations is:
Forbo International SA
Urs Christen, Head Investor Relations
Lindenstrasse 8
P.O. Box 1339
CH-6341 Baar
Phone + 41 58 787 25 25
The contact address for press information is:
Forbo International SA
Karin Marti, Head Corporate Communications
Lindenstrasse 8
P.O. Box 1339
CH-6341 Baar
Phone + 41 58 787 25 25

73

REMUNERATIONREPORT

76

FORBO ANNUAL REPORT 2016 – REMUNERATION REPORTREMUNERATIONREPORT
Introduction
The Ordinance against Excessive Remuneration in Listed Public Companies (OaER) entered into force on January
1, 2014. The Ordinance allows a transition period until the end of 2015. The Board of Directors promptly submitted
a comprehensive amendment of the Articles of Association to the Ordinary General Meeting of April 25, 2014. The
present remuneration report was drawn up by the Board of Directors in compliance with the OaER and theamended Articles of Association.
As of the 2014 Ordinary General Meeting, and in accordance with the OaER and the amended Articles of Asso­
ciation, all members of the Board of Directors, including members of the Remuneration Committee, are now
elected in individual ballots for a term of one year.
In accordance with the amendment of the Articles adopted at the 2014 Ordinary General Meeting, the below
rules apply to votes on remuneration.
Once a year, 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 Meet­
ing. In addition, a vote is taken on the maximum total amount of fixed remuneration to be paid to the Executive
Board for the business year following the Ordinary General Meeting, as well as the amount of variable remunera­tion to be paid to the Executive Board for the business year preceding the Ordinary General Meeting.
Owing to a change in the remuneration system effective as of 2017, shareholders will vote individually at the 2017
Ordinary General Meeting on the following four remuneration payments:–– Maximum total remuneration for the Board of Directors for 2018–– Maximum fixed remuneration for the Executive Board for 2018–– Variable remuneration of the Executive Board for 2016 (short-term incentive plan 2016)–– Maximum total amount of the variable long-term remuneration for the Executive Board for 2017
(long-term incentive plan 2017 – 2019)** See the explanation on page 78: outlook: important changes in 2017
The total remuneration was approved by a large majority in a consultative vote on the 2015 remuneration reportat the Ordinary General Meeting of April 29, 2016 (agenda item 5.1). Participants in the 2017 Ordinary General
Meeting will also be invited to vote in a consultative ballot on the entire 2016 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.

77

The Human Resources and Nomination Committee meets as often as business requires, but at least twice a year.
In the 2016 business year, the HRNC held two meetings, both lasting a couple of hours.
The Human Resources and Nomination Committee consists of at least two members of the Board of Directors.
The Ordinary General Meeting of April 29, 2016, elected Dr. Peter Altorfer (Chair), Claudia Coninx-Kaczynski andMichael Pieper to the HRNC for the 2016 business year.
The Remuneration Committee (RC): task and function
The Remuneration Committee supports the Board of Directors in defining the principles of remuneration policy
and in determining the remuneration paid to members of the Board of Directors and the Executive Board with­in the total sum of remuneration as approved by the Ordinary General Meeting. It supports the Board of Directors
in drawing up participation programs and in all other tasks related to remuneration. The Remuneration 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 2016 business
year, the Remuneration Committee held three meetings, each lasting a couple of hours.
The Remuneration Committee consists of at least two members of the Board of Directors. The Ordinary General
Meeting of April 29, 2016, elected Dr. Peter Altorfer (Chair), Claudia Coninx-Kaczynski and Michael Pieper to theRemuneration Committee for the 2016 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.
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 determined by the Remuneration Committee as a rule once a year in thespring for the following business year and are submitted to the Board of Directors for acceptance at its Marchmeeting. The amount of the target bonus for the Executive Board is determined by the Remuneration Committee
once a year in November for the following year.
ProposalAcceptanceApproval

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 current business year

RC

BoD

Performance targets – Executive Board re variablelong-term remuneration (long-term incentive plan)*

RC

BoD

Performance targets – CEO

RC

BoD

Remuneration budget
Maximum total remuneration of the Board of Directors
Maximum fixed remuneration of the Executive Board
Variable remuneration of the Executive Board(short-term incentive plan)
Maximum total amount of the variable long-term
remuneration for the Executive Board for 2017
(long-term incentive plan)*
Performance targets
Performance targets – Executive Board re variable
remuneration (short-term incentive plan)* See explanation on page 78: outlook: important changes in 2017

78

FORBO ANNUAL REPORT 2016 – REMUNERATION REPORT

Important changes in 2016
In the 2016 business year there were no important changes in the remuneration system for the Board of Directors
or the Executive Board.

Outlook: important changes in 2016
The variable remuneration currently paid to the Executive Board in the form of a performance-related bonus –the short-term incentive plan or STI – is to be amended to include a long-term participation scheme – the longterm incentive plan or LTI – with effect from January 1, 2017, and subject to approval by the Ordinary General
Meeting of April 6, 2017.
The aim of the LTI is to link the remuneration of the Executive Board even more closely with the company’s longterm success.
No payment under the LTI was made in 2016. The related amendment to the Articles of Association to be­submitted to the Ordinary General Meeting of April 6, 2017, and approval of the maximum total sum of the LTI
in 2017 will have no effect on disclosure of the 2016 remuneration.
The LTI 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 of performance share units(PSUs). One PSU corresponds to a future subscription right to one share. The size of the PSU grant corresponds toa defined percentage of the Executive Board member’s fixed remuneration. The percentage may vary from 10 to30 percent. The PSUs are subject to a three-year vesting period. They are converted into vested shares only on
condition that the performance objectives of the Group are achieved. At the end of the performance period,
the company will determine the degree to which the objectives set by the Board of Directors at the start of theperformance period for the performance indicators have been reached. Depending on the degree to which theobjectives are reached, a given percentage of the PSUs will be converted into shares after the three-year vesting
period. Converted shares are locked up for a period of 3 years. They cannot be sold or pledged during this time.
Immediately on termination of the plan participant’s employment contract, regardless of whether the plan par­ticipant has terminated the contract or the company has terminated the contract with the plan participant, all
PSUs are forfeited.
The relevant share price for the allocation of PSUs at the start of the performance period is calculated from theunweighted average of the closing prices of the Forbo share in the first 14 trading days in January of the year
when the PSUs are granted.
The LTI performance indicators are geared to the company’s long-term, sustainable development. The perform­
ance indicators consist of three, evenly weighted objectives. These are organic growth, return on net assets(RONA), and growth in earnings per share (EPS).
The LTI objectives are based on a target achievement of 100%. It is not possible to exceed the maximum target
achievement level of 100%. If the 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 on conclusion of the three-year per­formance period.

79

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 gain
their long-term loyalty to the company. The purpose of paying part of the remuneration in the form of shares is
to link the interests of the managers to those of the shareholders. The portion of the remuneration paid in sharesis tied to a fixed remuneration amount.
The members of the Board of Directors receive a fixed remuneration, the amount of which is determined accord­
ing to whether the member is Board Chairman, a simple Board member or also a member of one of the Board
committees. The remuneration is paid out to members of the Board of Directors partly in the form of locked-up
shares in Forbo Holding Ltd.
The members of the Executive Board receive a fixed and a variable remuneration. The fixed remuneration is paid
mainly in cash but may also include shares of Forbo Holding Ltd. The portion paid in shares is tied to a fixed re­muneration amount. The variable remuneration consists of a performance-based remuneration (bonus), at least
50% of which must be taken in the form of locked-up shares of Forbo Holding Ltd (see the description of the
management investment plan (MIP) on pages 83 and 84 of this remuneration report). The portion paid in sharesis tied to a fixed remuneration amount. The bonus is tied to the achievement of individual (qualitative) targets
by each Executive Board member and of financial (quantitative) targets by the company. Depending on thefunction and responsibilities of the Executive Board member in question, these financial targets may be tied toGroup and/or divisional objectives. It may not exceed 200% of the fixed remuneration of the individual Executive
Board member.
The relevant statutory provisions governing the principles of performance-based remuneration, the distributionof shares, and the additional sum for remuneration of new members of the Executive Board who are appointed
after the Ordinary General Meeting are set out in Chapter IV, pages 9 and 10 of the Articles of Association of Forbo
Holding Ltd. These can be found at:www.forbo.com � Investors � Ordinary General Meeting

Determining the remuneration of the Board of Directors
In order to determine the remuneration of the Board of Directors, the compensation paid to Board membersof Forbo Holding Ltd is compared periodically with that paid to Board members of comparable industrial com­panies based on information that is available from publicly accessible sources, from respected market data pro­viders, and from data published by Ethos (the Foundation for Socially Responsible Investment and Active Share­ownership) or is known to Board members from their experience of office in similar companies. Industrial
companies are regarded as comparable if they are similar to Forbo in terms of sector, structure, size (sales andnumber of employees), geographic presence, profitability, market capitalization, and complexity. As a generalrule, 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 2016 – 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 is de­termined according to 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 tied to a fixed remuneration amount. These shares have a lock-up period of three years.
The number of shares issued is determined by taking the average price in the ten stock market days after distri­bution of a dividend or repayment of par value. If no dividend is distributed or no par value repayment made, theaverage price during the first ten stock market days starting on June 1 of the relevant business year applies. The
settlement or payment of the shares usually takes place in November.
For the purpose of reporting the remuneration, the shares issued are valued at fair value on the date of allocation.
The total compensation for the non-executive members of the Board of Directors also includes a lump sum for
expenses plus employer contributions to the usual social insurance benefits.
The non-executive Board members do not participate in the management investment plan (MIP).
Executive Chairman of the Board of Directors
The compensation for the Delegate of the Board of Directors and as of April 25, 2014 the Executive Chairman of
the Board of Directors is disclosed separately and included under total remuneration to the Board of Directors.
With effect from May 2013, the employment contract with the Delegate of the Board of Directors, and as of April
25, 2014, the Executive Chairman of the Board of Directors, was extended to encompass the period from May 1,
2013, to December 31, 2016. The remuneration will again be paid mainly in locked-up shares which have lock-up
periods of three, four, and five years respectively, and in an annual cash payment of CHF 310,000, to be used inpart for taxes and for employee contributions to the pension fund and social security. The underlying share priceused to calculate the number of shares is the weighted average price of the first and last five days on which Forbo
Holding Ltd shares were traded on the stock market in 2012 (CHF 522.12), less the reduced value as a result oflocking up the shares. The share package corresponds to annual compensation of CHF 2,200,000 (5,314 shares).
With this share package and this cash remuneration, all compensations such as bonuses, inflation, salary adjust­ments, options, etc. are settled. This share package may not be either pledged or assigned. The last third of thelocked-up shares will be available on May 1, 2018, at the earliest. This compensation model is thus geared tolong-term and sustainable corporate development and is fully consistent with the interests of the company andits shareholders.
The total remuneration of the Delegate of the Board of Directors and as of April 25, 2014, the Executive Chairmanof the Board of Directors for the period from May 1, 2013, to December 31, 2016, was described in detail in the2012 Annual Report and was approved by a majority of 98% in a consultative vote at the Ordinary General Meet­ing of April 26, 2013.
The Ordinance against Excessive Remuneration in Listed Public Companies (OaER) entered into force on January
1, 2014. According to Article 28 of the OaER, employment contracts must be compliant with the OaER by De­
cember 31, 2015, at the latest. Consequently, all payments that had been agreed and were paid out for 2016 haveto be reversed by December 31, 2015, at the latest. The value of this fixed remuneration for This E. Schneidercame to CHF 2,200,000 for 2016. In order to comply with and implement the provisions of the OaER, Forbo andThis E. Schneider have agreed that he will repay Forbo in cash the amount of his fixed compensation for the­period from January 1, 2016, to December 31, 2016, plus interest of 0.5% from May 1, 2013, to December 31, 2013.
The repayment was completed before year-end 2013 and has been paid out to him again in monthly install­

81

ments during 2016 after the approval of the 2015 Ordinary General Meeting. The compensation package andthe relevant agreements were adjusted accordingly. No severance payment or compensation in the event of atakeover was agreed; the period of notice is 12 months.
The total compensation for the Executive Chairman of the Board of Directors came to CHF 2,964,562 for the year
under review. Contained in this amount and reported in the column ‘Other payments’ are employer contributions
to the pension fund, other usual social insurance benefits, private use of the company car, contributions for­accident and health insurance, and location expenses. The Executive Chairman of the Board of Directors is nota party to the management investment plan (MIP) or the share-based compensation program of the Board of
Directors.
Remuneration paid
For the remuneration paid to the Board of Directors in the year under review and the details concerning valuationof the shares, the reader is referred to pages 86 to 89 of this remuneration report.

Determining the remuneration of the Executive Board
Basic principles
In order to determine the remuneration of the Executive Board, criteria such as function, responsibility and 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, from respected market data providers, and from data published by
Ethos (the Foundation for Socially Responsible Investment and Active Shareownership) or is known to the mem­bers of the Remuneration Committee from their experience of office in similar companies. Industrial companies
are regarded as comparable if they are similar to Forbo in terms of sector, structure, size (sales and number of
employees), geographic presence, profitability, market capitalization, and complexity. As a general rule, no exter­
nal consultants are co-opted for determining the remuneration.
Alignment of performance-based remuneration to the corporate strategy
The remuneration strategy of Forbo is geared to its current corporate strategy and linked to the relevant key­ratios. This is reflected in the choice of performance criteria that are tied to Group and/or divisional objectives
depending on the function of the individual Executive Board member; these include net sales, EBIT, net working
capital and free cash flow. The criteria for determining the remuneration paid to Executive Board members arethus 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 performance-driven 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.

82

FORBO ANNUAL REPORT 2016 – REMUNERATION REPORTThe performance-driven portion of the remuneration for the previous year is paid out on completion of thebusiness year and after approval by the shareholders. Impacts/performance criteria affecting the amount of thepayment are tied directly to Group profitability. The chart below provides a detailed breakdown on the timing
and connection between the corporate targets and the remuneration.

Planning cycle
1st quarter
Ordinary General Meeting
Corporate strategy
Review/amendment of strategy
Establishing mid-term plan
Establishing budget
Working out remuneration
Defining maximum total remunerationof Board of Directors
Defining maximum total remunerationof Executive Board
Ordinary General Meeting approval of total remunerationof Board of Directors and of fixed remuneration of
Executive Board for following business year
Setting targets for Executive Board
Assessing target achievement and proposal forvariable remuneration of Executive Board
Approval of variable remuneration of Executive Boardfor previous business year (short-term incentive plan)
Approval of maximum total amount of variable long-term
remuneration of Executive Board for current ­business year
(long-term incentive plan)*
Decision period* See the explanation on page 78: outlook: important changes in 2017

2nd quarter3rd quarter

4th quarter

83

Elements of remuneration of the Executive Board
Remuneration of the members of the Executive Board consists of a fixed base salary and a performance-driven
bonus.
Fixed remuneration
The fixed base remuneration paid to the Executive Board in the reporting year consists of the gross base salary,
private company car use, and social security payments made by the company. The Remuneration Committee may
also decide that part of the remuneration will be paid in the form of shares in Forbo Holding Ltd (lock-up periodof five years).
Performance-based remuneration (short-term incentive plan)
The variable (performance-based) remuneration component is tied to qualitative (individual) and quantitative(financial) targets, which are defined in accordance with the operational responsibility of the Executive Board
member in question. The Board of Directors defines and weights the individual and financial targets.
The qualitative targets are geared to the company’s long-term sustainable development and may account for
10% of the total variable remuneration. The remaining portion of the variable remuneration component depends
on achievement of the financial (quantitative) targets. The main targets for members of the Executive Board are:net sales of the Group and/or a division (25 to 30% of the variable remuneration), EBIT of the Group and/or a­division (50 to 55% of the variable remuneration), net working capital of the Group and/or a division (5 to 10%of the variable remuneration), RONA of the Group (0 to 10% of the variable remuneration) and free cash flow of
the Group (0 to 10% of the variable remuneration).
The defined objectives of the entire variable remuneration are equivalent to 100% target achievement. The max­
imum 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 performance-driven bonus, which is based on achievement of the individual and Group targets,is set in March on completion of the business year and is submitted to shareholders for approval at the Ordinary
General Meeting.
Conversion of remuneration into shares in the management investment plan (MIP)
The bonus payment is linked to the management investment plan (MIP), which was introduced in 2006 andamended in 2012. According to this plan, at least 50% of the annual bonus of Executive Board members must be
paid into the MIP. The portion paid in shares is derived from a fixed remuneration amount.
As for the remaining 50% of the annual bonus, the Executive Board members may either draw all or part of it incash or pay it into the MIP. The Executive Board members may redefine the allocation of this remaining 50% every
year. The portion paid in shares is derived from a fixed remuneration amount.

84

FORBO ANNUAL REPORT 2016 – REMUNERATION REPORT

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

Portion in cash
maximum 50%

in cashBonus

Portion MIP investment
minimum 50% –maximum 100%x 1.25x Factor 0.95 – 1.1
depending on shareprice development

in shares
3-year lock-up

Foreign members of the Executive Board may acquire stock awards instead of shares. The stock in question willbe transferred after three years.
Actual bonus payments
Readers are referred to pages 86 to 89 of this remuneration report for the amount of the actual variable remuner­
ation paid to the Executive Board in the year under review and for the details on valuation and allocation of shares.

85

Employment contracts of the Executive Board members
According to Article 28 of the OaER, employment contracts had to be compliant with the OaER by December 31,
2015 at the latest.
Consequently, the employment contracts of the Executive Board members were already adjusted in 2014 in order
to meet the ordinance guidelines that came into effect in 2015. The employment contracts of the Executive Board
members provide for contracts of indefinite duration with a maximum period of notice of twelve months.
The Board of Directors can order that lock-up periods stipulated in the employment contracts of Executive Board
members in connection with the MIP may be revoked wholly or in part upon the occurrence of defined events(e.g. change of control, termination of employment, retirement or death).
Should changes in control of the company occur, no additional remuneration or benefits will be paid out.
No severance payments have been agreed with Executive Board members.

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

86

FORBO ANNUAL REPORT 2016 – 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 813,772 in theyear under review (previous year: CHF 813,760). This sum consists of the base salary in cash (60% of the remuner­
ation), amounting to CHF 415,414 (previous year: CHF 415,487) and the base remuneration in shares (40% of the
remuneration) of CHF 332,987 (previous year: CHF 332,905). This corresponds to 278 shares (previous year: 284
shares) at a market value of CHF 1,197.80 (previous year: CHF 1,172.20). The portion paid in shares is tied to a fixed
remuneration amount. This total remuneration includes a lump sum for expenses plus employer contributions tothe usual social insurances, which are reported separately in the column ‘Other remuneration’.
The remuneration paid to the Executive Chairman of the Board of Directors is explained in detail on pages 80 and
81 of this remuneration report.
Remuneration of the Executive Board
The total remuneration paid to the members of the Executive Board came to CHF 3,606,280 in the year underreview (previous year: CHF 2,921,338), subject to approval of the variable portion by the 2017 Ordinary General
Meeting. This sum includes a fixed base salary of CHF 1,727,003 (previous year: CHF 1,700,352) and variable re­muneration (short-term incentive plan) of CHF 1,386,787 (previous year: CHF 790,135) plus the private use of thecompany car, employer contributions to the pension fund and other usual social insurances, which are reported
separately in the column ‘Other remuneration’.
The fixed portion of the base salary paid in shares (lock-up period of five years) came to CHF 404,478 (previous
year: CHF 404,619). The portion paid in shares is tied to a fixed remuneration amount. The portion of the variable
remuneration (short-term incentive plan) paid in shares in connection with the MIP (lock-up period of three
years) came to CHF 1,300,125 (previous year: CHF 720,127), which is subject to approval by the 2017 Ordinary
General Meeting. The portion paid in shares is tied to a fixed remuneration amount.

87

Disclosure of remuneration of the Board of Directors and Executive Board
Remuneration
For the year 20161)

Variable
remuneration2)

Base salary
CashName and function

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

SharesCash

CHF

Number

CHF

CHF

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

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

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

86,662
0

Other
remu­
neration3)

Total

SharesNumber

959
450

CHF

CHF

CHF

1,300,125
610,069

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

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

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

88

FORBO ANNUAL REPORT 2016 – REMUNERATION REPORT

Remuneration
For the business year 20151)

Variable
remuneration2)

Base salary
CashName and function

This E. Schneider, Executive Chairman4)
Michael Pieper, Vice Chairman
Dr. Peter Altorfer, Vice Chairman
Claudia Coninx-Kaczynski, member
Dr. Reto Müller, member
Vincent Studer, member
Total Board of Directors5)
Total Executive Board6)7)8)
Of whom highest-paid
Executive Board member

SharesCash

CHF

Number

CHF

CHF

297,983
80,869104,138
71,774
71,77486,932
713,470
1,295,733
400,000

5,314
55
72
49
49
59
5,598
394
196

2,200,020
64,471
84,39857,43857,43869,1602,532,925
404,619
201,249

70,0080

Total

SharesNumber

679
328

CHF

CHF

CHF

720,127
347,867

436,614
12,08817,606
13,531
13,531
8,612
501,982
430,851
169,8932,934,617
157,428
206,142
142,743
142,743
164,704
3,748,377
2,921,338
1,119,009

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 valuation models used and disclosed in the consolidated financial statements.
2

Other
remu­
neration3)

The variable remuneration of the Executive Board corresponds to the actual degree to which targets were reached in 2015 and has been
submitted to the April 2016 Ordinary General Meeting for approval. The criterion for determining the number of shares issued for the variable
remuneration is the unweighted average of the closing price of the Forbo shares in the first 14 trading days in January of the allocation year
in connection with the MIP. The allocation takes place in late April/early May (subject to approval by the Ordinary General Meeting) for theperiod from January to December of the previous year. The value at allocation was CHF 1,060.57. The shares are locked up for a period of
3 years.

3) ‘Other remuneration’ includes in particular employer contributions to the usual social insurances, private use of the company car and lumpsum or on-site expenses.
4) This E. Schneider was Delegate of the Board of Directors until the 2014 Ordinary General Meeting. From this point on, he has had the functionof Executive Chairman of the Board of Directors. Please refer to pages 80 and 81 of this remuneration report for details of his remuneration
structure. These remarks also contain the criterion for determining the number of shares issued and their lock-up periods.
5) The criterion for determining the number of shares issued for the non-executive members of the Board of Directors is the average share pricein the ten trading days after payment of the dividend or repayment of the par value: CHF 1,172.20. The allocation is made at the discounted
tax value of CHF 984.20. The shares are locked up for a period of three years and are reported at market value in the table above.
6) Remuneration of the entire Executive Board including the highest paid Executive Board member.
7) The criterion for determining the number of shares issued for the base salary is the unweighted average of the closing price of the Forboshare in the first 14 trading days in January of the allocation year. The shares are allocated in late April/early May for the period from May ofthe previous year to April of the year of allocation. The shares are locked up for a period of 5 years. The value of the shares allocated was CHF
965.65 in 2015 and CHF 1,060.57 in 2016.
8) The criterion for determining the number of shares issued for the variable remuneration is the unweighted average of the closing price of the
Forbo share in the first 14 trading days in January of the allocation year. The shares for the bonus for the business year 2015 were allocatedin late April 2016, after approval by the 2016 Ordinary General Meeting. The shares are locked up for a period of three years. The value atallocation was CHF 1,060.57. Foreign members of the Executive Board may acquire stock awards instead of shares. The stock in question willbe transferred after 3 years.

89

Options
As of the 2013 business year, no options have been issued in connection with the MIP. However, there are still
options outstanding within the management investment plan (MIP), which was launched in 2006 and revised in
2012.
As at the balance sheet date December 31, 2016, the Executive Board held the following options:
Allocation
2012

Number500

Term
20.04.2012 – 21.04.2017

Locked-up until
20.04.2015

Subscription ratio
1:1

Strike price (CHF)
616.33

Advances and loans
As at December 31, 2016, no advances or loans to members of the Board of Directors or the Executive Board were
outstanding.
The relevant statutory provisions concerning advances, loans and employee benefits for members of the Boardof Directors and the Executive Board are set out in Chapter IV, pages 9 and 10 of the Articles of Association ofForbo Holding Ltd can be downloaded at:www.forbo.com � Investors � Ordinary General Meeting

Disclosure of shareholdings pursuant to Article 663c CO2016 business year
As at December 31, 2016, the individual members of the Board of Directors and the Executive Board (including
related parties) held the following number of shares in Forbo Holding Ltd:
Shareholdings 2016
SharesName and function
This E. Schneider, Executive Chairman3)
Michael Pieper, Vice Chairman
Dr. Peter Altorfer, Vice Chairman
Claudia Coninx-Kaczynski, member
Dr. Reto Müller, member
Vincent Studer, member
Total Board of Directors
Stephan Bauer, Chief Executive Officer
Matthias P. Huenerwadel, Executive Vice President Flooring Systems
Andreas Spreiter, Chief Financial Officer
Jean-Michel Wins, Executive Vice President Movement Systems
Total Executive Board

Options1)
2012 series
1:12)

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

500

500

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

90

FORBO ANNUAL REPORT 2016 – REMUNERATION REPORTAs at December 31, 2015, 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 2015
SharesName and function
This E. Schneider, Executive Chairman3)
Michael Pieper, Vice Chairman
Dr. Peter Altorfer, Vice Chairman
Claudia Coninx-Kaczynski, member
Dr. Reto Müller, member
Vincent Studer, member
Total Board of Directors
Stephan Bauer, Chief Executive Officer
Matthias P. Huenerwadel, Executive Vice President Flooring Systems
Andreas Spreiter, Chief Financial Officer
Jean-Michel Wins, Executive Vice President Movement Systems
Total Executive Board

1) Following the amendment of the MIP, all the sums paid into it are invested in shares of Forbo Holding Ltd starting as of January 1, 2013. As of
fiscal 2013, no more options were issued under the MIP. However, there are still options outstanding within the MIP, which was launched in2006 and amended in 2012.
2) Subscription ratio.
3) The share portion for the Executive Chairman of the Board includes the 19,483 shares from the employment contract for the period fromMay 1, 2013, to December 31, 2016. The shares are subject to lock-up periods of 3, 4, and 5 years. The last third of the shares will be available
on May 1, 2018, at the earliest.

Options1)
2012 series
1:12)

46,221
544,122
1,104
85
505
754
592,791
1,524
1,944
1,102
195
4,765

500

500

91

Report of the statutory auditor

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

We have audited the accompanying remuneration report of Forbo Holding Ltd for the year ended December 31,
2016. 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 87 to 90 of the remuneration report.
Responsibility of the Board of Directors
The Board of Directors is responsible for the preparation and overall fair presentation of the remuneration reportin accordance with Swiss law and the Ordinance against Excessive compensation in Stock Exchange Listed
Companies (Ordinance). The Board of Directors is also responsible for designing the remuneration system anddefining individual remuneration packages.
Auditor's Responsibility
Our responsibility is to express an opinion on the accompanying remuneration report. We conducted our audit inaccordance with Swiss Auditing Standards. Those standards require that we comply with ethical requirements
and plan and perform the audit to obtain reasonable assurance about whether the remuneration report complies
with Swiss law and articles 14 – 16 of the Ordinance.
An audit involves performing procedures to obtain audit evidence on the disclosures made in the remuneration
report with regard to compensation, loans and credits in accordance with articles 14 – 16 of the Ordinance. The
procedures selected depend on the auditor’s judgment, including the assessment of the risks of material
misstatements in the remuneration report, whether due to fraud or error. This audit also includes evaluating thereasonableness of the methods applied to value components of remuneration, as well as assessing the overall
presentation of the remuneration report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
OpinionIn our opinion, the remuneration report for the year ended December 31, 2016, 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, March 2, 2017

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

FINANCIAL REPORT
Forbo Group financial report
93
Consolidated balance sheet
94
Consolidated income statement
95
Consolidated comprehensive income statement
96
Consolidated statement of changes in equity
97
Consolidated cash flow statement
98
Notes – accounting principles
99
Notes109
Group companies
140
Report of the statutory auditor
144
Consolidated income statements 2012 – 2016
150
Consolidated balance sheets 2012 – 2016
151
Financial statements for Forbo Holding Ltd
Income statement
Balance sheet
Notes to the financial statements
Proposal for appropriation of available earnings
Report of the statutory auditor

153
154
155
156
161
162

94

FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS

Consolidated balance sheet

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

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

31.12.2016

31.12.2015

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

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

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

559.2
0.2
– 0.1
559.1
120.7
0.9
70.1
25.7
24.0
232.2
77.4
18.0
79.9
0.1
20.3
36.5
352.9
912.1

Note

14
15
12

16
17

18

Note

20
20

22
23
24
12

24
25
26

FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS

95

Consolidated income statement

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

2016

2015

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

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

Note

5

6

7
8
10
11
12
27

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

13
13

74.66
74.65

62.14
62.13

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

13
13

74.66
74.65

62.14
62.13

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

96

FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS

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

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

2016

2015

127.6

115.7

– 14.6– 10.0– 27.2– 41.885.8
85.8– 48.7– 58.7
57.0
57.0

Note

12

FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS

97

Consolidated statementof changes in equity
2016

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

SharecapitalTreasuryshares0.2– 0.1

Reserves

0.2

– 0.1

852.0
127.6
– 14.6
113.0
4.8
0.7
– 29.1
941.4

Share
capitalTreasurysharesReserves

0.2

– 0.1

0.0

Translationdifferences– 292.9– 27.2– 27.2– 320.1

Translationdifferences

Total

559.2
127.6
– 41.885.8
4.8
0.7– 29.1
621.4

2015

CHF m
December 31, 2014
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, 2015

– 0.0

0.0

0.2

– 0.1

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

982.9
115.7
– 10.0105.7
3.8– 210.1– 30.3852.0– 244.2– 48.7– 48.7– 292.9

Total

738.8
115.7
– 58.757.0
3.8– 210.1– 30.3
559.2

98

FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS

Consolidated cash flow statement

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

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

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

2016

2015

127.6
31.5
– 1.9
29.9
5.9
0.0
4.8
– 29.90.4
19.2– 21.0
166.5

115.7
28.7
– 1.6
29.3
2.8
0.1
3.8
– 28.1
2.0
– 8.9
– 2.9
140.9

– 1.7
– 40.00.9
0.0
0.5– 40.30.0– 39.5
0.2
50.2
0.5
11.4

0.0
– 0.5
0.0
0.0
0.0
– 29.1– 29.6

– 0.5
– 0.5
0.0
– 205.8
5.3– 30.3– 231.8

96.6
– 3.2
116.3
209.7

– 79.5
– 9.3
205.1
116.3

Note

12
14
15
21

Note

10

Note

22
11

Note

18
18

FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS

99

Notes –
accounting principles
1 General information
Forbo Holding Ltd (‘the company’) and its subsidiaries(together with the company constituting the ‘Group’)
manufacture floorings, construction adhesives, anddrive and conveyor technology. The Group has a glo­
bal network of locations with production and distribu­
tion as well as pure sales companies.
The company is a public limited company under Swisslaw, domiciled in Baar, Switzerland. It is listed on the
SIX Swiss Exchange.
These financial statements were approved by the
Board of Directors on March 2, 2017, and released for
publication on March 7, 2017. This financial report issubject to approval by the Ordinary General Meetingof April 6, 2017.

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.
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 statements were prepared in accord­
ance with the principle of historical costs with the­exception of available-for-sale financial assets and de­rivative financial instruments, which are measured atfair value.
The preparation of the consolidated financial state­ments requires management to make discretionary
judgements, estimates and assumptions that can affectthe application of accounting methods and reported
revenues, expenses, assets, liabilities, and contingent
assets and liabilities at the date of the financial state­ments. Actual results may differ from these estimatesand assumptions. Estimates and the underlying 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 in­estimates are contained in note 3.
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 involvementin the company or possesses rights to the returns andis able to influence these returns by means of its dis­cretionary control over the company. The financial
statements of subsidiaries are included in the consoli­
dated 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 ofthe assets transferred, liabilities incurred or acquired,and equity instruments issued by the acquirer on
the transaction date. Liabilities dependent on future
events which are based on agreements on contingent
considerations are accounted for at their fair value inthe accounting treatment of the acquisition. Acquisi­tion costs are reported as expenditure in the income
statement. Non-controlling interests are measured at
the acquisition date with their proportionate share in
the identifiable net assets of the acquired entity.

100 FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS

Goodwill is the excess of the consideration of the busi­
ness combination and the amount of the non-con­trolling interest over the identifiable net assets as­
sessed at fair value.
Inter-company transactions, balances, and unrealized
gains or losses on transactions between Group com­panies are eliminated.
Associates are all entities over which the Group hassignificant influence but not control, generally accom­
panied by a shareholding of between 20% and 50%of the voting rights. Investments in associates are ac­counted for using the equity method of accounting
and are initially recognized at cost.
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
Effective June 28, 2016, Forbo Siegling Italia S.p.A. ac­quired the entire share capital of Tema S.r.l. in Parma,
Italy. Tema S.r.l. was an existing customer of Forbo thatsells fabric conveyor belts and plastic modular belts.
Tema S.r.l. is now an additional service point for the
Movement Systems division in northern Italy.
In addition, in the reporting year Forbo Finanz AG es­
tablished a new production facility belonging to Forbo
Movement Systems (China) Co. Ltd. in Pinghu and a
new sales company Forbo Flooring Middle East DMCC
in Dubai.
The subsidiaries included in the group of consolidated
companies are listed under ‘Group companies’ (frompage 140 of this report).

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

FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS 101

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

Exchange rates
Euro zone
USA
Great Britain
Japan
China
Sweden

EUR
USD
GBP
JPY
CNY
SEK

Discontinued operations
Discontinued operations are recognized separately if
a component of the Group has either already been dis­continued or been classified as held for sale. The pri­or-year figures affecting the income statement are ad­justed accordingly and are also presented separately.
Net sales and revenue recognition
Net sales include the fair value of the consideration­received or to be received for the sale of goods andservices as part of ordinary business activity. Net sales
are reported net of revenue reductions such as sales
tax, returns, discounts, and rebates.
Revenue from the sale of goods and services is recog­
nized in the income statement if the risks and rewardsof ownership have been transferred to the buyer, theamount of the revenue can be reliably determined, andpayment is deemed to be likely.
Appropriate provisions are made for expected warranty
claims.

1
1
1
100
100
100

Balance sheet(year-end exchange rates)

2016

2015

2016

2015

1.09010.9853
1.33540.907114.8300
11.5216

1.06840.96271.47120.795415.3200
11.41811.07191.0184
1.25760.870914.6600
11.19631.08781.00191.47720.832915.4300
11.8561

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 sufficient re­sources and intends to complete the development andexploit or sell the asset. Other development expenses
that do not meet these criteria are taken to the income
statement as soon as they are incurred. Capitalized de­velopment costs are measured at the cost of acquisi­tion or production less cumulative amortizations andimpairments.
Share-based payments
Equity-settled share-based payments to employees
are valued at the fair value of the equity instrumenton the date on which the instruments are granted.
The fair value determined on granting equity-settled
share-based payments is recognized in the income
statement over the vesting period and is included inpersonnel expenses.

102 FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS 103

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

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

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

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

104 FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS(c) Financial assets available-for-sale
Available-for-sale financial assets are non-derivative fi­
nancial assets that are either designated in this catego­ry or not classified in any of the other categories.
(d) Financial liabilities at amortized costs
Financial liabilities are recognized at fair value less directtransaction costs the first time they are reported. Sub­sequent valuations are generally done at the amortized
cost, applying the effective interest method.
Current and non-current financial debt comprise bankloans and finance lease obligations. It is stated at amor­
tized costs.
Financial debt is assigned to current debt, except if theGroup has to settle the obligation earliest 12 months
after the reporting date or enjoys an unlimited right topostpone payment of the debt by at least 12 months
after the reporting date.
Trade payables are non-interest-bearing and are dis­closed at nominal value.
RECOGNITION AND MEASUREMENT
Purchases and sales of financial assets are basically rec­ognized as soon as the Group becomes a contractual
party. In the case of regular purchases or sales, the set­tlement date is relevant for the initial recognition andderecognition.
Financial assets not classified as being ‘Financial assets
at fair value through profit or loss’ are initially recog­
nized at fair value plus transaction costs. Financial as­
sets which are carried at fair value through profit or loss
are initially recognized at fair value, and transaction
costs are expensed in the income statement. Financial
assets are derecognized when the rights to receive
cash flows from the investments have expired or havebeen transferred and the Group has transferred sub­stantially all risks and rewards incidental to ownership.

Available-for-sale financial assets and assets in the cat­egory ‘Financial assets at fair value through profit orloss’ are carried at fair value after their initial recogni­tion. Loans and receivables are carried at amortizedcost using the effective interest method.
Gains or losses arising from financial assets in the cate­gory ‘Financial assets at fair value through profit or loss’
are recognized in the income statement in the period
in which they are incurred. Dividend income from fi­
nancial assets classified as at fair value through profit orloss is recognized in the income statement when theGroup’s right to receive payments is established.
Changes in the fair value of securities classified as avail­able-for-sale are recognized in other comprehensive
income. When securities classified as available-for-saleare sold or impaired, the accumulated fair value adjust­ments previously recognized in other comprehensive
income are reclassified to the income statement.
The Group assesses at the end of each reporting year
whether there is objective evidence that a financial as­
set or a group of financial assets is impaired.

FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS 105

Inventories
Inventories are stated at the lower of cost or net realiz­able value. Cost includes direct material and, if applic­able, other direct costs and related production over­heads to the extent that they are incurred in bringing
the inventories to their present location and condition.
The net realizable value constitutes the estimated sales
price less all estimated costs up to completion, as wellas the costs of marketing, sales, and distribution.

Employee pension plans
The Group maintains various pension plans designed
as defined contribution and defined benefit plans.
These pension plans are established in accordancewith the local conditions in each country. The plans are
funded either by contributions to legally autonomous
pension funds and insurance plans or by recognitionof the pension plan liabilities in the financial state­ments of the respective companies.

Inventories are for the greater part measured at aver­age cost. Adjustments are made for unsaleable in­ventories and inventories with insufficient turnover.
­Inter-company profits on intra-Group deliveries are
eliminated in the income statement.

For defined contribution plans, the costs incurred in
the relevant period correspond to the agreed employ­er contributions.

Cash and cash equivalents
Cash and cash equivalents are stated at nominal value.
They include cash on hand, postal and bank accounts,and fixed-term deposits with maturities of up to 3
months from the date of acquisition.
Shareholders’ equity
Registered shares are classified as share capital at theirpar value. Payments by shareholders above the par val­ue are credited to reserves.
Treasury shares are deducted at their par value fromshare capital. The acquisition costs in excess of par val­ue arising on the acquisition of treasury shares are deb­
ited to reserves. On the sale of treasury shares, gains orlosses compared with the par value are credited ordebited to reserves.
Dividends are debited to equity in the period in which
the resolution on their distribution is adopted.

For defined benefit plans, the pension costs and liabil­ities are assessed annually on the basis of various eco­nomic and demographic assumptions by independ­
ent actuaries according to the projected unit credit
method. The liabilities correspond to the present valueof the expected future cash flows. The plan assets arestated at market value and deducted from the pension
liabilities. Pension costs, consisting of current service
costs incurred in the relevant period and net interest
expense, less employee contributions, are stated as
personnel expenses in the income statement. Past
­service costs resulting from changes in pension plans
are posted directly to the income statement. Profits orlosses resulting from pension plan curtailments or set­tlements are immediately taken to the income state­
ment.
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.

106 FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS

Provisions
Provisions are recognized if the Group has a current le­gal or constructive obligation as a result of a past event,
it is probable that an outflow of resources will be re­quired to settle the obligation, and a reliable estimateof the amount can be made. The provision is the best
estimate on the reporting date of the amount required
to meet the current obligation, taking into account therisks and uncertainties underlying the obligation.

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

Impairment tests
Along with the regular periodic review of goodwill
and intangible assets with an indefinite useful life, thecarrying amounts of fixed and intangible assets witha finite useful life are also always reviewed if due tochanged circumstances or other triggering events
these amounts can possibly no longer be realized. Ifsuch a situation occurs, the recoverable amount is­determined based on expected future revenues. This
corresponds to either the discounted expected cash
flows or the expected net sales price.
Important assumptions in the calculations underlying
these impairment tests include growth rates, margins,
estimates and management’s expectations of the fu­
ture development of net working capital, and discountrates. The actual cash flows may deviate from theplanned discounted future values. Likewise, the useful
lives may be shortened or non-current assets impairedin the event of a change in the use of buildings, ma­chinery and facilities, change or abandonment of lo­
cations, 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’.

FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS 107

Valuation of pension plan liabilities
Various employee pension plans and schemes exist for
employees of the Group. In the valuation of defined
benefit plans, actuarial assumptions are made to esti­
mate future developments. These include assumptions
and estimates relating to the discount rate, the inflation
rate as well as assumptions for future wage trends. In
their actuarial calculations for determining employee
benefit obligations, the actuaries also use statistical in­formation such as mortality tables and staff turnoverrates. If these parameters change owing to a change inthe economic situation or market conditions, the sub­sequent results may deviate considerably from the ac­
tuarial reports and calculations. These deviations may
have a significant medium-term effect on expenses
and income from the employee pension schemes andon the comprehensive income statement. Further in­formation on this topic can be found in note 23 ‘Em­
ployee benefit obligations’.
Recognition and valuation of provisions
In the conduct of ordinary business activities, a liabilityof uncertain timing and/or amount may arise. Provi­sions are determined using available information basedon reasonably expected cash outflows. Claims against
the Group may arise that may not be covered, or arecovered only in part, by provisions or insurance bene­fits. Further information on this topic can be found innote 24 ‘Provisions’.

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 12 ‘Income taxes’.

108 FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS

4 Application of new or revised
accounting standards

The first-time application of the before-mentioned
new and revised standards and interpretations had noeffect on the Annual Report presented here.

Applied new and revised standards
and interpretations
The following new or revised standards and inter­
pretations of the International Accounting Standards
Board (IASB) were applied for the first time in the busi­
ness year that began on January 1, 2016:

Introduction of new standards
in 2017 and beyond
The following new and revised standards and inter­
pretations that were published by end-2016 but are
not yet mandatory were not applied in advance in thepresent consolidated financial statements. Since theirimpact on the consolidated financial statements has
not yet been systematically analyzed, the anticipatedeffects shown in the corresponding note to the tablebelow represent an estimate by management.

–– Accounting for acquisitions of interests in a joint
operation (amendments to IFRS 11)–– Clarification of acceptable methods of depreciation
and amortization (amendments to IAS 16 and 38)–– Annual improvements to IFRS 2012 – 2014 cycle–– Disclosure initiative (amendments to IAS 1)

Standards
Date effective

Plannedapplication

**
**
***

January 1, 2018
January 1, 2018
January 1, 2019

Business year 2018
Business year 2018
Business year 2019**

January 1, 2017
January 1, 2017

Business year 2017
Business year 2017

Annual improvements to IFRS 2014 – 2016 cycle
Classification and measurement of share-based payment transactions(amendments to IFRS 2)**

January 1, 2017
January 1, 2018

Business year 2017
Business year 2018

Applying IFRS 9 – ‘Financial instruments’ with IFRS 4 – ‘Insurance contracts’(amendments to IFRS 4)*

January 1, 2018

Reporting year 2018

New standards or interpretations:
IFRS 9 – ‘Financial instruments’
IFRS 15 – ‘Revenue from contracts with customers’
IFRS 16 – ‘Leases’
Amendments and changes to standards and interpretations:Disclosure initiative (amendments to IAS 7)
Recognition of deferred tax assets for unrealized losses(amendments to IAS 12)*

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

FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS 109

Notes

5 Segment reporting
The Group is a global producer of Flooring Systems
and Movement Systems. The divisions correspond to
the internal management structure and are run sepa­
rately 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 specificbusiness.
The Flooring Systems and the Movement Systems di­visions are reportable segments. The identification of
the reportable segments is based on internal man­agement reporting to the Executive Chairman of theBoard of Directors and to the Chief Executive Officer of
the Group and hence on the financial information
used to review the performance of the operational
units in order to reach a decision on the allocation of
resources.
Segment information on the reportable segments forthe reporting year:

2016
CHF m
Total net sales
Inter-segment sales
Net sales to third parties
EBIT
EBITDA
Operating assets
Capital expenditure
Number of employees (December 31)

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

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

Corporate/
Elimination
– 0.5
0.5

Flooring
Systems
791.8
– 0.5
791.3
109.8
133.1
528.6
30.5
3,006

Movement
Systems
347.9
– 0.1
347.8
42.9
51.2
215.2
8.9
2,174

Corporate/
Elimination
– 0.6
0.6

– 10.8– 10.6
16.9
3.0
42

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

Segment information on the reportable segments forthe prior year:
2015
CHF m
Total net sales
Inter-segment sales
Net sales to third parties
EBIT
EBITDA
Operating assets
Capital expenditure
Number of employees (December 31)

– 9.9
– 9.5
12.3
0.1
42

Total
1,139.1
0.0
1,139.1
142.8
174.8
756.1
39.5
5,222

110 FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS

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

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

CHF m
Total operating assets
Non-operating assets
Total assets

Inter-segment sales are transacted at arm’s length. The
segments apply the same accounting principles as
the Group. Sales to third parties, as they are reported
to the Executive Chairman of the Board of Directors
and the Chief Executive Officer, are identical with thesales reported in the income statement.
Reconciliation of segment results to the income state­ment and balance sheet:
2016

2015

157.2
1.9
159.1

142.8
1.6
144.4

31.12.2016

31.12.2015

738.9
250.4
989.3

756.1
156.0
912.1

FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS 111

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

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

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

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

2016
Third-party sales

2015
Third-party sales

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

26.1
139.1
134.0
108.4
123.0
100.4
55.9
47.9
734.8
239.4
164.9
1,139.1

31.12.2016
Operating assets

31.12.2015
Operating assets

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

29.5
62.4
77.1
188.6
155.1
25.5
18.2
17.8
574.2
100.9
81.0
756.1

112 FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS

6 Development costs

7 Other operating expenses‘Development costs’, which mainly comprise productdevelopment, amounted to CHF 15.1 million in the re­porting year (2015: CHF 15.1 million).

‘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.

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

8 Other operating income‘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, 2016, the headcount was 5,346(2015: 5,222). The average headcount over the year
was 5,336 (2015: 5,223).

2016

2015

281.0
68.3
6.4
355.7

267.7
65.6
3.9
337.2

Salaries and wages include share-based payments ex­penses of CHF 4.8 million (2015: CHF 3.8 million). A
bonus program is available for around 130 managers,which is linked to achieving financial targets set for
the Group, the divisions, and individual objectives (seealso note 21 ‘Employee participation plan’).

10 Financial income

Financial income
CHF mInterest income
Gains from financial instruments classified as being at fair value through profit and loss
Foreign exchange gains, net
Total financial income

2016

2015

0.5
0.0
1.5
2.0

0.5
0.8
0.7
2.0

FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS 113

11 Financial expenses

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

2016

2015

0.0
0.0
0.1
0.1

0.0
0.0
0.4
0.4

2016

2015

38.9
– 7.4
31.5

31.5
– 2.8
28.7

2016

2015

159.1
– 40.1144.4– 32.5

– 1.4
1.2
4.1
2.0
2.7
– 31.5

– 1.2
2.9
2.4
0.0
– 0.3
– 28.7

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

12 Income taxes

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

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

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

Since the Group operates in various countries with dif­ferent tax laws and rates, the expected and effective
tax expense depends every year on the origin of the
profits or losses in each country. The expected tax ex­
pense is the sum of the expected individual tax in­come/expense of all subsidiaries. The expected indi­vidual tax income/expense in a country is calculated
by multiplying the individual profit/loss by the tax rateapplicable in the country concerned. The expected tax
rate in the year under review was 25.2% (2015: 22.5%).

114 FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS

Capitalized and non-capitalized tax loss carry-for­wards, by expiry date:
2016
CHF m
Expiry after:
1 year
2 years
3 years
4 years
5 years
More than 5 years
Total tax loss carry-forwards

Not capitalized

Capitalized

Total

0.4
0.1
0.2
0.7
2.1
44.0
47.5

0.1
0.1
0.8
3.3
0.1
49.5
53.9

0.5
0.2
1.0
4.0
2.2
93.5
101.4

Not capitalized

Capitalized

Total

0.3
1.0
1.6
1.2
3.5
75.7
83.3

0.0
0.1
0.1
0.0
0.0
40.3
40.5

0.3
1.1
1.7
1.2
3.5
116.0
123.8

2015
CHF m
Expiry after:
1 year
2 years
3 years
4 years
5 years
More than 5 years
Total tax loss carry-forwards

In 2016, no tax loss carry-forwards expired unused(2015: CHF 0.3 million).

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

Deferred income tax assets and liabilities are offset
when they relate to the same tax jurisdiction, provided
that the legal right to offset exists, and they are intend­
ed either to be settled net or to be realized simultan­
eously. The following amounts are shown in the bal­ance sheet:
31.12.2016

31.12.2015

40.5– 10.929.6

39.5– 24.0
15.5

FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS 115

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

CHF m
As at December 31, 2015
Increase/decrease (–) in deferred tax assets
As at December 31, 2016
Netting
As at December 31, 2016, net

Inventories
7.7
1.1
8.8

Property,plant, andequipment
3.1
– 0.8
2.3

Provisions
4.8
0.7
5.5

Loss carryforwards
11.2
2.7
13.9

Employeebenefitobligations
15.6
2.0
17.6

Other
7.8
– 0.6
7.2

Total
50.2
5.1
55.3
– 14.840.5

Inventories
3.3
– 0.1

Property,plant, andequipment
4.7
– 0.9

Provisions
6.6
– 3.2

Intangible
assets
17.3– 3.8

Employeebenefitobligations
1.7
– 1.7

Other
1.1
0.7

Total
34.7
– 9.0

3.2

3.8

3.4

13.5

0.0

1.8

25.7
– 14.8
10.9

Deferred tax liabilities

CHF m
As at December 31, 2015
Decrease (–)/increase indeferred tax liabilities
As at December 31, 2016
Netting
As at December 31, 2016, net

Increase in deferred tax assets, net
Of which recognized in other comprehensive income
Of which recognized in the income statement
Of which due to currency translation

14.1
3.5
7.4
3.2

As at December 31, 2016, no deferred tax liabilities on
undistributed profits from consolidated companies
have been recognized, since this income is deemed tohave been reinvested for an indefinite period. Should
there be a distribution, withholding and other taxes

might be incurred, which upon decision may be pro­vided for accordingly.
Tax expense and income recognized directly in theother comprehensive income statement:
2016

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

2015

Before tax

Tax income

After tax

Before tax

Tax income

After tax

– 18.1– 27.2– 45.3

3.5
0.0
3.5

– 14.6– 27.2– 41.8– 12.0– 48.7– 60.7

2.0
0.0
2.0

– 10.0– 48.7– 58.7

116 FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

2016
127.6
0
127.6
1,709,233
246
1,709,479

2015
115.7
0
115.7
1,861,248
219
1,861,467

FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS 117

14 Property, plant, and equipment

Cost on acquisition
CHF m
As at January 1, 2015
Additions
Disposals
Transfers
Translation differences
As at December 31, 2015
Change in scope of consolidation
Additions
Disposals
Transfers
Translation differences
As at December 31, 2016

Land andbuildings

127.4
1.1
– 2.3
1.5
– 19.7108.0

Machineryandequipment

1.3
– 0.2
9.0
– 6.1
112.0

701.5
5.3
– 23.215.0– 53.2
645.4
0.6
5.5
– 3.9
30.4
– 22.7655.3

Land andbuildings

Net carrying amountAs at January 1, 2015
As at December 31, 2015
As at December 31, 2016

128.9
1.2
– 5.3
1.2
– 9.5
116.5

Assetsunderconstruction

17.3
31.4
– 17.7
– 1.1
29.9

Total
property,plant, andequipment

975.1
39.0
– 30.8

1.3
– 2.8
1.4
– 2.8
113.6

– 41.0– 0.4
17.4– 83.5
899.8
0.6
37.0
– 6.9
– 0.2
– 32.0898.3

Machineryandequipment

Other
property,plant, andequipment

Assetsunderconstruction

Total
property,plant, andequipment

16.1
6.6
– 2.2

607.0
18.5
– 23.1

117.1
4.2
– 5.2

– 12.6
7.9
6.5
– 0.1

– 8.5
107.6
3.8
– 2.5

– 3.5
10.8

– 45.4
557.0
19.6
– 3.4
– 0.2
– 19.4
553.6

– 2.6
106.3

0.0

740.2
29.3
– 30.50.0– 66.5
672.5
29.9
– 6.0
– 0.2
– 25.5
670.7

111.3
100.1
101.2

94.5
88.4
101.7

11.8
8.9
7.3

17.3
29.9
17.4

234.9
227.3
227.6

Accumulated depreciation and impairments
CHF m
As at January 1, 2015
Depreciation
Disposals
Transfers
Translation differences
As at December 31, 2015
Depreciation
Disposals
Transfers
Translation differences
As at December 31, 2016

Other
property,plant, andequipment

Property, plant, and equipment is recognized at amor­
tized cost. As in the previous year, no impairments oc­
curred in the year under review.
Maintenance and repair costs amounted to CHF 20.1
million (2015: CHF 21.2 million). The depreciation ex­pense of CHF 29.9 million (2015: CHF 29.3 million) is
included in the items ‘Cost of goods sold’, ‘Develop­
ment costs’, ‘Marketing and distribution costs’, and‘­Administrative costs’.
Property, plant, and equipment also includes leased
assets with a net book value of CHF 0.5 million (2015:

28.9

0.0

0.0

CHF 1.0 million). The leasing liability for fixed assets car­ried in the balance sheet amounts to CHF 0.5 million(2015: CHF 1.0 million) and is found in note 22 ‘Non-cur­rent financial debt’.
As at December 31, 2016 there were no assets forwhich interest on borrowed capital was capitalized
during the preparation phase.
As at December 31, 2016 the Group had outstanding
purchase orders for capital goods amounting to CHF
22.1 million (2015: CHF 1.7 million).

118 FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS

15 Intangible assets and goodwill

Cost on acquisition
CHF m
As at January 1, 2015
Additions
Translation differences
As at December 31, 2015
Change in scope of consolidation
Additions
Disposals
Transfers
Translation differences
As at December 31, 2016

Accumulated amortization and impairments
CHF m
As at January 1, 2015
Amortization
Translation differences
As at December 31, 2015
Amortization
Disposals
Transfers
Translation differences
As at December 31, 2016
Net carrying amountAs at January 1, 2015
As at December 31, 2015
As at December 31, 2016

Other
intangible assets

Total

– 1.2
32.8

86.9
0.4
– 3.2
84.1
0.5
3.0
– 0.2
0.2
– 10.4
77.2

212.8
0.4
– 9.2
204.0
0.5
3.0
– 0.2
0.2
– 13.8
193.7

Goodwill

Trademarks

Otherintangible assets

Total

9.5

25.8

– 0.7
8.8

0.0
25.8
0.2

– 0.1
8.7

0.0
26.0

31.4
2.8
– 0.5
33.7
5.7
– 0.2
0.2
– 0.2
39.2

66.7
2.8
– 1.2
68.3
5.9
– 0.2
0.2
– 0.3
73.9

82.1
77.1
75.0

8.5
8.2
6.8

55.5
50.4
38.0

146.1
135.7
119.8

Goodwill

Trademarks

91.6

34.3

– 5.7
85.9

– 0.3
34.0

– 2.2
83.7

FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS 119

Goodwill is distributed among the following groups ofcash-generating units:31.12.2016
70.9
4.1
75.0

Flooring Systems
Movement Systems

The goodwill in Flooring Systems as at December 31,
2016, comprises primarily the goodwill acquired inconnection with the acquisition of Bonar Floors in
2008. ‘Other intangible assets’ consists mainly of thecustomer relations and technologies as part of the ac­quisition of Bonar Floors, as well as acquired software.
The annual impairment test of goodwill yielded a val­ue in use that was greater than the carrying amount.
Intangible assets with an indefinite useful life (goodwill
and trademarks) are subject to an annual impairment
test at cash-generating unit level. The test is carriedout using a standardized method with discounted
cash flow for calculating the value in use. Cash flow for
the first five years is estimated on the basis of the plan
approved by management (detailed planning period).

31.12.2015
73.5
3.6
77.1

Cash flows beyond the detailed planning period are
extrapolated to the terminal value by means of using
sustainable earnings. The growth rate underlying theterminal value equals the expected inflation. During
the detailed planning period, relatively constant EBIT­
DA margins are assumed, which are around 18% (2015:17%) for Flooring Systems and around 15% (2015: 15%)for Movement Systems. The discount rate corresponds
to the total weighted cost of capital before taxes in­cluding an average risk charge estimated by man­agement, and lies between 9.3% and 11.8% (2015: be­tween 9.3% and 11.8%). The intangible assets with anindefinite useful life were subject to impairment test­
ing also in the form of sensitivity analyses.
No change in the basic assumptions that can be re­garded as reasonably realistic will result in the carrying
amounts exceeding the recoverable amounts.
Amortizations are higher in the reporting year, since
the useful lives for selected assets were adjusted in thecourse of the annual review of the intangible assets’useful lives.

120 FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS

16 Inventories

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

31.12.2016

31.12.2015

39.8
67.0
129.8
– 30.2
206.4

39.6
73.4
129.4
– 27.9214.5

31.12.2016

31.12.2015

140.8
16.2
– 5.6
151.4

137.2
16.0
– 5.9
147.3

Expenses for inventories recognized in the reporting
year came to CHF 455.0 million (2015: CHF 443.1 mil­lion).

17 Trade receivables

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

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

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

FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS 121

Trade receivables recognized as at the balance sheet
date:

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

Of the total of CHF 19.4 million in trade receivables
past due as at December 31, 2016 (2015: CHF 22.8 mil­lion), CHF 16.1 million (2015: CHF 17.8 million) were notsubjected to a valuation allowance. Overall, valuation

31.12.2016

31.12.2015

157.0
137.6
10.1
4.6
2.5
2.2
– 5.6
151.4

153.2
130.4
11.4
5.4
3.1
2.9
– 5.9
147.3

allowances of CHF 5.6 million (2015: CHF 5.9 million)
were made for receivables with a nominal value of CHF
20.5 million (2015: CHF 21.2 million).

Gross value of trade receivables by currency:

CHF m
CHF
EUR
USD
JPY
GBP
CNY
SEK
Other
Total trade receivables, gross31.12.2016

31.12.2015

1.0
75.9
22.9
13.4
11.3
3.8
5.3
23.4
157.0

0.7
70.1
23.4
13.4
11.8
9.6
5.3
18.9
153.2

2016

2015

– 5.9
– 0.8
0.4
0.6
0.1
– 5.6

– 6.6
– 0.9
0.1
1.0
0.5
– 5.9

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

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

122 FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS

Allowances of CHF 1.9 million (2015: CHF 1.9 million)
were made for trade receivables not yet due and of
CHF 3.7 million (2015: CHF 4.0 million) for trade receiv­
ables past due.

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

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

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

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

31.12.2016

31.12.2015

0.1
164.8
44.8
209.7

0.1
107.9
8.3
116.3

20 Share capital
As at December 31, 2016, the share capital of Forbo
Holding Ltd stood at CHF 180,000 (2015: CHF 199,000),
divided into 1,800,000 registered shares with a par val­ue of CHF 0.10 each. Of this amount 21,419 registeredshares without voting or dividend rights are at the dis­posal of the Board of Directors. Consequently, 1,778,581
registered shares were eligible for dividends as at De­
cember 31, 2016 (2015: 1,968,581).

Change of shares issued and outstanding:

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

31.12.2016
Number1,800,000

ChangeNumber– 190,000

31.12.2015
Number
1,990,000

68,737– 1,386– 190,000

70,123
190,000
21,419281,542
1,708,458

21,41990,156
1,709,844– 191,386
1,386

FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS 123

At the Ordinary General Meeting of Forbo Holding Ltd
held on April 29, 2016, the shareholders approved acapital reduction from CHF 199,000 to CHF 180,000 bycancellation of the 190,000 shares acquired in connec­
tion with the fixed-price share buyback offer and via
the second trading line of the SIX Swiss Exchange, as
approved at the Ordinary General Meeting of April 24,
2015, and adopted the corresponding amendment to
the Articles of Association.
The capital reduction was completed with the entry
into the Commercial Register of the Canton of Zug on
July 11, 2016, and was published in the SHAB on July
14, 2016. The exchange adjustment took place on thesame day.

21 Employee participation plan
Variable compensation for the Executive Board is linked
with the management investment plan (MIP), which
was introduced in 2006 and amended in 2012. The
members of the Board of Directors do not participate
in the MIP. According to this plan, at least 50% of theannual variable remuneration of Executive Board mem­bers is paid into the MIP. As for the remaining 50% of
the annual variable remuneration, the Executive Board
members may either draw all or part of it in cash or pay
it into the MIP. They may redefine the allocation of thisremaining 50% every year anew.

Under the previous plan until 2012, 25% of the pay­ments were invested in options and 75% in shares ofForbo Holding Ltd. The shares and options were sub­ject to a three-year lock-up period and the term of theoptions was five years. The options issued in connec­
tion with the MIP come to maturity on April 21, 2017, atthe latest. Following the amendment of the MIP, all thesums paid into it will be invested only in shares of Forbo
Holding Ltd as of January 1, 2013, and no longer in op­
tions. These shares, too, are subject to a three-year lockup period. The shares and options issued under the MIP
are equity-settled. The share-based portion of the vari­able compensation is recognized at fair value, offset byequity instruments and recognized as a corresponding
increase in equity. The shares that are distributed under
the MIP are issued at the unweighted average closing
price of the Forbo share for the first 14 trading days in
January of the year in which they are distributed. The
options until 2012 were issued on the basis of a valua­tion by an independent bank, whereby the valuation
was based on the average market price of the sharesin the first 14 trading days in January of the respective
year.
Options
Change in the number of outstanding options andtheir weighted average strike price:

2016

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

Weighted
averagestrike pricein CHF

616

616

Of the 500 (2015: 500) options outstanding, all were
exercisable as at December 31, 2016 (2015: 500). No
options were exercised during the reporting year. The
exercise of 8,547 options in the previous year resulted

2015

Numberof options

Weighted
averagestrike pricein CHF

Numberof options

500

616

9,047

616

– 8,547

616

500

500

in the issue of 8,547 Forbo Holding shares at a weight­
ed average issue price of CHF 616. The weighted aver­age share price on the exercise days was CHF 1,174.

124 FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS

Information on the outstanding options as at Decem­
ber 31, 2016:

Series2012
Total options outstanding

SharesIn the year under review, 729 shares of Forbo Holding
Ltd were issued under the MIP (2015: 1,894). A further
379 shares were allocated to Executive Board mem­bers in the reporting year as part of base remuneration(2015: 416). The share price at valuation date was CHF
1,061 (2015: CHF 966).
The Executive Chairman of the Board of Directors iscompensated primarily with shares. The detailed infor­
mation and figures for this compensation model canbe found on pages 134 and 135 of this financial reportand on pages 80 and 81 of the remuneration report.

Strike price
(CHF)

616

Number ofoutstanding
options

Averageremainingterm (years)

Number of
exercisable
options

500
500

0.3

500

The number of shares with a three-year lock-up period
allocated to the non-executive members of the Boardof Directors came to 278 in the reporting year (2015:284).
In the year under review, the amount charged to theincome statement in application of IFRS 2 for sharesissued came to CHF 4.8 million (2015: CHF 3.8 million).

FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS 125

22 Non-current financial debt

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

31.12.2016

31.12.2015

0.5
– 0.1
0.4

1.0
– 0.1
0.9

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

The pension plan follows an investment strategy thatis geared to the structure of the pension liabilities(LDI – liability-driven investment approach). The coreelements of this strategy are:23 Employee benefit obligations–– Hedging of liabilities: 57% of the assets of the fundare held in physical form in corporate bonds and afurther 17% in funds geared to the pension liabil­ities. This approach hedges a substantial portion ofinterest rate and inflation risks.
–– Return-seeking assets: 26% of the assets of the FSF
are held in the form of diversified growth invest­
ment funds.

The Group has established several pension plans on
the basis of the specific requirements of the countries
in which it operates. Both defined contribution and de­fined benefit plans exist in the Group that insure em­
ployees against the risks of death and invalidity andprovide old-age pensions.
The liabilities and assets under the main defined ben­e­fit plans are assessed annually by independent actu­
aries using the projected unit credit method.
Pension plans in the United Kingdom
The Group has two defined benefit pension plans in
the United Kingdom. The main one is the Forbo Super­annuation Fund (the FSF), which accounts for about
63% of the Group’s total pension liabilities. The FSF isa pension plan whose benefits are based on the final
salary and which pays out a guaranteed pension forlife to its members. The FSF is closed to new entrants,
but benefits continue to accrue for a small number ofexisting members. The composition of the pension li­
abilities is as follows: 3% to active employees, 35% todeferred members and 62% to current beneficiaries.
New employees in the United Kingdom who meetcertain 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 use of any surplus is not subject to any restriction
under the FSF’s articles of incorporation and may be
used freely by the Group. These surpluses are therefore
recognized in the balance sheet as assets in accord­
ance 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 mini­
mum benefit, this independent pension fund must
­provide the beneficiary with an old-age pension at thetime of retirement. This pension is paid out of the retire­
ment savings capital at the start of the pension. The
Group meets these liabilities through agreements withpension funds that cover the pension liabilities in full.
The pension liabilities of the Swiss Group companies
account for about 18% of the Group’s entire pension
liabilities. 95% of the liabilities are to active members
and 5% to retired beneficiaries.
The Swiss pension system includes guarantees that
expose the company to the risk that it may have toprovide additional financing. Such a situation may oc­
cur, for instance, if the pension fund is unable to meetits obligations or decides to end the insurance rela­tionship. The pension fund guarantees a minimum re­turn and is responsible for the payment of a pension
for life once the insurance benefits fall due. As a resultof these guarantees, Swiss pension plans are treated as

126 FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS

defined benefit plans under IFRS, even though they
contain essential elements of defined contributionplans.
The company cannot participate in any surplus of thepension plan. According to Swiss pension law, all sur­pluses belong to the pension plan and hence to its
members.
OthersOther notable defined benefit plans exist in France,
Germany, Japan, Sweden, and the USA.

The latest actuarial valuations of the present values ofdefined benefit liabilities and of service costs were
performed as at December 31, 2016, by independentactuaries using the projected unit credit method.
The fair value of the plan assets was determined as at
December 31, 2016, based on the information avail­able when the annual financial statements were pre­pared. The weighted average duration of the pension
plans (plan duration) is 14.8 years for the United King­dom, 19.3 years for Switzerland, and 16.3 years for theother countries.
The principal assumptions underlying the actuarial
calculations are summarized as follows.
2016

2015

Actuarial assumptions
Switzer­
land

UK

Other

Weighted

Switzer­
land

UK

Other

Weighted

0.7
1.5
1.0

2.5
4.2
3.5

1.7
2.7
1.8

2.1
2.3
2.9

0.9
2.0
1.5

3.7
3.8
3.1

2.2
2.4
1.4

3.0
2.5
2.7

22
24

22
24

20
23

21
24

22
24

22
24

20
23

22
24

24
26

23
25

21
25

23
25

23
25

23
25

21
25

23
25

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

The pension costs for defined benefit plans recognizedin the consolidated income statement and in equity
can be summarized as follows:
2016

2015

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

Switzerland

UK

Other

Total

Switzerland

UK

Other

Total

2.1
0.6
– 0.4
2.3

0.9
8.0
– 7.9
1.0

2.2
1.1
– 0.2
3.1

5.2
9.7
– 8.5
6.4

0.0
0.7
– 0.5
0.2

1.3
8.6
– 9.0
0.9

1.9
1.1
– 0.2
2.8

3.2
10.4
– 9.7
3.9

FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS 127

Changes in pension liabilities under the defined bene­
fit plans:
2016

2015

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

Switzerland

UK

Other

Total

Switzerland

UK

Other

Total

65.4
2.1
1.0
0.6
– 4.0
– 1.4

244.0
0.9

51.0
2.2
0.0
1.1
– 3.0
3.9

360.4
5.2
1.0
9.7
– 17.9
42.2

62.0
0.0
1.0
0.7
– 1.8
3.5

247.5
1.3

– 0.1
0.2
55.3

– 38.6
0.2
362.2

– 9.0

58.1
1.9
0.1
1.1
– 1.7
– 3.0
– 1.7
– 3.8

367.6
3.2
1.1
10.4
– 13.66.2– 1.7– 12.8

244.0

51.0

360.4

8.0
– 10.939.7– 38.5

63.7

243.2

65.4

8.6
– 10.1
5.7

Changes in plan assets of the defined benefit plans atfair value:
2016

2015

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

Switzerland

UK

Other

Total

Switzerland

UK

Other

Total

43.0
0.4
1.8
1.0
0.0

241.5
7.9
0.1

290.3
8.5
4.8
1.0
24.1

41.3
0.5
1.7
1.0
0.3

257.9
9.0
0.1

24.1

5.8
0.2
2.9
0.0
0.0

7.9
0.2
1.6
0.1
– 0.1

307.1
9.7
3.4
1.1
– 5.8

– 4.0

– 10.9– 3.0– 17.9– 1.8– 10.142.2– 37.1
225.6

– 0.2
5.7

– 37.3
273.5

43.0

– 9.4
241.5

– 1.7
– 1.7
– 0.5
5.8

– 13.6
– 1.7
– 9.9
290.3

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

– 6.0

Most of the pension plans are financed in full or in partvia outsourced funds. Pension liabilities amounting
to CHF 37.2 million (2015: CHF 34.8 million) out of a
total of CHF 362.2 million (2015: CHF 360.4 million) areunfunded.

128 FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS

Changes in the net liabilities of defined benefit plans
recognized in the balance sheet:
2016

2015

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

Switzerland

UK

Other

Total

Switzerland

UK

Other

Total

22.4
2.3
– 1.8
– 1.4

2.5
1.0
– 0.1
15.6
– 1.4

– 10.4
0.9
– 0.1
11.7
0.4

50.2
2.8
– 1.6
– 2.9
– 3.3

60.5
3.9
– 3.4
12.0
– 2.9

17.6

70.1
6.4
– 4.8
18.1
– 1.3
0.2
88.7

20.7
0.2
– 1.7
3.2

21.5

45.2
3.1
– 2.9
3.9
0.1
0.2
49.6

22.4

2.5

45.2

70.1

Gains and losses of defined benefit pension plans off­
set in the comprehensive income statement for all seg­ments:
2016

2015

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

Switzerland

UK

Other

Total

Switzerland

UK

Other

Total

0.6

– 42.3– 3.9– 45.6

– 3.0

3.0

3.2

3.2

Based on adjustment ofdemographic assumptions

1.1

3.4

0.0

4.5

0.0

0.2

0.0

0.2

Based on adjustment of financial
assumptions– 0.5– 45.7– 3.9– 50.1

– 3.0

2.8

3.2

3.0

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

0.8
0.0

2.6
24.1

0.0
0.0

3.4
24.1

– 0.5
0.3

– 8.7
– 6.0

– 0.2
– 0.1

– 9.4
– 5.8

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

1.4– 15.6– 3.9– 18.1– 3.2– 11.72.9– 12.0FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS 129

Change in the present value of defined benefit liabili­
ties:

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

2016

2015

+ 50bp+ 50bp

Switzerland

UK

Other

Switzerland

UK

Other

– 5.9
1.8
1.4
1.6

– 16.9
0.2
9.9

– 4.2
2.7
3.7

– 5.9
1.9
1.5
1.5

– 15.8
0.3
8.4

– 3.6
2.5
3.2

Sensitivities – 50bp

– 50bp

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

Switzerland

UK

Other

Switzerland

UK

Other

6.5
– 1.8
– 1.3
– 1.4

18.5
– 0.2
– 9.3

4.6
– 2.4
– 3.3

6.7
– 1.9
– 1.5
– 1.5

17.5
– 0.3
– 7.7

4.1
– 2.2
– 2.8

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

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

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

Other securities amounting to 51.4% (2015: 37.9%)
consisted of 35.9% listed investments (2015: 23.0%)
and 15.5% unlisted investments (2015: 14.9%). The
shares and bonds are all listed investments. The plan
assets do not include any shares or other securities of
the Forbo Group.

2016

2015

1.8
46.2
51.4
0.6
100.0

2.0
59.2
37.9
0.9
100.0

Future contributions to defined benefit plans in the fol­lowing year are estimated on the basis of the period
under review.

130 FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS

The expense for the contributions to defined contribu­
tion plans, which is included in personnel expenses,
amounted to CHF 13.1 million (2015: CHF 12.5 million).

Other non-current benefits
The Group does not finance any other non-current
benefits. The plans for long-service bonuses and otherbenefits related to years of service are negligible or do
not qualify as plans for other non-current benefits.

24 Provisions

Provisions
CHF m
As at January 1, 2016
Additions
Used during the year
Released during the year
Translation differences
As at December 31, 2016
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 mainly to product liability claims in which
the Group is involved in the course of its normal busi­
ness. The personnel provisions include in particular
the bonus programs, provisions for paid leave, and po­
tential labor law issues.

Warranty
provisions

Environmental
provisions

4.1
2.4
– 0.3
– 0.8
0.0
5.4

11.5

3.4
2.0

Provisions
for legal
claims

12.5
0.8
– 0.5
– 0.1

Personnel
provisions

Other
provisions

Total
2016

4.2
0.8
– 0.7
– 0.1
0.1
4.3

43.7
7.6
– 3.4
– 1.5
– 0.1
46.3

3.2
1.1

20.2
26.1

– 0.1
11.4

12.7

11.4
3.6
– 1.9
– 0.5
– 0.1
12.5

11.4

1.4
11.3

12.2
0.3

In connection with the sale of the industrial adhesives
activity, including synthetic polymers, provisions of
CHF 11.0 million are kept unchanged for anticipatedcash outflows in connection with risks in the areas ofenvironmental (CHF 7.0 million), legal claims (CHF 3.0
million) and other (CHF 1.0 million).

25 Accrued expenses anddeferred income

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 vol­31.12.2016

31.12.2015

37.8
43.7
81.5

35.6
44.3
79.9

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

FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS 131

26 Current financial debt

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

27 Discontinued operations and assets
held for sale as well as liabilities directly
associated with assets held for sale
As reported in note 24 ‘Provisions’, there are still risks
from existing warranty deadlines that arise from thesale of the industrial adhesives activity, including syn­thetic polymers, of the former Bonding Systems divi­sion. This division was sold to H.B. Fuller on March 5,2012, for CHF 384.7 million.

31.12.2016

31.12.2015

0.0
0.1
0.1

0.0
0.1
0.1

28 Contingent liabilities
As announced in a media release on July 3, 2013, theactivity of Flooring Systems in France is being investi­
gated by the French competition authorities. The in­vestigation affects the flooring market in France andwas instituted on suspicion of anti-competitive prac­
tices by leading manufacturers. As the investigation is
ongoing, the Group is unable to provide any further
information at present or estimate the possible reper­
cussions.

In this connection and as in the previous year, there
were neither cash flows nor changes in provisions in
the reporting year.

29 Leasing

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

Expenses for operating leasing and rentals charged to
the 2016 income statement totaled CHF 19.1 million(2015: CHF 18.3 million). The Group has no individual­
ly significant operating leasing contracts.

31.12.2016

31.12.2015

6.0
17.9
5.7
29.6

8.3
21.7
6.1
36.1

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

132 FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS

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

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

There were no material financial instruments in the fairvalue hierarchy levels nor was there any regrouping be­
tween the levels of the fair value hierarchy. The finan­cial instruments held at the balance sheet date were allvalued at amortized costs:

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

Carrying amount
Fair value throughprofit or loss –held for trading

Loans andreceivables

Other
financial liabilities

0.2
151.4
3.5

0.2
151.4
3.5
209.7

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

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

Total

0.0

0.4
95.4
0.1
9.8

0.4
95.4
0.1
9.8

FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS 133

Classification of financial instruments
CHF m
31.12.2015
Financial assets valued at fair value:

Carrying amount
Fair value throughprofit or loss –held for trading

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

Loans andreceivables

Other
financial liabilities

0.3
147.3
5.4

Total

0.3
147.3
5.4
116.3

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

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

0.9
77.4
0.1
8.6

0.9
77.4
0.1
8.6

134 FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS

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

The remuneration paid to the Executive Board in thereporting year came to CHF 1.7 million (2015: CHF 1.6
million) and consists of the fixed gross base salary incash, the variable remuneration in cash, private use of
the company car, and social security payments madeby the company. Employer contributions to the pen­sion fund are reported separately. Share-based pay­ments to the Executive Board consist of the proportionof the fixed gross base salary, which is paid in shares ofForbo Holding Ltd, and the variable remuneration with­in the framework of the MIP (see note 21 ‘Employee
participation plan’) for the reporting year, amounting to
CHF 1.7 million (variable remuneration payable in April
2017, subject to approval by the 2017 Ordinary Gener­
al Meeting).
The remuneration of the Board of Directors amounted
to CHF 1.0 million in the year under review (2015: CHF
1.0 million). This includes the gross base remunerationin cash, the employer contributions to the usual social
insurances, the lump sum and on-site expenses, andprivate use of the company car (only for the Executive
Chairman of the Board of Directors).

2016
1.7
0.2
1.7
3.6

2015
1.6
0.2
1.1
2.9

Board of Directors
2016
1.0
0.2
2.5
3.8

2015
1.0
0.2
2.5
3.7

The employer contributions to the pension fund for
the Executive Chairman of the Board of Directors arereported separately. The share-based remuneration of
the Board of Directors includes the portion of the grossbase remuneration in shares. This consists on the one
hand of the 40% portion of the remuneration paid inshares to non-executive Board members, amounting
to CHF 0.3 million (2015: CHF 0.3 million) and, on theother, of the share package of the Executive Chairmanof the Board of Directors amounting to CHF 2.2 million(2015: CHF 2.2 million).
With effect from May 2013, the employment contract
with the Delegate and as of April 25, 2014, the Execu­
tive Chairman of the Board of Directors was extended
to encompass the period from May 1, 2013, to Decem­
ber 31, 2016. The bulk of the compensation will again
be paid in locked-up shares which have lock-up peri­
ods of three, four, and five years respectively, and in anannual cash payment of CHF 310,000 to be used in partfor taxes and for employee contributions to the pen­sion fund and social security payments.

Total
2016
2.7
0.4
4.2
7.4

2015
2.6
0.4
3.7
6.7

FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS 135

The underlying share price used to calculate the num­
ber of shares is the weighted average price of the firstand last five days on which shares of Forbo Holding Ltd
were traded on the stock market in 2012 (CHF 522.12),
less the discount as a result of the shares being locked
up. The share package corresponds to annual compen­
sation of CHF 2,200,000 (5,314 shares). As per IFRS 2,
they are recognized pro rata for each calendar year.
With this share package and the cash remuneration, allbenefits such as bonuses, inflation, salary adjustments,
options, etc. are settled. This share package may not
be either pledged or assigned. The last third of thelocked-up shares will be available on May 1, 2018, atthe earliest.
The Ordinance against Excessive Remuneration in List­
ed Public Companies (OaER) entered into force on­January 1, 2014. According to Article 28 of the OaER,
employment contracts must be compliant with thisOrdinance no later than December 31, 2015. Conse­
quently, all payments that had been agreed and were
paid out for 2016 have to be reversed by December 31,
2015, at the latest. The value of this fixed remuneration
paid to This E. Schneider for fiscal year 2016 amounted
to CHF 2,200,000. In order to comply with and imple­
ment the provisions of the OaER, the Group and This
E. ­Schneider have agreed that he will repay the Group
in cash the amount of his fixed compensation for theperiod from January 1, 2016, to December 31, 2016,
plus interest of 0.5% from May 1, 2013, to December
31, 2013. The repayment was completed before yearend 2013 and was paid out to him again in monthly
instalments in 2016 after approval by the 2015 Ordi­nary General Meeting. The compensation package andthe relevant agreements were adjusted accordingly.
Information on the remuneration of the Executive
Board and Board of Directors is explained in detail on
page 87 of the Remuneration Report.
As at December 31, 2016 and 2015, Forbo had no sig­
nificant receivables due from or liabilities to relatedparties.

32 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.
Financial risk management
In its day-to-day operations, the Forbo Group uses
­derivative and non-derivative financial instruments tomanage the risks and opportunities arising from fluc­tuations in exchange rates and interest rates. The vari­
ous risks associated with existing assets and liabilities
as well as planned and anticipated transactions aremonitored and managed centrally – with due regard
to the Group’s overall risk exposure. In line with theGroup’s hedging policy, Corporate Treasury constantly
monitors both the risk exposure and the effectivenessof the hedging instruments and issues recommenda­
tions with regard to partial or complete hedging ofexisting risks.
The Group’s financial risk management policy does not
permit the use of derivative financial instruments for
speculation. In order to manage counterparty risk, de­rivative financial transactions are concluded only with
first-class banks. The creditworthiness of these institu­
tions is assessed on the basis of evaluations by leading
rating agencies.
Derivatives include instruments used by the company
to manage foreign currency and interest risks or com­binations thereof.

136 FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS

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

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

Transaction risks from financial instruments
2016
Change inexchange rate

Impact on profit
before tax

2.6

5%
– 5%

0.1
– 0.1

USD/CHF

1.9

5%
– 5%

0.1
– 0.1

EUR/USD

12.8

5%
– 5%

0.6
– 0.6

GBP/USD

– 2.2

5%
– 5%

– 0.1
0.1

Change inexchange rate

Impact on profit
before tax

CHF m
EUR/CHF

Net exposure

Transaction risks from financial instruments
2015
CHF m
EUR/CHF

Net exposure– 18.6

5%
– 5%

– 0.9
0.9

USD/CHF– 10.6

5%
– 5%

– 0.5
0.5

EUR/USD

– 6.6

5%
– 5%

– 0.3
0.3

GBP/USD

0.7

5%
– 5%

0.0
0.0

FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS 137

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

Interest rate risks from cash and cash equivalents,
interest-bearing debt and financial derivatives
2016
Change ininterest rate

Impact on profit
before tax

50bp– 50bp

0.2
– 0.2

USD

50bp
– 50bp

0.1
– 0.1

CHF

50bp
– 50bp0.2– 0.2

Change ininterest rate

Impact on profit
before tax

50bp– 50bp

0.2
– 0.2

USD

50bp
– 50bp

0.1
– 0.1

CHF

50bp
– 50bp

0.1
– 0.1

CHF m
EUR

Interest rate risks from cash and cash equivalents,
interest-bearing debt and financial derivatives
2015
CHF m
EUR

138 FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTSManagement of liquidity risksGroup companies need sufficient cash in order to meettheir commitments. Corporate Treasury is responsible
for managing liquidity surpluses. The share of the ag­
gregate cash and cash equivalents managed by Corpo­
rate Treasury was around 54% on December 31, 2016.
At present, the Group regards a cash level of roughly
CHF 50 million as sufficient to meet its payment obliga­
tions at all times.

The maturity structure of the existing financial liabil­ities is shown in the following table. These liabilities
correspond to contractually agreed maturities andrepresent nominal payment outflows. Inflows andoutflows of funds from derivative financial instru­
ments are shown separately.

As at December 31, 2016

CHF m
Interest-free liabilities
Liabilities from finance leasing

Remaining term
to maturity up to
1 year105.4
0.1

Remaining term
to maturity
1 – 2 years

Remaining term
to maturity
2 – 5 years

Remaining term
to maturity
over 5 years

0.1

0.3

Remaining term
to maturity up to
1 year86.1
0.1

Remaining term
to maturity
1 – 2 years

Remaining term
to maturity
2 – 5 years

Remaining term
to maturity
over 5 years

0.1

0.4

0.4

As at December 31, 2015

CHF m
Interest-free liabilities
Liabilities from finance leasing

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

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

FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS 139

Capital management
For the Group, capital management means both opti­
mizing the capital employed and managing consoli­
dated shareholders’ equity, which consists of paid-up
share capital, treasury shares, reserves, and translationdifferences. As at December 31, 2016, shareholders’­equity stood at CHF 621.4 million. The objectives ofcapital management are to ensure that the Group re­mains a going concern, to preserve its financial flexi­
bility for investments, and to achieve a risk-adjusted
return on equity for investors.
Changes in economic conditions may require adjust­ments to the Group’s shareholders’ equity. These ad­justments can take the form of dividend distributions,capital repayments or increases, or share buybacks.

33 Events after the balance sheet date
Between the balance sheet date and the date of pub­lication of this annual report no event occurred that
could have a significant effect on the 2016 annual fi­
nancial statements.

140 FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS

Group companies(as at December 31, 2016)

Currency

Share capital

Equityinterest

Wetherill Park, NSW
Wetherill Park, NSW

AUD
AUD

1,400,000
6,000,000

100%
100%

S

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

ViennaViennaEUR
EUR

73,000330,000

100%
100%

S

Belgium
Forbo Flooring N.V.

Groot-Bijgaarden

EUR

250,000

100%

S

BrazilForbo Pisos Ltda.
Forbo Siegling Brasil Ltda.

São PauloSão Paulo

BRL
BRL

18,175,000
7,008,746

100%
50%

S

CanadaForbo Flooring Canada Corp.
Forbo Siegling Canada Corp.

Halifax
Halifax

CAD
CAD

500,200
501,000

100%
100%

S

Chile
Forbo Siegling Chile S.A.

Santiago

CLP

335,631,092

50%

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

Liberec
PragueCZK
CZK100,000
500,000

100%
100%

Denmark
Forbo Flooring A/SForbo Siegling Danmark A/S

Glostrup
Brøndby

DKK
DKK

500,000
32,300,000

100%
100%

S

Finland
Forbo Flooring Finland Oy

HelsinkiEUR

33,638100%

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

Château-Renault
Reims
Reims
Reims
Lomme

EUR
EUR
EUR
EUR
EUR

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

100%
100%
100%
100%
100%

MS

Group company

Registered office

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

S Sales
MS Manufacturing and Sales
H Holding/Services
N Not consolidated as at December 31, 2016
D Direct participation of Forbo Holding Ltd

N

N

D

Flooring
Systems

Move­
ment
Systems

Holding/Services

S

S

MS

S

S

S
S

MS

H
MS
S
S

FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS 141

Currency

Share capital

EUR
EUR
EUR
EUR
EUR

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

100%
100%
100%
100%
100%

GBP
GBP
GBP
GBP
GBP
GBP

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

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

Hong Kong

HKD

1

100%

Delhi
Pune

INR
INR

15,000,000
26,000,000

100%
100%

Indonesia
PT Forbo Siegling Indonesia

Kabupaten Bandung

IDR

6,344,580,000

100%

Ireland
Forbo Ireland Ltd.

DublinEUR125,000

100%

S

Segrate (Milan)
Paderno Dugnano(Milan)EUR
EUR

60,000120,000

100%
100%

S

Tema S.r.l.

Parma

EUR

50,000

100%

S

Japan
Forbo Siegling Japan Ltd.

Tokyo

JPY

330,000,000

100%

MS

Malaysia
Forbo Siegling SDN. BHD.

Johor Bahru

MYR

2,500,002

100%

S

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

Tlalnepantla

MXN

24,676,404

100%

MS

Group company

Registered office

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

LörrachErfurtPaderborn
Hanover
LörrachD

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

Derbyshire
Kirkcaldy
Derbyshire
Dukinfield
Derbyshire
Derbyshire

D

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

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

S Sales
MS Manufacturing and Sales
H Holding/Services
N Not consolidated as at December 31, 2016
D Direct participation of Forbo Holding Ltd

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

142 FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS

Currency

Share capital

Equityinterest

Zaanstad
Krommenie
Krommenie
Krommenie
Coevorden
Spankeren

EUR
EUR
EUR
EUR
EUR
EUR

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

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

New Zealand
Forbo Siegling Ltd.

Auckland

NZD

650,000

100%

NorwayForbo Flooring AS

Asker

NOK

1,000,000

100%

S

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

PinghuShanghai
Shenyang

USD
CHF
USD

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

100%
100%
100%

S

Portugal
Forbo-Revestimentos, S.A.

Maia (Porto)

EUR

74,850100%

S

Romania
Forbo Siegling Romania S.R.L.

Bucharest

RON

38,000100%

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

Moscow
MoscowSaint Petersburg
Stary Oskol

RUB
RUB
RUB
RUB

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

100%
100%
100%
100%

Slovakia
Forbo Siegling s.r.o.

Malacky

EUR

15,281,639

100%

South Korea
Forbo Korea Ltd.

Seoul

KRW

900,000,000

100%Group company

Registered office

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

S Sales
MS Manufacturing and Sales
H Holding/Services
N Not consolidated as at December 31, 2016
D Direct participation of Forbo Holding Ltd

Flooring
Systems

MS
MS
MS

Move­
ment
Systems

Holding/Services

H
MS
S

S

MS
MS
MS

S

S
MS
S
MS

MS

S

S

FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS 143

Group company

Registered office

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

Barcelona
Montcada i Reixac(Barcelona)

Currency

Share capital

Equityinterest

Flooring
Systems

EUR
EUR

60,101
1,532,550

100%
100%

S

SEK
SEK
SEK

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

100%
100%
100%

S

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

100%
100%
100%
100%
100%

Gothenburg
GothenburgKållered (Gothenburg)

D
D

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

Baar
Baar
Baar
Giubiasco
Baar

D
D

D

CHF
CHF
CHF
CHF
CHF

Thailand
Forbo Siegling (Thailand) Co. Ltd.

Samut Prakarn

DTHB

13,005,000100%

Istanbul

TRY

3,500,000

100%

S

United Arab Emirates
Forbo Flooring Middle East DMCC

Dubai

AED

499,000

100%

S

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

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

USD
USD
USD
USD

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

100%
100%
100%
100%

S Sales
MS Manufacturing and Sales
H Holding/Services
N Not consolidated as at December 31, 2016
D Direct participation of Forbo Holding Ltd

D

Holding/Services

S

SwedenForbo Flooring AB
Forbo Project Vinyl AB
Forbo Siegling Svenska AB

TurkeyForbo Hareket ve Zemin Sistemleri Ticaret
Limited irketi

Move­
ment
Systems

H
S

H
H
H
MS
MS

H

S

S

H
H
S
MS

144 FORBO ANNUAL REPORT 2016 – 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 2016 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 94 to 143) give a true and fair view of the consolidated
financial position of the Group as at 31 December 2016, and its consolidated financial performance and its
consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards(IFRS) and comply with Swiss law.
Basis for Opinion
We conducted our audit in accordance with Swiss law, International Standards on Auditing (ISAs) and Swiss
Auditing Standards. Our responsibilities under those provisions and standards are further described in the
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are
independent of the Group in accordance with the provisions of Swiss law and the requirements of the Swiss audit
profession, as well as the IESBA Code of Ethics for Professional Accountants, and we have fulfilled our otherethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.

Key Audit Matters
Revenue recognition

Existence and valuation of inventories

Employee benefit obligations
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 2016 – CONSOLIDATED FINANCIAL STATEMENTS 145

Revenue recognition

Key Audit Matter

Our response

Total consolidated net sales of the financial year 2016 We mainly performed the following audit procedures:amounted to CHF 1,185.5 million (2015: CHF 1,139.1
million). The segment Flooring Systems contributed— We analyzed the process from the purchase order
CHF 818.0 million (2015: CHF 791.8 million) or 69.0%
to the receipt of payment and assessed whether(2015: 69.5%) to total net sales, while the segment
transactions are completely and accurately
Movement Systems realized CHF 367.5 million (2015:
recorded in the accounts.
CHF 347.9 million), representing 31.0% of total net— Considering the diverse design of internal control
sales (2015: 30.5%).
and IT systems of individual subsidiaries, wetested the operating effectiveness of identified key
Net sales are a key performance indicator for Forbo
controls relating to the proper recognition ofand therefore in the focus of internal and external
revenue.
stakeholders. Consequently, when performing theaudit we had a focus on existence of revenue— Based on a statistical sample of delivery notes
transactions and their recognition in the appropriate
and payments received, we assessed theperiod.
existence of revenues and their recognition in thecorrect period.
In both segments, sales arrangements are based on— We furthermore performed analytical procedures
standardized commercial terms and conditions
on a segment level as well as on the level of(incoterms), which govern the transfer of risk andspecific individual entities. These included
rewards. Different incoterms may be used depending
analyses of price and volume deviations, margin
on the region and the industry of the buyer. Owing todevelopment, the largest clients and the mostthe types of products sold by either segment of thesold products as well as analyses of theGroup, the contractual sales arrangements are notdistribution of sales throughout the year andcomplex. Due to the large number of transactions, thespecific months.
proper recognition of revenue nevertheless depends
on a functioning internal control system, adapted to
local circumstances. Furthermore, accurate data on
volumes and prices are central to revenue recognition.

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

Note 2 – Summary of significant accounting policies: net sales and revenue recognition, page 1012146 FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS

Report of the statutory auditor

Existence and valuation of inventories

Key Audit Matter

Our response

Inventory as at 31 December 2016 amounted to CHF
206.4million (31 December 2015: CHF 214.5 million)
and represents one of the most material asset
positions. Existence and valuation of inventories areconsequently of significance to an understanding of
the financial statements.

We mainly performed the following audit procedures:

Inventory is recognized at acquisition or manufacturingcosts and periodically assessed in terms ofrecoverability. For work in progress and finishedgoods that include a significant value added, thedetermination of manufacturing costs partly requires
judgment.
Additionally, there is a risk that for work in progress
and finished goods the manufacturing costs exceed
the actual sales price less selling, distribution andadministrative costs (net realizable value).

—

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

—

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

—

To test existence of significant inventories, we
assessed the instructions and procedures forrecording and monitoring inventory counts and weparticipated in selected inventory countobservations on site. Based on samples we reperformed counts and compared quantities
counted to the inventory sub ledger.

—

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

—

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

Furthermore, determining valuation allowances
involves a degree of judgment.

For further information on inventories refer to the following:—

Note 2 – Summary of significant accounting policies: inventories, page 105—

Note 16 – Inventories, page 120

3

FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS 147

Employee benefit obligations

Key Audit Matter

Our response

The employee benefit obligations mainly relate toplans in Switzerland and the United Kingdom (UK).

We mainly performed the following audit procedures:

The defined benefit obligation (DBO) is calculated
based on the scope of beneficiaries and a number offinancial and demographical assumptions. The mostsignificant assumptions are the discount rate, thefuture development of salaries and the life expectancy.
These assumptions are determined by management
and involve judgment that has a material impact on
the amount of the DBO and pension costs. The
discount rate is particularly significant, as even smallchanges in the discount rate can result in material
fluctuations of the DBO.
As a consequence of the political developments in the
UK (Brexit) there is potentially also increased
uncertainty relating to the valuation of the plan’s
underlying assets.

—

We assessed the completeness and accuracy of
personnel data underlying the expert report of theactuary (who was mandated by Forbo) by testing
the operating effectiveness of internal controls,
and we reconciled the data on a sample basis.

—

We analyzed the assumptions and input
parameters determined by management, whichwere used in the actuarial report. In doing so, we
examined the methodology used to determine theparameters and the consistency with prior year
and compared these parameters with the range of
observable market information.

—

In addition, we assessed the appropriateness of
the asset valuation underlying the calculation
relating to the UK.

—

We furthermore assessed the competence andindependence of the actuary.

For further information on employee benefit obligations refer to the following:—

Note 2 – Summary of significant accounting policies: employee pension plans, page 105—

Note 3 – Critical judgements, estimates and appraisals by management: valuation of pension plan
liabilities, page 107—

Note 23 – Employee benefit obligations, page 125

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.

4

148 FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS

Report of the statutory auditor

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.
— Evaluate the overall presentation, structure and content of the consolidated financial statements, including
the disclosures, and whether the consolidated financial statements represent the underlying transactions andevents in a manner that achieves fair presentation.
— Obtain sufficient appropriate audit evidence regarding the financial information of the entities or businessactivities within the Group to express an opinion on the consolidated financial statements. We areresponsible for the direction, supervision and performance of the Group audit. We remain solely responsible
for our audit opinion.
We communicate with the Board of Directors or its relevant committee regarding, among other matters, theplanned scope and timing of the audit and significant audit findings, including any significant deficiencies ininternal control that we identify during our audit.
We also provide the Board of Directors or its relevant committee with a statement that we have complied with
relevant ethical requirements regarding independence, and to communicate with them all relationships and othermatters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

5

FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS 149

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

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

Rolf Hauenstein
Licensed Audit Expert
Auditor in Charge

Regula Tobler
Licensed Audit Expert

Zurich, 2 March 2017

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

6

150 FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS

Consolidated income statements
2012 – 2016
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

2016

2015

2014

2013

2012

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

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

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

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

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

FORBO ANNUAL REPORT 2016 – CONSOLIDATED FINANCIAL STATEMENTS 151

Consolidated balance sheets
2012 – 2016
Assets
CHF m
Non-current assets
Property, plant, and equipment
Intangible assets
Deferred tax assets
Other non-current financial assets
Current assets
Inventories
Trade receivables
Other receivables
Accrued income and deferred expenses
Other current financial assets
Cash and cash equivalents
Total assets

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

31.12.2016

31.12.2015

31.12.2014

31.12.2013

31.12.2012

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

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

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

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

410.4
233.8
149.2
27.2
0.2
802.9
218.6
150.2
28.9
11.8
142.1
251.3
1,213.3

31.12.2016

31.12.2015

31.12.2014

31.12.2013

31.12.2012

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

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

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

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

729.2
0.3
– 0.1
729.0
105.0
2.6
51.1
35.8
15.5
379.1
84.7
112.9
132.5
26.6
22.4
484.1
1,213.3

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

153
154
155
156
161
162

154 FORBO ANNUAL REPORT 2016 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY

Income statement for Forbo Holding Ltd

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

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

2016

2015

211,245,653
6211,245,659

222,556,666
46
222,556,712

2016

2015

5,573,164
2,213,680
2,213,680
0
7,786,844
203,458,815

11,450,394
686,766
686,766– 1,149,481
10,987,679
211,569,033

Note

2

Note

3
4

FORBO ANNUAL REPORT 2016 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY 155

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

31.12.2016

31.12.2015

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

12,464,831
4,407,843
7,786,996
269,992
441,591,225
119,094,504
322,496,721
454,056,056

31.12.2016

31.12.2015

924,070,499
47,05023,702,949
320,500
445,139,595
180,000

183,388,008
12,949,598
170,103,258
335,152
270,668,048
199,000

11

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

15,600,000
43,288,528
8,796,681

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

227,049,935
211,569,033– 235,835,129454,056,056

Note

5
6

Note

7
8

11

156 FORBO ANNUAL REPORT 2016 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY

Notes to the financial statements
for Forbo Holding Ltd
1 Accounting
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.

2 Financial income from investments
in and loans to Group companies
Income from investments in and loans to Group com­panies amounting to CHF 211.2 million (2015: CHF
222.6 million) consisted primarily of dividend income,which came to CHF 211.1 million (2015: CHF 221.5 mil­lion) as well as interest income and – with reference tothe previous year – realized price gains on loans.

3 Administrative expenses
Administrative expenses include Stewardship costs, thefees paid to the members of the Board of Directors, theauditor’s fees, and usual administrative costs, mainly for
the Ordinary General Meeting, the share register, insur­
ance and announcements. Forbo Holding Ltd does not
employ any personnel.
Administrative expenses for the previous year includes
higher stewardship costs for services that were pro­vided by Forbo International SA.

4 Financial expenses from investments
in and loans from Group companies
Financial expenses include losses on foreign currency
accounts of CHF 1.3 million (2015: CHF 0.0 million) andinterest expense for liabilities to Group companies of
CHF 0.9 million (2015: CHF 0.7 million).

5 Loans to Group companies
Loans to Group companies, amounting to EUR 97.8
million and CHF 12.7 million, are unchanged.

FORBO ANNUAL REPORT 2016 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY 157

6 Investments in Group companies
Investments in Group companies are measured at thecost of acquisition less necessary valuation allowances.

The investments in Group companies decreased in thereporting year due to the transfer of Forbo-Giubiasco
SA, Switzerland, within the Group.

As at December 31, 2016, Forbo Holding Ltd held thefollowing direct investments:
Investments in Group companies
Currency

Share capital(in 1,000)

Equityinterest

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

USD
EUR
CHF
CHF
SEK
GBP
CHF

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

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

Holding/Services
Services
Manufacturing and Sales
Sales

EUR
SEK
MXN
THB

5,000
50,00024,676
13,005100%
100%< 0.1%
69.1%

Company

Registered office

Activity

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

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

FR-Reims
SE-Gothenburg
MX-Tlalnepantla
TH-Samut Prakarn

7 Current liabilities to third parties

8 Other liabilities to Group companies

Current liabilities to third parties include liabilities fromincome and withholding taxes. In the previous year,
the position included CHF 12.9 million in withholding
taxes to be paid from the repurchase of the company’s
own shares in December 2015.

Other liabilities to Group companies as at December
31, 2016, include in particular advances from Forbo
Finanz AG in connection with its cash pool.

158 FORBO ANNUAL REPORT 2016 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY

9 Share capital

10 Conditional capital

As at December 31, 2016, the share capital of Forbo
Holding Ltd totaled CHF 180,000 (2015: CHF 199,000),
divided into 1,800,000 registered shares with a par val­ue of CHF 0.10 each. 21,419 registered shares without
voting or dividend rights are at the disposal of theBoard of Directors.

Originally, conditional capital of CHF 8,500,000 for the
exercise of shareholder options and warrants in con­nection with a bond issue was created by a resolutionof the Annual General Meeting held on April 27, 1994.
Following the exercise of options in 1994, 1995 and1997 and reductions in the par value by CHF 22 pershare in 2003, CHF 8 per share in 2004, CHF 6 per sharein 2007, CHF 10 per share in 2008, and CHF 3.90 per
share in 2009, the conditional capital on December 31,
2016, remained unchanged against the previous year
at CHF 16,645.

At the Ordinary General Meeting of Forbo Holding Ltd
held on April 29, 2016, the shareholders approved acapital reduction from CHF 199,000 to CHF 180,000 bycancellation of the 190,000 shares acquired in connec­
tion with the fixed-price share buyback offer and via
the second trading line of the SIX Swiss Exchange, as
approved at the Ordinary General Meeting of April 24,
2015, and adopted the corresponding amendment to
the Articles of Association.
The capital reduction was completed with the entry
into the Commercial Register of the Canton of Zug on
July 11, 2016, and was published in the SHAB on July
14, 2016. The exchange adjustment took place on thesame day.

11 Treasury shares
The treasury shares in Forbo Holding Ltd amounting
to CHF 24.2 million on the balance sheet date corre­
spond to the value of the directly held treasury sharesvalued at cost. The item ‘Reserve for treasury shares’ re­flects the value of the treasury shares held by subsid­
iaries of Forbo Holding Ltd, amounting to CHF 8.4
million. Overall, the treasury shares held directly andindirectly developed as follows over the period underreview:­
Treasury shares
As at January 1, 2016
Additions
Disposals
As at December 31, 2016

Cost
CHF
244,631,810
0– 212,022,897
32,608,913

Number ofregistered shares
281,5420– 191,386
90,156

FORBO ANNUAL REPORT 2016 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY 159

12 Contingent liabilities
Guarantees and letters of support to third parties in fa­
vor of Group companies amounted to CHF 9.0 million
at year-end 2016 (2015: CHF 9.4 million), of which as in
the previous year none were utilized.

The Forbo 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.

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

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

Number of shares
544,176
90,156

As percentage
30.23%
5.01%

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

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

Options1)
2012 series
1:12)

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

500

500

3) The share portion for the Executive Chairman of the Board of Dir­
ectors includes the 19,483 shares from the employment contract
for the period from May 1, 2013, to December 31, 2016. The shares
are subject to lock-up periods of 3, 4, and 5 years. The last third of
the shares will be available on May 1, 2018, at the earliest.

160 FORBO ANNUAL REPORT 2016 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY

IN 2015
As at December 31, 2015, 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 2015
SharesName and function
This E. Schneider, Executive Chairman3)
Michael Pieper, Vice Chairman
Dr. Peter Altorfer, Vice Chairman
Claudia Coninx-Kaczynski, member
Dr. Reto Müller, member
Vincent Studer, member
Total Board of Directors
Stephan Bauer, Chief Executive Officer
Matthias P. Huenerwadel, Executive Vice President Flooring Systems
Andreas Spreiter, Chief Financial Officer
Jean-Michel Wins, Executive Vice President Movement Systems
Total Executive Board

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

3) The share portion for the Executive Chairman of the Board in­cludes the 19,483 shares from the employment contract for theperiod from May 1, 2013, to December 31, 2016. The shares are
subject to lock-up periods of 3, 4, and 5 years. The last third of theshares will be available on May 1, 2018, at the earliest.

2) Subscription ratio.

For further information regarding granted shares tothe Board of Directors and the Executive Board we­refer to pages 87 and 88 of the remuneration report.

14 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 2016 annual fi­
nancial statements.

Options1)
2012 series
1:12)

46,221
544,122
1,104
85
505
754
592,791
1,524
1,944
1,102
195
4,765

500

500

FORBO ANNUAL REPORT 2016 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY 161

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:2016
CHF
Net profit
Retained earnings
Release of general capital contribution reserves
Treasury shares
Total at the shareholders’ meeting’s disposal1)

203,458,815
227,549,421
14,191,705– 24,241,730
420,958,211

be appropriated as follows:
2016
CHF
Distribution from general capital contribution reserves
Distribution ordinary dividend
To be carried forward
Total at the shareholders’ meeting’s disposal1)

1) At the Ordinary General Meeting of April 6, 2017, the Board of
Directors will propose a withholding-tax-free distribution from
capital contribution reserves of CHF 8.30 (2015: CHF 17) per regis­
tered share as well as an ordinary gross dividend of CHF 10.70(2015: CHF 0) per registered share. No distribution will be madefor treasury shares held by Forbo Holding Ltd. or any of its sub­sidiaries on the record date, which explains why the amount ofordinary dividends as well as the amount definitively specified
for the release of general capital contribution reserves and with­holding-tax-free distribution may therefore still change.

14,191,705
18,295,331
388,471,175
420,958,211

162 FORBO ANNUAL REPORT 2016 – 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 2016, 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 154 to 160) for the year ended 31 December 2016, 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
We have determined that there are no key audit matters to communicate in our report.
Responsibility of the Board of Directors for the Financial Statements
The Board of Directors is responsible for the preparation of the financial statements in accordance with theprovisions of Swiss law and the company’s articles of incorporation, and for such internal control as the Board of
Directors determines is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the Board of Directors is responsible for assessing the entity’s ability tocontinue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the Board of Directors either intends to liquidate the entity or to cease
operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are freefrom material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes ouropinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted inaccordance with Swiss law and Swiss Auditing Standards will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of thesefinancial statements.

1

FORBO ANNUAL REPORT 2016 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY 163

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

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

—

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

—

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

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

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

2

164 FORBO ANNUAL REPORT 2016 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY

Report of the statutory auditor

Report on Other Legal and Regulatory Requirements
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 anIn
accordance
article728awhichpara.has
1 item3 CO
and the
Auditing Standard
890,statements
we confirmaccordingthat an tointernal
controlwith
systemexists,been
designed
forSwiss
the preparationof financial
internal
control system
exists,ofwhich
has been designed for the preparation of financial statements according to
the instructionsof the Board
Directors.
the instructions of the Board of Directors.
We further confirm that the proposed appropriation of available earnings complies with Swiss law and theWefurther confirm
thatthe proposedWe
appropriation
available
earnings
compliessubmittedwith Swisstolaw
thecompany’s
articles ofincorporation.
recommendofthat
the financial
statements
youandbe approved.
company’s articles of incorporation. We recommend that the financial statements submitted to you be approved.
KPMG AGKPMG AG

Rolf Hauenstein
Licensed
Audit Expert
Rolf
Hauenstein
Auditor in Audit
ChargeLicensedExpertAuditor in Charge

Regula Tobler
Licensed
Audit Expert
RegulaTobler
Licensed Audit Expert

Zurich, 2 March 2017
Zurich, 2 March 2017

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

3
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Publisher: Forbo Holding Ltd, Baar/Concept and design: Hotz Brand Consultants, Steinhausen/Zug
Photos: Luxwerk, Zurich/Layout, lithography, and printing: Neidhart + Schön AG, Zurich
Our Annual Report appears in German language and in English translation and can be downloaded fromour website www.forbo.com. The printed German version is authoritative.
All statements in this report that do not refer to historical facts are forward-looking statements which areno guarantee of future performance. They are based on assumptions and involve risks and uncertainties aswell as other factors beyond the control of the company.

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