ANNUAL REPORT 2015

CONNECT.
CHARACTERRESPONSIBILITY
FORBO – IN EVERYDAY LIFECHARACTER.

Individual needs and requirements deserve individual flooring
solutions. We create spaces that have a special and individual
character with flooring that meets the toughest demands interms of functionality, materials and finishing.

RESPON­SIBILITY.

The production of foodstuffs demands absolutely uncom­
promising standards of hygiene – at every step of the way.
Our high-quality conveyor belts are fine-tuned to each manu­
facturer’s individual requirements. They not only guaranteethe ­highest ­quality and hygiene but also ensure that delicate
goods are conveyed carefully.

4This E. Schneider

Stephan Bauer

Executive Chairman

CEO‘The strong Swiss franc provided a major challenge
for Forbo in the 2015 business year. We n
­ everthelessextended our product portfolio in specific areas inboth divisions and invested ­further in the devel­
opment of high-end quality products. Sales in ­local
currencies rose slightly as did currency-ad­justed
earnings, and earnings per share in Swiss francs in­creased once again.’

FORBO ANNUAL REPORT 2015 – LETTER TO SHAREHOLDERS5

TO OURSHAREHOLDERS
Dear Madam, dear Sir,
In the 2015 business year Forbo had to deal with major challenges. The strong Swiss franc had a discernible
impact on the company’s results. The generally subdued business performance in the first half of 2015
did not change appreciably in the second half of the year. In the year under review, the two divisions reported
divergent results. Movement Systems again increased sales and earnings considerably, whereas Flooring
Systems could not match the previous year’s results even on a currency-adjusted basis despite increased
marketing activities and new offerings in the product portfolio.
In the wake of the Swiss National Bank discontinuing its euro minimum exchange rate in January 2015, bothsales and earnings in the corporate currency were strongly impacted by exchange rates. The Swiss franc, whichfirmed significantly against most of the currencies important for our business such as the euro, the poundsterling and the Japanese yen, clearly left its mark when local currency results were translated into the corpo­
rate currency. The foreign currency translation effect shaved a good CHF 100 million off sales and about
CHF 18 million off operating profit (EBIT).
Despite these challenging conditions, both divisions expanded their already attractive product portfolios
by adding new innovations, and we invested further in the development of high-end products and continued
to strengthen our distribution channels, especially in growth markets. Owing to the ongoing situation on
the foreign exchange markets, we initiated a series of additional cost optimization measures in order to partially
offset the impact of the strong Swiss franc by an even better operating performance.

Sales in local currencies slightly higher
Divisions report divergent sales results
In the year under review, Forbo reported net sales of CHF 1,139.1 million (previous year: CHF 1,226.8 million),a gain of 1.1% in local currencies. Owing to the very negative currency effects, this is equivalent to a decline of
7.1% in the corporate currency.
Net sales of Flooring Systems decreased by 1.1% in local currency terms to CHF 791.3 million (previous year:
CHF 884.6 million). Translated into the corporate currency, the decline came to 10.5% owing to the negative
currency effects. Challenging conditions in core markets that are crucial for our business led to a slight decline
in sales, and the geographic weighting of business operations exacerbated the negative currency impact.
Movement Systems reported net sales of CHF 347.8 million (previous year: CHF 342.2 million), an encouraging
increase of 6.7% in local currencies. Translated into the corporate currency, the increase fell to 1.6% owing tonegative currency effects. All regions contributed to the solid growth in local currencies. The division’s strong
presence in growth markets was a major factor in the positive performance.

6

FORBO ANNUAL REPORT 2015 – LETTER TO SHAREHOLDERS

Earnings performance spoiled bynegative currency effects
Currency-adjusted earnings slightly higher year-on-year
Adjusted for currency effects, earnings increased slightly.
In addition to focusing on efficiency gains and continuous optimization of processes and procedures, we
initiated a number of measures designed to ensure our future growth.
In the Flooring Systems division, we expanded our broad portfolio with new designs and embossing, launched
the establishment of production for a new product group – homogeneous vinyl floor coverings – and targeted
distribution channels for further growth.
In the Movement Systems division, too, we again launched a number of technologically demanding develop­
ments with added value for our customers; in addition, we increased and optimized our range of services andcreated additional production capacity.
Slight increase in operating profit margins
Owing to the strong Swiss franc, operating profit before depreciation and amortization (EBITDA) decreased
by 5.6% to CHF 174.8 million (previous year: CHF 185.1 million). Group operating profit (EBIT) declined by 4.4%
to CHF 142.8 million (previous year: CHF 149.4 million).
Currency-adjusted, both EBITDA and EBIT showed a slight increase compared with the previous year.
The EBITDA margin was up by 0.2 percentage points to 15.3% (previous year: 15.1%). The EBIT margin rose by
0.3 percentage points to 12.5% (previous year: 12.2%).

Currency-adjusted Group profit
slightly higher than previous year
Group profit dragged down by negative currency effects
Owing to the strong Swiss franc and to financial income of CHF 1.6 million (previous year: CHF 4.9 million), which
was lower than in previous years, Group profit from continuing operations declined by 6.2% to CHF 115.7
million (previous year: CHF 123.4 million). After adjustment for currency effects, however, Group profit wasslightly higher than the previous year.

7

Balance sheet remains in great shape
Liquidity at an adequate level
In the year under review, net liquidity decreased by CHF 137.3 million to CHF 115.3 million (previous year:
CHF 252.6 million). The decline was due on the one hand to the share buyback program in the reporting
year and on the other hand to the consistently high level of investments designed to secure our future oper­ational activities.
In addition, as at 31 December 2015, Forbo held 281,542 of its own shares, valued at year-end at CHF 332.8
million (previous year: CHF 259.7 million). Of this total, 190,000 shares are earmarked for the capital reductionin accordance with the decision of the 2016 Ordinary General Meeting.
The equity ratio still remains at a high 61.3% (previous year: 67.4%).
Owing to the share buybacks, earnings per share increased slightly compared to the previous year despite
the decline in profit caused by currency fluctuations. Earnings per share from continuing operations (undiluted)
rose by 0.4% to CHF 62.14 (previous year: CHF 61.92).
Solid foundation for growth opportunities
Our strong global presence, our sound balance sheet, and the systematic implementation of our strategy areenabling us to drive expansion in growth markets and take advantage of growth opportunities outside thecompany. However, we will make acquisitions only if we can thereby create added value for our shareholders.

Proposals to the Ordinary General Meeting
The Ordinance against Excessive Remuneration in Listed Public Companies (OaER) entered into force on
January 1, 2014. The Ordinance allows for a transition period until the end of 2015. The Board of Directors ingood time submitted a comprehensive amendment of the Articles of Association to the Ordinary General
Meeting of April 25, 2014, which was passed by a large majority.
Elections to the Board of Directors
As of the 2014 Ordinary General Meeting and in accordance with the OaER and the amended Articles of
Association, all members of the Board of Directors are now elected in individual ballots for a term of one year.
All the current members of the Board of Directors will stand for re-election for a further one-year term of office.
Increase in the dividend
In view of the solid balance sheet and slightly higher earnings per share despite the strong Swiss franc, theBoard of Directors will propose to the Ordinary General Meeting that the dividend for the 2015 business year
should be increased from CHF 16 to CHF 17 per share. This dividend will be paid out to shareholders as a
tax-exempt distribution from capital contribution reserves.
Share buyback program
The Board of Directors will propose to the Ordinary General Meeting that the company’s own shares repur­
chased to date as part of the share buyback program be canceled.

8

FORBO ANNUAL REPORT 2015 – LETTER TO SHAREHOLDERS

2016 – another challenging year
Cautious outlook for 2016
We expect market conditions to remain demanding and challenging in the 2016 business year. Economic
and political circumstances can change quickly. However, we will persist with our strategy and will continue toexpand both our global presence and our product range.
Thanks to the good strategic positioning we have achieved, and barring any change in the foreign exchangesituation, we anticipate a slight increase in net sales and Group profit from continuing operations in 2016.

Thank youThanks to employees, business partners and shareholders
The past year was a challenge for all our employees. We would like to thank them for their commitment, theirprofessionalism and their flexibility in this challenging time.
We also wish to thank our customers, business partners, and suppliers for their professionalism and theconfidence they have placed in our company.
On behalf of the Board of Directors and the Executive Board, we thank you too, in particular, dear shareholders,for the ongoing trust and loyalty you show to Forbo.

Baar, March 2016

This E. Schneider
Executive Chairman

Stephan Bauer
CEO

Financial calendar
Ordinary General MeetingPublication of Half-Year Report 2016 
Publication of Annual Report 2016

April 29, 2016
August 16, 2016
March 7, 2017

9

CONTENTS
At a glance
Forbo in figuresCurrency-adjusted earnings slightly higher year-on-year
Sustainable engagement

Activity report
Two divisions with leading market positions
Flooring Systems: A mixed year
Movement Systems:
Impressive product range and service

11
14
18
24

29
31
34
40

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

46
49
50

The Forbo share

53

Corporate governance report

57

Remuneration report

75

Forbo Group financial report

93

Consolidated balance sheet
94
Consolidated income statement
95
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 2011 – 2015
146
Consolidated balance sheets 2011 – 2015
147

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

149
150
151
152
157
158

10

11

AT A GLANCE
Forbo in figuresCurrency-adjusted earnings slightly
higher year-on-year
Sustainable engagement

14
18
24

12

2015 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 5,200 people
and has an international network of 24 production
and distribution ­companies, 6 assembly operations and 42 pure sales organizations in a total of
35 countries. Forbo is headquartered in Baar in
the canton of Zug, Switzerland.

14

FORBO ANNUAL REPORT 2015 – 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 24 countries. Sales offices in Europe,
North, Central, and South America as well as Asia/
Pacific.
Floor coverings
Building and construction adhesives
Movement Systems
9 production sites and 6 assembly operations in 9
countries and distribution companies in 29 countries.
300 sales and service offices worldwide.
 Production facilities andassembly operations

15

Net sales 	 CHF 1,139.1 million
EBIT 		 CHF 142.8 million
EBIT margin 	
12.5%
Group profit	 CHF 115.7 million

from continuing operations

Earnings per share	
undiluted

CHF 62.14

16

FORBO ANNUAL REPORT 2015 – AT A GLANCE

Net sales by division
Change on previous year
CHF m 2015
791.3
347.8
1,139.1

Flooring Systems
Movement Systems
Total

in %
– 10.51.6– 7.1

in localcurrencies in %
– 1.1
6.7
1.1

In % of total
69.5
30.5
100.0

30.5%

Movement Systems

69.5%
Flooring Systems

Employees by division

Number 2015
3,006
2,174
42
5,222

Flooring Systems
Movement Systems
Corporate Functions
Total

41.6%
57.6%

Movement Systems

Flooring Systems

0.8%

Corporate Functions

Change onprevious year in %
– 1.7
5.5
0.0
1.2

In % of total
57.6
41.6
0.8
100.0

FORBO ANNUAL REPORT 2015 – AT A GLANCE

17

Financial overview Forbo Group
2015

2014

2015

2014

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

CHF m
1,139.1
791.3
347.8
174.8
142.8
115.7
115.7

CHF m
1,226.8
884.6
342.2
185.1
149.4
123.4
123.6

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

EUR m1)
1,010.0
728.3
281.7
152.4
123.0
101.6
101.8

Balance sheet
Total assets
Operating assets
Shareholders’ equity
Net cash

CHF m
912.1
756.1
559.2
115.3

CHF m
1,095.6
803.5
738.8
252.6

EUR m1)
853.7
707.7
523.4
107.9

EUR m1)
902.0
661.5
608.3
208.0

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

CHF m
140.9
11.4
152.3

CHF m
147.3
– 13.0134.3

EUR m1)
131.9
10.7
142.6

EUR m1)
121.3– 10.7
110.6

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

%
15.3
61.3
– 20.6%
15.1
67.4– 34.2

Number
5,222

Number5,161

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

CHF
62.14
396.9
17.03)

CHF
61.92
370.7
16.04)

EUR1)
58.2
371.5
15.9

EUR1)
51.0
305.2
13.2

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

CHF m
2,352.2

CHF m
2,138.2

EUR m1)2,201.6

EUR m1)
1,760.4

Employees (as at December 31)
Total employees

1) Euro values translated at the average annual exchange rate of
CHF 1.0684/1 EUR (2015) and CHF 1.2146/1 EUR (2014).

4) Approval of a dividend of CHF 16 per registered share at theOrdinary General Meeting of April 24, 2015.

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 29, 2016, the distribution of a dividend in the amount of
CHF 17 per registered share.

18

FORBO ANNUAL REPORT 2015 – AT A GLANCECURRENCY-ADJUSTEDEARNINGS SLIGHTLY
HIGHER YEAR-ON-YEAR
In the 2015 business year Forbo had tocontend with major challenges owing
to the strength of the Swiss franc. Bothsales and earnings were hit hard by ex­change rate fluctuations.
The two divisions turned in very diver­gent performances. Whereas Movement
Systems substantially increased bothsales and earnings, Flooring Systems
failed to match the previous year’s re­sults even on a currency-adjusted basis
despite multiple marketing activities
and efficiency gains in its operations.
Independent of these challenging con­ditions, both divisions expanded their
attractive product portfolios with newofferings, and we continued to invest in
the development of high-end products
and strengthen our distribution chan­nels, especially in growth markets.
Despite ongoing expansion of our op­
erational activities, earnings increasedslightly after adjustment for currency ef­
fects, though sales in local currencies
were only marginally higher.
Given our solid balance sheet, our strong
global presence, and our leading mar­ket positions, we are well placed to capi­
talize on future growth opportunities.

Sales in local currencies
slightly higher than previous year
In the year under review, Forbo reported net sales of
CHF 1,139.1 million (previous year: CHF 1,226.8 million),a marginal growth of 1.1% in local currencies. In thecorporate currency, due to negative currency effects,
sales resulted in a decrease of 7.1%. The main exchange
rate factors were the weakening of the euro, the poundsterling and the Japanese yen, which together reduced
sales by a good CHF 100 million.
The Flooring Systems division posted net sales of
CHF 791.3 million in the 2015 business year (previous
year: CHF 884.6 million). This corresponds to a sales de­crease of 1.1% in local currencies; owing to the nega­tive impact of currency fluctuations, the decline in thecorporate currency came to 10.5%. Various challeng­
ing conditions in core markets that are crucial for ourbusiness led to this decline in sales, and the geo­
graphic weighting of business operations exacerbatedthe negative currency impact.
The Movement Systems division generated net salesof CHF 347.8 million in the year under review (previous
year: CHF 342.2 million), which reflects a strong in­crease of 6.7% in local currency terms. In terms of thecorporate currency, the increase came to 1.6% despite
negative currency effects. All regions contributed tothis gratifying upturn in sales. Even the more tradition­al, saturated markets reported market share gains.

19

Net sales by geographic area
Change on previous year

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

%
21.0
14.5
12.2
11.8
10.8
9.5
8.8
4.9
4.2
2.3
100.0

in %
4.5
– 0.1
– 14.9– 7.5– 10.6– 13.2– 11.2– 2.6– 23.6– 8.8– 7.1

in local currencies in %
2.8
6.2
– 3.3
5.2
– 7.7
– 1.4
3.4
10.7
– 1.4
– 8.7
1.1

2015
CHF m
239.4
164.9
139.1
134.0
123.0
108.4
100.4
55.9
47.9
26.1
1,139.1

Currency-adjusted earnings
slightly higher year-on-year
Despite continuing high investments in property, plant,
and equipment plus a wide range of market activities
and product developments, we managed to increase
earnings slightly after adjustment for currency effects.
Earnings, however, were negatively impacted by thestrong Swiss franc.
In the corporate currency, Group EBITDA accordingly
declined by 5.6% to CHF 174.8 million (previous year:
CHF 185.1 million), while EBITDA at Flooring Systems
decreased by 11.0% to CHF 133.1 million (previous
year: CHF 149.6 million). The EBITDA of Movement Sys­
tems rose by 11.1% to CHF 51.2 million (previous year:
CHF 46.1 million) on the back of a strong operational
performance and weaker currency effects.

25

50

75

100

125

150

175

200

225

250

The Group increased its EBITDA margin by 0.2 percent­age points to 15.3% (previous year: 15.1%), Flooring
Systems reduced its EBITDA margin by 0.1 percentage
points to 16.8% (previous year: 16.9%), and Movement
Systems increased it by 1.2 percentage points to 14.7%(previous year: 13.5%).

20

FORBO ANNUAL REPORT 2015 – AT A GLANCEEBITDA by division

Flooring Systems
Movement Systems
Corporate

2015
CHF m
133.1
51.2
– 9.5

Group operating profit (EBIT) declined by 4.4% to CHF
142.8 million (previous year: CHF 149.4 million). The
Group’s EBIT margin rose by 0.3 percentage points to
12.5% (previous year: 12.2%). The strong Swiss franc
shaved about CHF 18 million off EBIT in the corporate
currency.
After adjustment for currency fluctuations, both op­
erating profit before depreciation and amortization(EBITDA) and operating profit (EBIT) were slightly high­er than the previous year at Group level. Operating
profit margins were also slightly higher than the previ­
ous year.
Owing to the strong impact of currency fluctuations
and a lower financial result compared with previous
years, Group profit from continuing operations de­clined by 6.2% to CHF 115.7 million (previous year: CHF
123.4 million). After adjustment for currency effects,
however, it was slightly higher than the previous year.

Change onpre­vious year in % – 25
– 11.011.1– 10.4

0

25

50

75

Taxes and financial income
The tax rate in the year under review came to 19.9%,
compared with 20.1% the previous year.
Financial expenses declined to CHF 0.4 million (previ­
ous year: CHF 1.0 million) owing to lower interest ex­penditures and a weaker effect from currency transla­
tions. In contrast, the Group reported financial incomeof CHF 2.0 million (previous year: CHF 5.9 million),
stemming primarily from income from securities. Onbalance, the financial result came to CHF 1.6 million(previous year: CHF 4.9 million).

100

125

150

21

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

2015
CHF m
140.9
11.4
152.3

Higher free cash flow
In the reporting year, cash flow from operating activi­
ties was down by CHF 6.4 million to CHF 140.9 mil­lion(previous year: CHF 147.3 million), owing mainly to
lower Group profit, which was reduced by currency
effects. Cash flow from investing activities was a posi­tive CHF 11.4 million in the reporting year (previous
year: CHF – 13.0 million). Despite high investments inproperty, plant, and equipment, cash flow from invest­
ing activities was positive owing to proceeds from thesale of current financial assets. Free cash flow thus
amounted to CHF 152.3 million (previous year: CHF
134.3 million).

2014
CHF m
147.3
– 13.0
134.3

– 40

0

40

80

120

160

Balance sheet remains in great shape
Total assets as at December 31, 2015, stood at CHF
912.1 million (previous year: CHF 1,095.6 million). Net
liquidity decreased by CHF 137.3 million to CHF 115.3
million (previous year: CHF 252.6 million). This decline
can be explained by the share repurchases made in
the reporting year. Likewise, shareholders’ equity de­creased to CHF 559.2 million as at end-December 2015
(previous year: CHF 738.8 million) primarily owing to
the share buybacks. The equity ratio still remains at ahigh 61.3% (previous year: 67.4%).

22

FORBO ANNUAL REPORT 2015 – AT A GLANCE

Substantially higher investment
volume in local currencies
Although the demanding conditions pose a challenge
to our organization in all areas, we remain focusedon the factors that will drive our future growth as wellas on efficiency gains, continuous optimization of pro­
cesses, and cost-saving measures. In the reporting year,
we concentrated our resources on key activities andstrategic projects in the areas of product portfolio,
technology, production capacity, and market expan­
sion. Total investments in fixed assets in 2015, as in theprevious year, came to CHF 39.5 million; in local curren­
cy terms, however, this was well above the prior-yearlevel.

In the reporting period, Flooring Systems invested
CHF 30.5 million (previous year: CHF 29.9 million). This
amount includes in particular the construction of a­factory for the manufacture of homogeneous vinyl
floor coverings, the building of an additional packaging
line for the production of luxury vinyl tiles in the Neth­erlands, as well as expanded warehouse capacity in
Sweden for the Scandinavian market and for modular
linoleum production in Scotland.
At Movement Systems, investments in fixed assets
came to CHF 8.9 million (previous year: CHF 9.4 million),
which in local currencies was higher than the previous
year. The funds were spent mainly on extending the
product portfolio for specific applications in complex
and demanding facilities, for various additional service
tools, and for fabrication and production plants and ex­
pansion in growth markets.

Investments 2011 – 2015

2015
2014
2013
2012
2011

Flooring
Systems
CHF m

Movement
Systems
CHF m

Corporate
CHF m

Total
CHF m

31
30
27
24
24

9
9
7
9
7

0
1
1
1
1

40
40
35
34
32

10

20

30

40

23

Headcount adjusted on case-by-case basis
At year-end 2015, the Forbo Group employed 5,222
people. These are 61 employees more than at the endof the previous year. The individual percentage chang­
es in staff levels by and large reflect market develop­
ments in the regions in question. The marked increasein Eastern Europe stems in particular from the ex­pansion of Movement Systems’ manufacturing centerin Slovakia and expansion in growth markets. The ex­pansion of the sales and distribution organizations in
Asia/Pacific and the Americas resulted in additional­hiring in these regions. In Germany, following several
years of restraint as regards new hiring, headcount wasincreased on a case-by-case basis. In most other Euro­pean countries, we have been more restrained withnew hiring given the current market situation, which
is characterized by rather 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

%
20.7
14.3
14.2
12.3
11.7
9.8
8.3
3.4
3.1
2.2
100.0

Change onpre­vious year in %
– 1.7
3.7
2.6
1.3
– 2.2
11.5
– 0.9
– 2.9
– 1.2
0.0
1.2

2015
1,081
746
741
640
611
512
434
178
164
115
5,222

200

400

600

800

1,000

1,200

24

FORBO ANNUAL REPORT 2015 – AT A GLANCESUSTAINABLE
ENGAGEMENT
A responsible attitude towards the
management of resources in all dimen­
sions is one of the fundamental values
at Forbo. We are committed to protect­
ing 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 on the requirements we makeof ourselves. This is why we promote the necessary ca­pabilities and competences at all organizational levels,and support this internally with seminars and further
training activities.
This means that the divisions provide internal training
in a wide range of areas regarding products and appli­
cations, sales and marketing, finance, operations, pro­

ject management, strategy implementation, and For­bo’s values. Continuous intensive training in the area of
health and safety includes measures on topics of acci­
dent prevention, risk awareness, occupational healthand safety, and general ongoing preventive measures.
At the Group level Forbo has established an internalmanagement training program in collaboration with
the University of St. Gallen, as well as other external
partners and internal experts. This practice-oriented
advanced training program for senior managers andpersons in key positions consists of a first training weekthat includes various modules in areas ranging frommanagement and sales to marketing and operations.
A second training week expands on this and includes
additional leadership modules, focusing on strategic
implementation and leadership topics such as dealing
with organizational and team changes as well as per­formance management.
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 these25­ emands by offering purely natural products in theirdproduct portfolio.

layer 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.

The production of Flotex was switched over to com­pletely phthalate-free materials in the reporting year.
The proportion of recycled material used in the manu­
facture of linoleum and needle felt floor coverings wasincreased.

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

Flooring Systems gets 100% of the electricity usedat 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
from renewable, plant-based raw materials.
In order to maximize environmental compatibility andat the same time increase the product advantages,
Movement Systems had patented a special coating(AmpMiser) that significantly reduces the friction be­

26

FORBO ANNUAL REPORT 2015 – AT A GLANCESUSTAINABLE
ENGAGEMENT
tween the underside of the belt and the slider bed
compared with conventional conveyor belts. In theyear under review, Movement Systems launched a
new generation of these energy-saving conveyor belts
that are even more efficient. Conveyor belts coatedwith AmpMiser display their advantages most clearly
where goods are being continuously conveyed andmany belts are in use, for example at airports or in
logistics and distribution centers. For this type of appli­
cation, energy savings of up to 50% are achieved forthe 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, reduc­tion of emissions, reuse of heat generated in the pro­duction process, and in the reduction and the efficient
recycling of waste material in order to reduce the bur­den on the environment. A wide range of certifications
confirm these efforts. At the same time, we are working
on innovative ideas regarding the materials used in the
production process as well as new application tech­niques.

FLOORING SYSTEMS
Floor coverings are part of our everyday lives and de­fine our living, leisure, and working space. Whether
as a direct end customer, builder of a major project,architect or installer, for every stakeholder group theissue of sustainability plays an important role in thedecision-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 sustain­
ability features more clearly than up to now and placethem in correlation to each individual. By ‘health’ wemean all-round physical, mental and social well-being,
and by ‘one’ we mean persons as well as companies, theenvironment, organizations, customer segments, etc. In
this way, the relevant product properties and explicit
differentiation features are emphasized for each stake­holder group. In the reporting year, the focus was on
analyzing the effects of allergens. This led to appropri­ate product improvements, an engagement which wasrecognized by the award of various certificates.

27

MOVEMENT SYSTEMS
Movement Systems’ resource management is based on
the continuous improvement of consumption efficien­
cy by the development and the targeted implementa­tion of measures for the optimization of electricity, gas,oil and water consumption. Alongside ongoing en­
ergy-saving measures, energy recovery is an importantfactor, i.e. the use of energy released in the downstreamincineration plant for the purposes of heating and/or
power generation. In order to reduce water consump­tion and avoid unnecessary waste, Movement Systems
is increasingly using closed water circulation systems.
Some of the waste water can be used in another pro­duction step in order to minimize water requirements.
The reduction and productive reuse of waste material
is increasingly the focus of Kaizen and sustainability ini­
tiatives. Cut-offs from the belts we produce in certain
countries are sold to other companies to be reused intheir production. The locations in North America col­lect sanding dust in filters which is then processed asmaterial by external partners in their production. Someof the waste from plastic modular belts and polyur­e­thane cut-offs is recycled back into our own produc­tion.

Economic dimension
As a listed company, Forbo also engages intensively
with the economic dimension of sustainability. Com­
pliance is enormously important for the reputation andpositioning of a company. We are successful as a com­pany when we meet the expectations of customers,
when employees are enthusiastic and committed, andwhen we create added value in the long term for ourshareholders.
In the reporting year we constantly maintained our­efforts in terms of a conscious attitude to what we doby reinforcing awareness, particularly regarding thecontents of the code of conduct (by means of ane-learning module), as well as competition law and­anti-corruption principles, and the uncompromising
implementation of the risk management process.

28

29

ACTIVITYREPORT
Two divisions with leading market positions

31

Flooring Systems:
A mixed year

34

Movement Systems:
Impressive product range and service40

CHARACTER.

RESPONSIBILITY.

FORBO ANNUAL REPORT 2015 – 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 linoleum,high-quality vinyl floors, entrance flooring systems forcleaning and drying shoes, carpet tiles, needle felt, and­Flotex, the washable textile flooring. Thanks to their­excellent technical properties and attractive designs,
these flooring products are invariably the first choicefor public buildings, department stores, hospitals, andother healthcare facilities, schools, libraries, commer­
cial and office spaces, leisure centers, shops, hotels, res­taurants, and cafeterias as well as for applications in theresidential market. With a market share of over 65 per­cent, Forbo is the world leader in linoleum.
Flooring Systems also provides ready-made adhesives
for flooring installations and ceramic tiles as well as
leveling compounds for the construction industry un­
der the trade name Eurocol.

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

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

32

FLOORINGSYSTEMS33

CHARACTERSTYLISHAMBIENCE
Carpet tiles give a room a very special character. They
create a warm atmosphere and bring about an envi­­ronment that is conducive to concentration by natural­ly reducing noise levels. Our carpet tiles not only lend
every room a personal touch but also satisfy a numberof other requirements: resistance to wear, antistatic
properties and ease of cleaning. With our own carpet
tile production, we are able to cater to customers’ spe­cific wishes, and to offer custom-made carpets. Carpet
tiles are suitable for carpeting large surfaces, and theirmodular design and long-lasting materials make them
ideal.

34

FORBO ANNUAL REPORT 2015 – ACTIVITY REPORTFLOORING SYSTEMS:A MIXED YEAR

‘In the past year we focused once again
on our defined long-term goals byaligning our product portfolio evenmore closely to the needs and applica­
tions of customers in the private sector
and by adding further attractive collec­
tions to our product range. To support
these efforts, we have invested in new
products as well as in measures to boost
efficiency over a wide range of oper­
Matthias P. Huenerwadel
ational areas. Despite all these steps, we Executive Vice President
were unable to repeat the positive sales Flooring Systems
and earnings performance achieved in
2014. Public sector investments remain(EBIT), which declined by 11.0% to CHF 109.8 mil­at a modest level and are still character­ profit
lion (previous year: 123.4 million). The EBIT margin
ized by restraint. Our efforts to expand came to 13.9% (previous year: 14.0%), slightly below
and energize customer segments in the previous year by 0.1 percentage points.
the private sector are having an effect.
in local currencies
However, weaker demand in our im­ Sales
slightly lower than previous year
portant, high-revenue core markets has The market we operate in has been very mixed forput a damper on growth. With our cur­ a number of years and, in addition, depressed by arent product portfolio, the initiatives ­persistently low level of demand in the public sector.
factors are increasingly affecting our high-rev­e­
to boost growth, customer focus and Thesenue segments in the healthcare and education sec­cost consciousness, we will strengthen tors. In the year under review, our major core markets,
our market position as a leading sys­ in particular France, Great Britain and North America,
tems supplier in the commercial seg­ had to contend with a number of challenges. In France,
went into decline owing to the ongoing mar­ment and get back on the growth path.’ demand
ket situation and a very competitive environment. Sales
The Flooring Systems division posted net sales of
CHF 791.3 million in the 2015 business year (previous
year: CHF 884.6 million). This corresponds to a decreaseof 1.1% in local currencies; owing to the negative im­pact of currency fluctuations, the decline in the cor­porate currency came to 10.5%. The division accounts
for 69.5% of Group sales. By expanding our productportfolio for specific applications in the private sector,
we posted encouraging growth figures in various cus­
tomer segments, especially for shop fittings, hotels, andcatering and leisure services as well as the manufactur­
ing industry. However, flagging demand in important
core markets impeded our efforts. In addition, public
sector investment is still weak. Despite measures on thecost side, the strong Swiss franc combined with a slight
downturn in sales impacted negatively on operatingin Great Britain showed a downtrend in the reporting
year following significant growth the previous year driv­
en by large-scale projects. In North America demand
was muted especially in our core segments healthcare
and education. Some of our smaller markets also had tocontend with adverse market conditions: Switzerland
reported a negative impact on sales from the strength­
ening of the Swiss franc against the euro, while markets
in Eastern Europe and South America, which had been
growing, recorded a significant drop in demand owing
to the current market environment.
The markets in southern Europe performed very well.
Sweden, too, reported encouraging sales growth on
the back of an overall strong market, while Germany
performed well and posted growth amid tough com­
petition. In the Netherlands, sales stabilized after falling35

in recent years. China and South Korea again reported
above-average sales growth owing to large-scale cus­
tomer installations in various customer segments.
The building and construction adhesives activity recov­
ered after difficult years during a cyclical downturn andreported marginal sales growth. All three core markets,
Netherlands, Germany and Russia, contributed to thisresult. New product developments delivered additional
growth stimuli.
Innovative new collections
The steady expansion of the range catering to private
sector customer segments continued in the year un­
der review with innovative new collections featuring
a broad spectrum of color and design options, 3-D
printing, new embossing and materials plus develop­
ments in functionalities. The luxury vinyl tiles again
generated double-digit growth in a highly competitivemarket, gaining market share and delighting custom­ers with state-of-the-art designs, patterns, and instal­lation techniques for discerning tastes. Vinyl floor cov­
erings for the commercial sector, entrance matting
systems, and needle felt floor coverings also contribut­
ed to sales growth. Carpet tiles and Flotex – our wash­
able, high-tech textile floor covering – remained moreor less at the previous year’s level. Demand for lino­
leum remained subdued because this material is wide­ly used in the healthcare and educational sectors
where investment in new builds and renovations de­pends closely on public spending budgets. Sales of­vinyl floor coverings for the residential sector declinedin the year under review in the wake of strategic port­
folio adjustments.
Investments to support growth
In addition to engaging in wide-ranging product port­
folio activities, we have taken targeted measures tostrengthen distribution channels. In Turkey, the newsales team set up the previous year was expanded andprovided with local warehouse capacity; in Indonesia,
a local sales team was established; and in Poland andthe Czech Republic, a local customer service was put inplace. In Sweden, we opened an additional service de­pot in Malmö and expanded the central warehouse in
Gothenburg. These measures guarantee us customer
focus and make delivery of daily orders more efficient
by reducing delivery times and bringing us closer tocustomers in order to deal with their local needs andrequirements.

Given the buoyant sales of luxury vinyl tiles, we haveadded an additional packaging line in the Netherlands.
For modular linoleum production in Scotland, we com­pleted the expansion of the interim storage facility forlarge reels.
In the year under review, we built a new production
plant in Coevorden, the Netherlands, which will begin
manufacturing high-end homogeneous vinyl floor
coverings towards the end of 2016. This will significant­ly increase the portfolio of resilient floor coverings for
2017, a range that is geared to new application areas
in both the public and private sector.
Execution and efficiency
will drive a return to profitable growth
For 2016 we anticipate market conditions similar to
those in the reporting year, and this will pose a chal­lenge for all areas of the organization. We will execute
our strategy systematically, develop our attractive prod­
uct portfolio with a focus on customers in all target seg­ments, and coordinate it closely with a wide range ofapplications. We expect this approach to generate bet­
ter-than-average sales growth in the growth markets,
especially in Asia.
We will support all these investments and activities
with continuous efficiency gains along the entire value
chain in order to get back on the path to profitable
growth.

36

FORBO ANNUAL REPORT 2015 – ACTIVITY REPORTINNOVATIONS ADDED TO
PRODUCT RANGE FOR
THE PRIVATE SECTOR
Continuously improving the sustain­
ability and environmental friendlinessof products and processes – this is thepriority in all changes and new devel­
opments at Flooring Systems. Forbofloor coverings combine attractive andinnovative design with long life andhigh product quality. Forbo has again
made its mark in the reporting yearwith a wide range of new trends.

Design award for unique linoleum offer
After the launch of the very diverse and trendy modu­
lar linoleum floor coverings for the private sector in
the previous year, the collection was extended in thereporting year by a click-fit version, which can also
be used in the commercial sector. This is available insquare and rectangular formats, and allows easy andquick installation.

Work continued in the reporting year on further in­novative and creative linoleum offers, resulting in aunique linoleum collection with a striped look whose
surface has a three-dimensional embossment. The useof this embossment technique gives the surface tex­
ture a new depth, and changes the way the surface
feels to the touch. With the aid of a large metal roller, a
3-D pattern is embossed into the linoleum, transform­ing the otherwise flat surface, giving the floor covering
its own dynamics as the appearance changes depend­ing on the incidence of light and the angle of view.
This gives a warmer, cozier character to any ambience.
Accordingly, this collection is more likely to be popularfor installations in the private sector, for example innursing homes or in office buildings. Alongside thisaesthetic aspect, the technique also has practical ad­
vantages – it is very good at hiding scratches, dirt oruneven surfaces of the underfloor.

37This collection, available in various tone on tone shades
and colorful designs, was distinguished in February
2016 with the iF Design Award, which, along­side the
Red Dot Award, is one of the world’s most prestigious
design awards.
This product offer, with a three-dimensional effect, will
also be available as of spring 2016 in a modular version.

Even more sustainable entrance matting systems
Our high-performance entrance matting systems keep
entrance areas clean and tidy, and reliably absorb mostof the dirt and wet before it is carried into the building.
This protects the neighboring floor covering from dirt
and wear, which in turn effectively reduces buildingcare and maintenance costs. The sustainable entrance
matting systems owe their dirt- and water-repellent
properties to highly absorbent fibers and robust bris­
tles.

‘NATURALNESS IN In order to make the product offer for permanently in­stalled entrance matting systems even more sustain­
THE FOREGROUND’ able, the Nuway collection has been expanded with abamboo version, in which the aluminum rails are re­placed by strips of bamboo. This version gives the am­bience an even more natural, softer look. Bamboo is aregenerative material of the grass family, with all theadvantages of the finest hardwoods.

MOVEMENTSYSTEMSRESPONSIBILITYCONSCIEN­
TIOUS­HANDLING
In addition to ensuring that all hygiene requirements
are met, producers of fine chocolate creations mustsee to it that their goods are carefully and gently trans­
ported. Our conveyor belts play wwa crucial role in thisrespect for parameters such as surface structure, re­lease properties and innovative belt edge sealing.
We not only provide added value to our customers
through functional application features and the highend materials of our products but we are also an inno­
vation partner, helping them to find comprehensive
solutions.

40

FORBO ANNUAL REPORT 2015 – ACTIVITY REPORTMOVEMENT SYSTEMS:IMPRESSIVE PRODUCTRANGE AND SERVICE‘We can look back on 2015 as anothersuccessful year for Movement Systems.
Systematic efforts to implement thestrategy in all the division’s business ar­eas had a positive impact on all fronts.
We considerably increased both sales
and earnings in all regions. The growth
drivers were innovative and applica­
tion-specific product innovations withfeatures that generate added value inJean-Michel Wins
our customers’ production or logistics Executive Vice President
processes across a broad spectrum of Movement Systems
industries. These were backed up by
growth-promoting investments, newafter years of subdued performance. Growth mar­global manufacturing processes, and turn
kets such as Turkey, Russia and the Czech Republic also
other optimization measures along the contributed to this success with sales gains, althoughentire global value chain, which have modest in scale. Switzerland reported a negative im­given a further major boost to our pro­ pact on sales from the strong Swiss franc. Growth in theregion was driven by long-standing, close co­ductivity and efficiency. We are on the Americas
operation with major accounts in North America in cus­right path to further strengthen our tomer segments such as logistics and food processing
market position.’on the one hand, and gratifying major orders in the
The Movement Systems division generated net sales of
CHF 347.8 million in the year under review (previous
year: CHF 342.2 million), which reflects a substantial in­crease of 6.7% in local currency terms. In the corporate
currency, however, adverse currency effects pared thisgrowth back to 1.6%. The division accounts for 30.5% ofGroup sales. All regions contributed to this encourag­ing upturn in sales. Even the more traditional, saturated
markets reported market share gains. This perfor­
mance, coupled with consistently executed opera­
tional activities designed to improve global processes
across the board, again had a very positive impact on
operating profit (EBIT), which climbed to CHF 42.9 mil­lion (previous year: CHF 37.0 million). This is equivalent
to a significant increase of 15.9%. The EBIT margin cameto 12.3% (previous year: 10.8%), a year-on-year increaseof 1.5 percentage points.
All regions contributed to sales growth
All regions and, almost without exception, all markets
contributed to this strong sales growth with a varietyof growth stimuli. In Europe it was particularly encour­aging that the main market Germany reported an up­

food-processing industry in Mexico on the other hand.
Asia/Pacific repeated its strong growth performance.
One of the reasons was better-than-average sales in­India, South Korea and Southeast Asia, where we havefocused on expanding the local sales and assembly or­
ganizations in recent years. Important factors energiz­
ing this growth were major projects such as equipping
the Incheon airport in South Korea and large-scale or­ders for the textile industry in India. In China, however,
we are feeling the slowdown in the economy.
All customer segments reported higher sales
Following years of strategically focused development,
the Prolink plastic modular belts product group again
posted double-digit growth and has now establisheditself in the Asia/Pacific region. These belts are usedmainly in the food-processing industry, logistics and in­
dustrial manufacturing, wherever conventional Transi­
lon conveyor belts, owing to their design, are not en­
tirely suitable for some conveying and processing tasks.
Efforts to build up the business in Extremultus powertransmission belts were also successful.

41

It is especially encouraging that we posted expansion
in all customer segments. We reported double-digit
growth in the logistics, food-processing, and tobacco
industries on the back of reliable, customer-specificsolutions that are based on innovative product range
extensions with high-end quality features. Sales also
showed an encouraging uptrend in the other seg­ments – textiles, treadmills, industrial production, rawmaterials and paper/printing – owing to highly suc­cessful belt and application solutions.
Innovation partner for our customers
Movement Systems not only supplies a wide range of
conveyor and power transmission belts but is also a
reliable provider of technical know-how for total solu­
tions and an innovation partner for original equipment
manufacturers and end customers. In new product de­velopments, small details often play a crucial role in theinteraction of application features and the materials
used. In the year under review, we again committed
significant resources to expanding the product portfo­
lio and to developing specific applications in complex
facilities.
With the new generation of the energy-saving convey­
or belt AmpMiserTM 2.0, launched in the year under re­view, our customers make big extra savings in energy.
The belts, equipped with a patented special anti-fric­tion layer, excel when goods have to be constantly
conveyed and several belts are being used: at airports
and in logistics and postal distribution centers. In thistype of application, energy savings of up to 50 percent
have been measured in whole conveying systems.
In the food-processing industry we have launched belt
types that meet the most demanding hygiene require­ments owing to their surface structure and their special
belt edge sealing. The seal keeps oil, grease, moistureand bacteria from penetrating the belt. The belt’s espe­
cially low-friction and easy-to-clean running side tex­
ture means that cleaning the conveyor belt is donequickly and quite easily.
The innovations in the reporting year include the newseries 11 Prolink plastic modular belts. These light­
weight belts have been specially designed for tightradius conveying systems to ensure top performanceand reliability. Owing to their curve radius, these belts
provide a maximum of flexibility and can be config­
ured for use in a wide range of applications. Theirunique design makes it possible to install space- andcost-saving conveying systems that are resistant to hot
water and to cleaning and disinfectant agents.
We also focused efforts on expanding the productportfolio of Extremultus flat belts. The new Grip StarTM
flat belt is used mainly in packaging plants for pro­cessing paper, cartons, corrugated cardboard and tis­sue-based products. With the new coating, products
can be processed savely and efficiently, leaving nomarks. Grip StarTM has all the advantages of rubber but
without the latter’s disadvantages such as brittlenessand cross-cracking.
We have invested in various fabrication and production
plants. In order to increase service capacity, we haveequipped a number of support points with new andadditional service tools such as heat presses.
Taking small steps to top performance
In 2016, we will continue to systematically execute thestrategic initiatives in all the division’s business areas byaligning our product range specifically to the needs ofthe customer segments and targeting expansion of ourdistribution and service organizations.
In addition, in the new year we will continue the initia­
tives already underway in order to optimize processes
across the board. In the year under review, we achieved
a number of improvements, including establishing
global manufacturing processes and launching effi­
ciency projects in reel production. We see further po­
tential in the processes and methods involved in oper­
ations, production planning, supply chain management
and quality, which will improve our efficiency and raise
our industry standard.

42

FORBO ANNUAL REPORT 2015 – ACTIVITY REPORTSECTOR-SPECIFICINNOVATIONSCONVINCE
Not always visible, but present almost
everywhere, Movement Systems is mak­ing sure that a wide range of produc­tion steps run smoothly and efficiently.
Our solutions are distinguished by highecon­omy, precision and reliability. For­bo has again distinguished itself in thereporting year as a competent partnerin the development of sector-specificand future-oriented solutions for powertransmission, conveying and producing.

New generation of energy-saving conveyor belts
One of Movements Systems’ key corporate objectives
is to maximize environmental friendliness and to en­
hance product value at the same time. On this basis,
we successfully conduct research and development
by closely liaising with OEMs and end users. The newgene­ration of energy-saving conveyor belts Amp­
Miser™ 2.0 is a further example of this. Due to a signifi­
cantly reduced coefficient of friction, AmpMiser™ 2.0
belts make an impact where energy losses in a con­veyor are usually the greatest: in the friction between
the underside of the belt and the slider bed. By adding
a patented Texglide coating to the underside fabric,a smooth layer is created that permanently acts likea dry lubricant and thus minimizes energy consump­tion. AmpMiser™ 2.0 conveyor belts excel in areas
where items are constantly conveyed and where many
belts are in use, for example at airports and in logistics
or distribution centers. Total energy savings of up to
50% have been measured in these types of applica­
tions. Further advantages are the suitability for zincslider beds and the reduction of CO2 emissions due tolower energy consumption.

43

Plastic modular belts for tight curve radiiDue to their construction, conventional conveyor belts
are not always suitable for certain conveyor and pro­cessing tasks. As an optimum complement to these,
Movement Systems is focusing on expanding its prod­
uct offer in the area of plastic modular belts. In the re­porting year, special curved belts were developed
which are particularly lightweight and distinguishedgenerally by their tight radii, which allow space andcost-saving system construction. The individual mod­ules are flexibly connected with one another andmade endless by inserting hinge pins. They offer the‘COMPETITIVE ADVANTAGE
THROUGH APPLICATION
KNOW-HOW’

smallest currently available curve radius at high powertransmission and are thus unique on the market – they
allow a space saving of up to 33% compared withstandard belts. These belts are used predominantly inbakeries where dough-based products are manufac­
tured and further processed, such as baked goods,­baguettes or pizzas.
All-round hygienic belt
ProsanTM, a special belt for the processing of dough, of­fers all-round hygiene and was developed specificallyfor the food-processing industry. Thanks to the Frayfree
belt construction, unsealed belts have almost com­pletely fray-free edges. With the optional Smartseal beltedge sealing, this gives rise to a fully protected, durable
belt body that offers maximum hygiene: oil, grease,dampness and bacteria cannot penetrate the belt. The
belt also offers a new running side texture which is es­
pecially low-friction and easy to clean so that the belt
can be cleaned quickly and easily.

44

45

ORGANIZATION
Executive BoardGroup structure
Board of Directors

46
49
50

46

FORBO ANNUAL REPORT 2015 – 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 joined
Siemens Metering AG, where he was Head of Financeand Controlling for two years and was then appointed
to head the Electronic Meters Competence Center.
From 2002 to 2012 he was Executive Vice President andGroup Chief Financial Officer of Landis + Gyr AG. He isa member of the Board of Directors at Reichle & DeMassari AG. Andreas Spreiter joined the Forbo Groupin January 2013 as a member of the Executive Board
and Chief F­ inancial Officer.

Chief Executive Officer

Chief Financial Officer

48

Matthias P. Huenerwadel

Jean-Michel Wins

Matthias P. Huenerwadel was born in 1968 and is a
Swiss citizen. He studied engineering at the Federal­Institute of Technology (ETH) in Zurich, specializing
in manufacturing technologies and technology mana­
gement. 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 manage­
rial 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 2015 – ORGANIZATION

49

GROUP STRUCTURE
Forbo has performed better than average in the last ten years compared with other exchange-listed compa­
nies. With its two focused divisions, the Group is now a world leader in its markets, free of debt, and in posses­
sion of adequate resources for further strategic development. Despite the challenging market conditions in
the year under review, Forbo now faces the task of maintaining 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.
Whereas Forbo was managed until the beginning of 2014 by one person who exercised two functions –­Delegate of the Board of Directors and CEO – the change at the top executive level made at the Ordinary
General Meeting of April 2014 redefined the tasks and responsibilities by appointing a separate Executive
Chairman of the Board of Directors and a CEO.

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

Board of Directors Office
Investor Relations
Corporate Communications
Internal Audit
CEO

Corporate HR
Corporate Development

Executive Vice President
Flooring Systems

Executive Vice President
Movement Systems

CFO

Sales and Marketing

EuropeSupply Chain

Americas

Corporate Controlling
and Reporting

Business Development

Asia/PacificFinance

Plastic Modular Belts

Building and Construction
Adhesives

Operational Areas

Member of the Executive Board

Corporate Tax
Risk Management
Corporate Legal Services

IT

Business andProduct Development

Human Resources

Marketing

M&A

Process Development

Finance

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

Corporate Treasury

Human Resources

Corporate IT

50

FORBO ANNUAL REPORT 2015 – ORGANIZATIONBOARD OF DIRECTORS

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

51

This E. Schneider
Executive Chairman

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

Michael Pieper
Vice Chairman

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

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

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

Vincent Studer
MemberPartner, 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 2015 – THE FORBO SHARETHE FORBO SHARE
Following the decision of the Swiss National Bank on January 15, 2015, to discontinue its minimum exchange rateof Swiss franc 1.20 to the euro, the Swiss Performance Index (SPI) lost about 15 percent. By the end of February
the SPI had already climbed back to its end-2014 level. The market continued to gain ground, reaching a high of+ 9.2% by early August 2015. However, before the month of August was out, the SPI had lost all its previous gains
and closed the year up 2.7%.
The Forbo share performed more or less in line with the SPI until the company’s annual results 2014 were an­nounced. As of mid-March, the share gained considerable ground and by mid-April 2015 it had reached a highof CHF 1,255, which was a good 26 percent higher than the end-2014 level of CHF 994.50. By the end of August
2015, however, not only the SPI but also the Forbo share price had fallen back to the end-2014 levels. The Forboshare subsequently posted substantial gains, however, and closed the 2015 stock market year at CHF 1,182,
equivalent to a gain of 18.9%. Once again, the Forbo share clearly outperformed the SPI.

The Forbo share in comparison to the SPIForbo share
SPI
100%

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

75%
50%
25%
0%
– 25%
– 50%
31.12.2011

31.12.2012

31.12.2013

31.12.2014

31.12.2015

55

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

2015
Number
1,990,000

2014
Number2,150,000

2013
Number2,250,000

2012
Number2,500,000

2011
Number2,500,000

1,708,458
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
21,4192,298,758

CHF
199,000

CHF
215,000

CHF
225,000

CHF
250,000

CHF
250,000

170,846
19,0007,012
2,142

188,885
15,8478,126
2,142

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

205,274
25,00017,5842,142

229,876

CHF
300
62.1
17.04)
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
349
62.8
12.0
1.75)
3.55)
19

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

CHF
713
343
493
1,782
857
1,232

179,823
21,419Issued nominal capital
Total
Thereof:
Shares outstanding
Share buyback programs
Other treasury shares
Reserve shares (without dividend rights)

17,982
2,142

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 2015, 2014, 2013, 2012 and 2011: 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 2016 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 2015 – 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, 2015, 1,957 shareholders were listed in the share register of Forbo Holding Ltd, or 229 (13%)
more than in the previous year. As of December 31, 2015, 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

31.12.2015
as a percentage
27.34
14.15
3–5

1) Michael Pieper holds his interest directly and indirectly through Artemis Beteiligungen I AG.
2) – First trading line 4.60%, share buyback programs 9.55%.
– 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 20 of the Federal Act on Stock Ex­
changes and Securities Trading (SESTA) and the provisions of the Ordinance of the Swiss Financial Market Super­visory Authority on Stock Exchanges and Securities Trading (SESTO-FINMA).
On March 25, 2015, This E. Schneider reported that his shareholding had fallen below 3%. On April 16, 2015,
JPMorgan Chase & Co. reported that it had exceeded the 3% threshold and that it held 61,900 shares and 5,437
equity swaps indirectly, corresponding to 3.132% of the voting rights. On April 21, 2015, JPMorgan Chase & Co.
reported that its shareholding had fallen below 3% and that it held 59,016 shares and 5,437 equity swaps, equiv­
alent to 2.998% of voting rights. On July 11, 2015, BlackRock Inc. reported that it had exceeded the 3% threshold
and that it held 60,853 shares and 3,808 contracts for difference (CFD), corresponding to 3.01% of the voting rights.
Black Rock Inc. further reported that it also held 2,184 sales positions in connection with CFD, corresponding to
0.1% of the voting rights. Forbo Holding Ltd reported on July 16, 2015, that, as a result of the completion of the59capital reduction approved by the Ordinary General Meeting of Forbo Holding Ltd on April 24, 2015, it had fallen
below the 5% threshold and that it held 93,168 of its own shares, equivalent to 4.682% of the voting rights,­directly and indirectly through Forbo International SA, Baar, Switzerland, and Forbo Finanz AG, Baar, Switzerland.
Forbo Holding Ltd further reported that it had granted 1,842 stock purchase rights on 1,842 registered shares ofForbo Holding Ltd, corresponding to 0.093% of the voting rights. In addition, as a result of the capital reduction,
BlackRock Inc. reported on July 18, 2015, that it had exceeded the 3% threshold with registered shares alone,since it held 61,080 registered shares and 5,072 CFD, corresponding to 3.32% of the voting rights. BlackRock Inc.
further reported that it held 2,235 sales positions in connection with CFD, corresponding to 0.11% of the voting
rights. On September 16, 2015, Credit Suisse Funds AG reported that it had exceeded 3% and held 60,148 shares,
corresponding to 3.02% of the voting rights. Forbo Holding Ltd further reported on September 16, 2015, that it
had exceeded the 5% threshold and that it held 100,922 of its own shares, corresponding to 5.071% of the voting
rights, directly and indirectly via Forbo International SA, Baar, Switzerland, and Forbo Finanz AG, Baar, Switzerland.
In addition, Forbo Holding Ltd reported that it had granted 1,552 stock purchase rights on 1,552 registered sharesof Forbo Holding Ltd, corresponding to 0.078% of the voting rights. On October 2, 2015, Credit Suisse Funds AG
reported that it had fallen below the 3% threshold. Forbo Holding Ltd reported on October 22, 2015 that it had
exceeded the 10% threshold and that it held 208,982 of its own shares, corresponding to 10.502% of the voting
rights, directly and indirectly via Forbo International SA, Baar, Switzerland, and Forbo Finanz AG, Baar, Switzerland.
Forbo Holding Ltd further reported that it had granted 1,552 stock purchase rights on 1,552 registered shares ofForbo Holding Ltd, corresponding to 0.078% of the voting rights. Norges Bank reported on December 10, 2015,that it had fallen below 3% and held 59,414 shares, corresponding to 2.99% of the voting rights. BlackRock Inc.
reported on December 16, 2015, that it had fallen below 3% and held 58,939 shares, corresponding to 2.96% of
the voting rights. Norges Bank reported on December 23, 2015, that it had exceeded 3% and that it held 59,774
shares, equivalent to 3.004% of voting rights and that it held 1,859 shares of this portion (or 0.09% of its holding)as security. Norges Bank reported on December 24, 2015, that it had fallen below 3% again and held 57,915
shares, corresponding to 2.91% of the voting rights.
No other disclosures were made in 2015.
For further information on significant shareholders or shareholder groups, we refer the reader to the table on page
58 and to page 155 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, 2015, Forbo Holding Ltd had a fully paid up share capital of CHF 199,000, which was divided
into 1,990,000 listed registered shares, each with a par value of CHF 0.10. Of this amount:–– 59.95% were registered in the name of 1,927 shareholders with voting rights–– 31.14% were shares of banks or of SIX SIS AG pending registration of transfer–– 8.91% 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.

60

FORBO ANNUAL REPORT 2015 – CORPORATE GOVERNANCE REPORTThe share buyback program launched by the Board of Directors on April 29, 2014, based on the authorization
given by the Ordinary General Meeting of Forbo Holding Ltd of April 25, 2014, was completed on April 23, 2015.
By this date, Forbo Holding Ltd had repurchased a further 1,533 shares via the second trading line in the year un­
der review. The Ordinary General Meeting of April 24, 2015, approved the cancelation of the total of 160,000 sharesacquired through the share buyback program. At the Ordinary General Meeting of Forbo Holding Ltd of April 24,
2015, the Board of Directors was again authorized to buy back own shares up to a maximum of 10% of the sharecapital over a period of three years either on a second trading line at the SIX Swiss Exchange or otherwise, withthe purpose of extinguishing them at a later stage. The Board of Directors reserved the right to interrupt or ter­minate the share buyback program if this should become necessary in order to finance external growth. The Boardof Directors once more opted for a two-stage procedure in which the shareholders took the basic decision at theOrdinary General Meeting of Forbo Holding Ltd on April 24, 2015, and will be asked to approve the cancelationof the repurchased shares at one of the forthcoming General Meetings. By December 31, 2015, Forbo Holding Ltd
had repurchased 108,683 shares via the second trading line. In addition to the repurchase via the second trading
line, an additional 81,317 shares were tendered to Forbo Holding Ltd in a fixed-price repurchase program. In total,
therefore, Forbo Holding Ltd repurchased 190,000 shares, corresponding to 9.55% of the share capital.
Conditional and authorized capital
Pursuant to Clause 4 of the Articles of Association, Forbo Holding Ltd has a maximum conditional capital of
CHF 16,645, corresponding to 166,450 registered shares to be paid up in full with a par value of CHF 0.10 each.
The capital increase takes place in accordance with the Articles of Association through the exercise of option
and convertible rights granted in connection with the bonds issued by the company or one of its subsidiaries,or through the exercise of option rights granted to shareholders. Except for shareholder options, shareholders
have no right of subscription. Holders of option or convertible rights are entitled to subscribe to new share issues.
The registration of new shares is subject to the general restriction set out in Clause 6 of the Articles of 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 24, 2015, decided, based on the audit report ofa licensed 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.
In 2013, except for the implementation of the decision of the Extraordinary General Meeting of November 5,
2012, at which, based on the audit report of a licensed audit expert, the ordinary share capital of the company
was reduced by CHF 25,000, from CHF 250,000 to CHF 225,000, by canceling 250,000 shares with a par value of
CHF 0.10 each, there was no change to the capital of Forbo Holding Ltd.
Participation certificates and non-voting equity securities (‘Genussscheine’)
Forbo Holding Ltd has issued neither participation certificates nor non-voting equity securities.

61

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 enteredin the Commercial Register.
No statutory privileges exist and there is no restriction on the transferability of the shares of Forbo Holding Ltd.
Convertible bonds and warrants/options
Forbo Holding Ltd has no outstanding convertible bonds nor has it issued any marketable warrants/options.
Details on the 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 124 of this Annual Report.

Board of Directors
Members of the Board of Directors
The cut-off date for the following information is December 31, 2015.
With the exception of This E. Schneider, Executive Chairman of the Board of Directors, none of the members of
the Board of Directors listed below holds or has held any operational management positions for Forbo Holding
Ltd or its Group companies. With the exception of This E. Schneider, none of the members of the Board of Direc­
tors 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 Meetingof 2014. This E. Schneider is also a member of the Board of Directors of Galenica SA, Rieter Holding AG and­Autoneum Holding AG.

62

FORBO ANNUAL REPORT 2015 – CORPORATE GOVERNANCE REPORT

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, AFG
Arbonia-Forster-Holding AG, Berenberg Bank (Schweiz) AG, Rieter Holding AG and Autoneum Holding AG. He
was first elected to the Board of Directors of Forbo Holding Ltd in 2000.
Dr. Peter Altorfer, Vice Chairman
Peter Altorfer, born in 1953, is a Swiss citizen. He studied law at the University of Zurich and holds a doctorate
in law (Dr. iur.). He attended the PED program at the IMD, Lausanne. Until 1988, he worked at Bank Leu AG. He
subsequently joined the law firm Wenger & Vieli in Zurich, where he is now a partner, specializing in bank andcompany law. Peter Altorfer sits on the Board of Directors of several companies, including Huber + Suhner AG in
Herisau, agta record ag in Fehraltorf, Abegg Holding AG in Zurich, Altin AG in Baar, the Werner Abegg Fund in
Zurich and various private and foreign banks, as well as unlisted investment and real estate companies in Switzer­
land. He has been a member of the Board of Directors of Forbo Holding Ltd since March 2005.
Claudia Coninx-Kaczynski
Claudia Coninx-Kaczynski, born in 1973, is a Swiss citizen. She took a degree in law at the University of Zurich(lic. iur.) and earned her Master of Law (LL. M.) at the London School of Economics and Political Sciences. From2006 to 2011 she managed the business of Faerbi Immobilien AG (subsequently Rietpark Immobilien AG) in Z
­ urichas a member of the Board of Directors. Afterwards until 2014, she implemented various projects for P. A. Media AG
and Swisscontent AG in Zurich (M & A amongst others). She is currently a member of the Board of Directors of
Tamedia AG and Swisscontent AG and holds directorships in other foundations and committees. She has been amember 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 compa­
nies, for which he has worked since 1984. From 2000 to 2011 he was the CEO and Chairman of the Board and in
July 2011 he was appointed full-time Chairman of the Board of Helbling Holding AG. Between 2002 and 2010
Reto Müller was either a member or Chairman of the Zurich Regional Economic Advisory Board (Zurich) of the
Swiss National Bank. He has been a member of the Council of SWISSMEM since 2008. He also holds other direc­
torships. 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 Direc­
tors of Bank EEK AG in Berne. He holds further directorships in other companies and foundations. He has been amember of the Board of Directors of Forbo Holding Ltd since April 2009.

63

Board of Directors of Forbo Holding Ltd
as per December 31, 2015
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 2015 – 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 Swiss Com­
mercial Register or comparable foreign registers and do not belong to the Forbo Group. Mandates with associ­ated companies outside the Forbo Group are deemed to be a single mandate.
Election and term of office
The members of the Board of Directors 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
the measures adopted by the Board. He is the direct superior of the CEO, is in regular contact with him, and hasan advisory and supervisory function. In addition, the Executive Chairman represents the Board and the ForboGroup vis-à-vis the public, the authorities and the shareholders. The tasks of the Executive Chairman of the Boardand the 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 2015, the Board of Directors met seventimes, 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 financial­reporting, the accounting standards and systems used, and decisions with significant financial implications. The
AFC monitors the activities of the internal auditors and the external auditors. Moreover, it establishes the audit
program of the internal auditors and proposes to the Board of Directors the choice of the external auditors forthe attention of the General Meeting. The CEO and the CFO are regularly requested to attend meetings in anadvisory capacity, while the internal and external auditors may attend on special invitation.
The AFC convenes as often as business requires, but at least twice a year. In the 2015 business year, three meet­ings were held, each lasting about half a day. The external auditors were present for some items on the agendaof the AFC’s meeting on the financial statements and at the meeting to discuss the scope of the audit andthe audit fee. The Ernst & Young representatives responsible for internal auditing attended two meetings held todiscuss the internal audit reports.
Human Resources and Nomination Committee
We refer to the explanations in the remuneration report on page 77.
Remuneration Committee
We refer to the explanations in the remuneration report on pages 77 and 78.
Areas of responsibility
The Board of Directors bears ultimate responsibility for the management of Forbo Holding Ltd. The main dutiesof the Board of Directors are the following non-transferable and inalienable tasks pursuant to the Swiss Code ofObligations and the Articles of Association:–– ultimate management of the company and issuing the necessary directives–– definition of the organization–– organization of accounting, financial controlling, and financial planning–– appointment and dismissal of persons entrusted with the management of the company–– overall supervision of the persons entrusted with managing the company, particularly with respect
to compliance with the law, articles of association, regulations, and directives–– preparation of the Annual Report, and of the General Meeting and implementation of its resolutions–– preparation of the remuneration report–– notification of the court in the event of over-indebtedness

66

FORBO ANNUAL REPORT 2015 – 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 the
Executive Chairman of the Board and that do not require the approval of the Board are delegated to the CEO
and are conducted by him on his own responsibility. The CEO is responsible for ensuring compliance with theprovisions of the law, the Articles of Association, and regulations throughout the Forbo Group.
In carrying out his tasks, the CEO is supported by the members of the Executive Board, who report to him. The
Executive Board comprises the CEO, CFO, and the Executive Vice Presidents of 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.

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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 2015 business year,
eleven 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 77 and 78, respectively.
The Board of Directors furthermore fulfils its supervisory and monitoring obligations by means of financial report­
ing 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 in2015 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 the­company’s current business performance and earnings situation by means of annotated income statements, key
ratios, and deviation analyses.
The Board of Directors is, moreover, involved in the company’s planning cycle. As a rule, the existing strategy is
subjected to a thorough review by the Board of Directors in the first half of the year. The revised strategy is quan­tified in the three-year medium-term plan, which is approved at mid-year by the Board of Directors. Based on themedium-term plan, the Board of Directors sets the budget objectives for the coming business year. These budget
objectives are the basis for the detailed budget, which is discussed and adopted by the Board of Directors in the
fourth quarter.
The current business year is assessed in a first estimate always at the end of May and in a second estimate midOctober. On completion of the business year, the extent to which the budget has been reached is checked anddeviations are analyzed. This analysis is used to derive appropriate measures, which are then implemented in thenext planning cycle.
Internal auditing is effected by Ernst & Young, which has been commissioned for this purpose. Internal auditing is
administratively subordinated to the Executive Chairman of the Board of Directors, is functionally independent,
and reports directly to the AFC.

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FORBO ANNUAL REPORT 2015 – CORPORATE GOVERNANCE REPORTThe audits are conducted in accordance with an annual plan approved by the AFC. A distinction is made between
ordinary and special engagement audits. The latter consist of limited reviews, follow-up reviews, compliance­audits, and other special engagements. Where necessary, the risks and weaknesses identified in these audits areminimized or eliminated by measures adopted by management and are constantly monitored.
In 2015, a total of seven internal audits were conducted. The internal audits were restricted to individual businessprocesses. In its review of audited Group companies, Internal Audit included any issues that had been defined in
the framework of the internal control system (ICS). Internal audits also involved various compliance reviews relat­
ed 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 33 ‘Risk assessment and financial risk management’) of the financial report.

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Executive Board
Members of the Executive Board, other activities, and vested interests
The members of the Executive Board, their nationality, function, training and professional career, as well as otheractivities and vested interests, are set out on 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 2015 – 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 32 and 22 SESTA.
Clause on changes of control
As per year-end 2015, 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 Ordinary­General Meeting on a proposal by the Board of Directors. Rolf Hauenstein has been the Auditor in Charge sinceApril 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
2015. 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 eval­uates the proposals and statements it has received and appraises the corrective measures taken by management.
At the AFC’s invitation, representatives of the external auditors attend the AFC meetings in an advisory capacity.
The Chairman of the AFC reports on the activities of the AFC and its assessment of the external auditors at themeetings of the Board of Directors. Any member of the Board of Directors may inspect the minutes of the AFC
meetings.
At its meetings, the AFC assesses the performance and fees of the external auditors as well as their independence
in both their auditing and their non-auditing capacities. This evaluation is based on the documents preparedby 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, delivery of the audit reports on time, scope and focusof the audits, and the ability to provide effective and practical recommendations. This assessment by the AFC
forms the basis for the proposal made by the Board of Directors to the Ordinary General Meeting regarding the
choice of the external auditors.

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

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FORBO ANNUAL REPORT 2015 – CORPORATE GOVERNANCE REPORT

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

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REMUNERATIONREPORT

76

FORBO ANNUAL REPORT 2015 – 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 the amended 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, the Ordinary General Meeting approves the maximum sum for the total remuneration to be paid to
the Board of Directors for the business year following the Ordinary General Meeting, in a separate and binding
ballot. In addition, a vote is taken on the maximum total amount of fixed remuneration to be paid to the Executive
Board for the business year following the Ordinary General Meeting, and the amount of variable remuneration to
be paid to the Executive Board for the business year preceding the Ordinary General Meeting.
At the 2016 Ordinary General Meeting, shareholders will vote individually on the following three remuneration
payments:–– Maximum total remuneration of the Board of Directors for 2017–– Maximum fixed remuneration of the Executive Board for 2017–– Variable remuneration of the Executive Board for 2015
The total remuneration was approved by a large majority in a consultative vote on the 2014 remuneration reportat the Ordinary General Meeting of April 24, 2015 (agenda item 6.1). Participants in the 2016 Ordinary General
Meeting will also be invited to vote in a consultative ballot on the entire 2015 remuneration report.

77

Content and methodology for determining the
remuneration and shareholding program
The Human Resources and Nomination Committee (HRNC): task and function
The Human Resources and Nomination Committee (HRNC) advises the Board of Directors in exercising its 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.
The Human Resources and Nomination Committee meets as often as business requires, but at least twice a year.
In the 2015 business year, the HRNC held three meetings, each lasting a couple of hours.
The Human Resources and Nomination Committee consists of at least two members of the Board of Directors.
The Ordinary General Meeting of April 24, 2015, elected Dr. Peter Altorfer (Chair), Claudia Coninx-Kaczynski andMichael Pieper to the HRNC for the 2015 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 2015 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 24, 2015 elected Dr. Peter Altorfer (Chair), Claudia Coninx-Kaczynski und Michael Pieper to theRemuneration Committee for the 2015 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.

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FORBO ANNUAL REPORT 2015 – REMUNERATION REPORT

Decision-making process of the Remuneration Committee
The maximum amount of the total remuneration paid to the Board of Directors and the maximum fixed 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

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

RC
RC
RC

BoD
BoD
BoD

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

Performance targets
Performance targets – Executive Board
Performance targets – CEO

RC
RC

BoD
BoD

Important changes in 2015
In the 2015 business year there were no important changes in the remuneration system for the Board of Directors
or the Executive Board. The contractual adjustments to the OaER were made in 2013 and in 2014.

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 theirlong-term loyalty to the company. The purpose of paying part of the remuneration in the form of shares is to link
the interests of the managers to those of the shareholders.
The members of the Board of Directors receive a fixed remuneration, the amount of which is determined 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 variable remuneration consists of a perform­
ance-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 remuner­
ation report). The bonus is tied to the achievement of individual (qualitative) targets by each Executive Board
member and of financial (quantitative) targets by the company. Depending on the function and responsibilitiesof the Executive Board member in question, these financial targets may be tied to Group and/or divisional objec­
tives. It may not exceed 200% of the fixed remuneration of the individual Executive Board member.

79

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

Determining the remuneration of the Board of Directors
In order to determine the remuneration of the Board of Directors, the compensation paid to Board 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

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 ofthe Audit and Finance Committee (AFC), the Remuneration Committee (RC) or the Human Resources and Nom­ination Committee (HRNC). Of the remuneration, 40% is paid to the Board of Directors in shares of Forbo Holding
Ltd. These shares have a lock-up period of three years. The number of shares issued is determined by taking the
average price in the ten stock market days after distribution of a dividend or repayment of par value. If no divi­
dend is distributed or no par value repayment made, the average price during the first ten stock market days
starting on June 1 of the relevant business year applies. The settlement or payment of the shares usually takes
place in November.
For the purpose of reporting the remuneration, the shares issued are valued at fair value on the date of allocation.
The total compensation for the non-executive members of the Board of Directors also includes a lump sum for
expenses plus employer contributions to the usual social insurance benefits.
The non-executive Board members do not participate in the Management Investment Plan (MIP).
Executive Chairman of the Board of Directors
The compensation for the Delegate of the Board of Directors and as of April 25, 2014 the Executive Chairman of
the Board of Directors is disclosed separately and included under total remuneration to the Board of Directors.
80

FORBO ANNUAL REPORT 2015 – REMUNERATION REPORTWith effect from May 2013, the employment contract with the Delegate of the Board of Directors, and as ofApril 25, 2014, the Executive Chairman of the Board of Directors, was extended to encompass the period fromMay 1, 2013, to December 31, 2016. The remuneration will again be paid mainly in locked-up shares which havelock-up periods of three, four, and five years respectively, and in an annual cash payment of CHF 310,000, to be
used in part for taxes and for employee contributions to the pension fund and social security. The underlying
share price used to calculate the number of shares is the weighted average price of the first and last five dayson which Forbo Holding Ltd shares were traded on the stock market in 2012 (CHF 522.12), less the reduced
value as a result of locking up the shares. The share package corresponds to annual compensation of CHF
2,200,000 (5,314 shares).
With this share package and this cash remuneration, all compensations such as bonuses, inflation, salary adjust­ments, options, etc. are settled. This share package may not be either pledged or assigned. The last third of
the locked-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 Decem­
ber 31, 2015, at the latest. Consequently, all payments that had been agreed and were paid out for 2016 have tobe reversed by December 31, 2015, at the latest. The value of this fixed remuneration for This E. Schneider comesto CHF 2,200,000 for 2016. In order to comply with and implement the provisions of the OaER, Forbo and This
E. Schneider have agreed that he will repay Forbo in cash the amount of his fixed compensation for the period
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 will be paid out to him again in monthly installments in2016 after having been approved by the 2015 Ordinary General Meeting. The compensation package and therelevant agreements were adjusted accordingly. No severance payment or compensation in the event of a take­over was agreed; the period of notice is 12 months.
The total compensation for the Executive Chairman of the Board of Directors came to CHF 2,934,617 for the year
under review. Contained in this amount and reported in the column ‘Other payments’ are employer contributions
to the pension fund, other usual social insurance benefits, private use of the company car, contributions for ac­
cident 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 until 89 of this remuneration report.

81

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 strate­
gy 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.
The 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.

82

FORBO ANNUAL REPORT 2015 – REMUNERATION REPORT

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

2nd quarter3rd quarter

4th quarter

83

Elements of remuneration of the Executive Board
Remuneration of the members of the Executive Board consists of a fixed base salary and a performance-driven
bonus.
Fixed remuneration
The fixed base remuneration paid to the Executive Board in the reporting year consists of the gross base salary,
private company car use, and social security payments made by the company. The Remuneration Committee may
also decide that part of the remuneration will be paid in the form of shares in Forbo Holding Ltd (lock-up periodof five years).
Performance-based remuneration
The variable (performance-based) remuneration component is tied to qualitative (individual) and quantitative(financial) targets, which are defined in accordance with the operational responsibility of the Executive Board
member in question. The Board of Directors defines and weights the individual and financial targets.
The qualitative targets are geared to the company’s long-term sustainable development and may account for
between 10% and 20% of the total variable remuneration. The remaining portion of the variable remuneration
component depends on achievement of the financial (quantitative) targets. The main targets for members of the
Executive Board are: net sales of the Group and/or a division (25% to 30% of the variable remuneration), EBIT of
the Group and/or a division (50% to 55% of the variable remuneration), net working capital of the Group and/or
a division (5% to 10% of the variable remuneration), 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 Group­targets, is set in March on completion of the business year and is submitted to shareholders for approval at theOrdinary General Meeting.
Conversion of remuneration into shares in the Management Investment Plan (MIP)
The bonus payment is linked to the Management Investment Plan (MIP), which was introduced in 2006 andamended in 2012. According to this plan, at least 50% of the annual bonus of Executive Board members must be
paid into the MIP.
As for the remaining 50% of the annual bonus, the Executive Board members may either draw all or part of it
in cash or pay it into the MIP. The Executive Board members may redefine the allocation of this remaining 50%
every year.

84

FORBO ANNUAL REPORT 2015 – 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 must 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 thebasis of a valuation by an independent bank, with the valuation being based on the average market price of theshares in the first 14 trading days in January of the year the allocation was made. The last allocation of options wasmade in 2012. The shares that were distributed in connection with the MIP up to and including 2012 were issued
at the average market price for the first 14 trading days in January of the corresponding year.

86

FORBO ANNUAL REPORT 2015 – 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 813,760 in theyear under review (previous year: CHF 880,480). This sum consists of the base salary in cash (60% of the remuner­
ation), amounting to CHF 415,487 (previous year: CHF 519,099) and the base remuneration in shares (40% of the
remuneration) of CHF 332,905 (previous year: CHF 264,234). This corresponds to 284 shares (previous year: 290
shares) at a market value of CHF 1,172.20 (previous year: CHF 911.15). This total remuneration includes a lump sum
for expenses plus employer contributions to the usual social insurances, which are reported separately in the col­umn ‘Other remuneration’.
The remuneration paid to the Executive Chairman of the Board of Directors is explained in detail on pages 79
and 80 of this remuneration report.
Remuneration of the Executive Board
The total remuneration paid to the members of the Executive Board came to CHF 2,921,338 in the year underreview (previous year: CHF 3,879,680), subject to approval of the variable portion by the 2016 Ordinary General
Meeting. This sum includes a fixed base salary of CHF 1,700,352 (previous year: CHF 1,714,347) and variable­remuneration of CHF 790,135 (previous year: CHF 1,664,955) plus the private use of the company car, employer
contributions to the pension fund and other usual social insurances, which are reported separately in the column‘Other remuneration’.
The fixed portion of the base salary paid in shares (lock-up period of five years) came to CHF 404,619. The portionof the variable remuneration paid in shares in connection with the MIP (lock-up period of three years) came to
CHF 720,127, subject to approval by the 2016 Ordinary General Meeting.

87

Disclosure of remuneration of the Board of Directors and Executive Board
Remuneration
For the 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
Board of Directors total5)
Executive Board6)7)8) total
Of whom highest paid-memberof Executive Board

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

70,008
0

Other
remu­
neration3)

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) The variable remuneration of the Executive Board corresponds to the actual degree to which targets were reached in 2015 and will be 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: CHF 1,060.57. 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 79 and 80 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 five 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 will be allocatedin late April/early May 2016, subject to approval by the 2016 Ordinary General Meeting. The shares are locked up for a period of three years.
The value at allocation was CHF 1,060.57. Foreign members of the Executive Board may acquire stock awards instead of shares. The stock inquestion will be transferred after three years.

88

FORBO ANNUAL REPORT 2015 – REMUNERATION REPORT

Remuneration
For the business year 20141)

Variable
remuneration2)

Base salary
CashName and function

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

SharesCash

CHF

Number

CHF

CHF

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

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

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

72,087
0

Other
remu­
neration3)

Total

SharesNumber

1,649
778

CHF

CHF

CHF

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

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

1) The remuneration of the Board of Directors and the Executive Board is reported gross before deduction of employee social insurance 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 2014 and was sub­mitted to the April 2015 Ordinary General Meeting for approval. The criterion for determining the number of shares issued for the variable
remuneration is the unweighted average of the closing price of the Forbo shares in the first 14 trading days in January of the allocation year inconnection with the MIP. The shares are allocated at the end of April/beginning of May (subject to approval by the Ordinary General Meeting)for the period from January to December of the previous year: CHF 965.96. The shares are locked up for a period of three years.
3) ‘Other remuneration’ includes in particular employer contributions to the usual social insurances, private company car use and lump sum or
local expenses.
4) This E. Schneider was Delegate of the Board of Directors until the 2014 Ordinary General Meeting. From this point on, he has had the func­tion of Executive Chairman of the Board of Directors. For details on the structure of his remuneration, please refer to pages 79 and 80 of thisremuneration report. These remarks also contain the criterion for determining the number of shares issued and their lock-up periods.
5) Dr. Albert Gnägi retired from the Board of Directors at the 2014 Ordinary General Meeting on reaching the retirement age. His remuneration
was paid in cash pro rata temporis.
6) Vice Chairman since the 2014 Ordinary General Meeting (previously member).
7) New member of the Board of Directors since the 2014 Ordinary General Meeting.
8) The criterion for determining the number of shares issued for the non-executive members of the Board of Directors is the average share pricein the ten trading days after payment of the dividend or repayment of the par value: CHF 911.15. The shares are locked up for a period of three
years.
9) Remuneration of the entire Executive Board including the highest-paid Executive Board member.
10) The criterion for determining the number of shares issued for the base salary is the unweighted average of the closing price of the Forbo sharein the first 14 trading days in January of the allocation year. The shares are allocated at the end of April/beginning of May for the period fromMay of the previous year to April of the year of allocation. The shares are locked up for a period of five years. The corresponding value of theshares allocated was proportionate CHF 759.68 for 2014 and CHF 965.65 for 2015.
11) The criterion for determining the number of shares issued for the variable remuneration is the unweighted average of the closing price of the
Forbo share in the first 14 trading days in January of the allocation year. The shares for the bonus for the business year 2014 were allocatedin late April 2015, after approval by the 2015 Ordinary General Meeting. The shares are locked up for a period of three years. The value atallocation was CHF 965.65.

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 revisedin 2012.
As at the balance sheet date December 31, 2015, 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, 2015, 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 CO2015 business year
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 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

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

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

90

FORBO ANNUAL REPORT 2015 – REMUNERATION REPORTAs at December 31, 2014, the individual members of the Board of Directors and the Executive Board (including
related parties) held the following number of shares in Forbo Holding Ltd:
Shareholdings 2014
SharesName and function
This E. Schneider, Executive Chairman3)
Michael Pieper, Vice Chairman
Dr. Peter Altorfer, Vice Chairman4)
Claudia Coninx-Kaczynski5), member
Dr. Reto Müller, member
Vincent Studer, member
Total Board of Directors
Stephan Bauer, Chief 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 three, four, and five years. The last third of the shares will beavailable on May 1, 2018, at the earliest.
4) Vice Chairman since the 2014 Ordinary General Meeting (previously member).
5) New member of the Board of Directors since the 2014 Ordinary General Meeting.

Options1)
2012 series
1:12)

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

3,051

3,051

91

Report of the statutory auditor

Report of the statutory auditor to the General Meeting
Forbo Holding Ltd, Baar
Report of the statutory auditor on the remuneration report
We have audited the accompanying remuneration report of Forbo Holding Ltd for the year ended December 31,
2015. The audit was limited to the information according to articles 14 – 16 of the Ordinance against Excessive
Compensation 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 Com­
panies (Ordinance). The Board of Directors is also responsible for designing the remuneration system and defining
individual remuneration packages.
Auditor’s responsibility
Our responsibility is to express an opinion on the accompanying remuneration report. We conducted our audit
in accordance with Swiss Auditing Standards. Those standards require that we comply with ethical requirements
and plan and perform the audit to obtain reasonable assurance about whether the remuneration report com­plies with Swiss law and articles 14 – 16 of the Ordinance.
An audit involves performing procedures to obtain audit evidence on the disclosures made in the remuneration
report with regard to compensation, loans and credits in accordance with articles 14 – 16 of the Ordinance. The
procedures selected depend on the auditor’s judgment, including the assessment of the risks of material mis­statements in the remuneration report, whether due to fraud or error. This audit also includes evaluating thereasonableness of the methods applied to value components of remuneration, as well as assessing the overall
presentation of the remuneration report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
OpinionIn our opinion, the remuneration report for the year ended December 31, 2015 of Forbo Holding Ltd complies
with Swiss law and articles 14 – 16 of the Ordinance.
Other matter
The remuneration report of Forbo Holding Ltd for the year ended December 31, 2014 was audited by anotherauditor who expressed an unmodified opinion on that report on March 11, 2015.
KPMG AG

Rolf Hauenstein
Licensed Audit Expert
Auditor in Charge

Zurich, March 9, 2016

Regula Tobler
Licensed Audit Expert

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 2011 – 2015
146
Consolidated balance sheets 2011 – 2015
147
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

149
150
151
152
157
158

94

FORBO ANNUAL REPORT 2015 – 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
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

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

31.12.2015

31.12.2014

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

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

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

Note

14
15
12

16
17

18
19

Note

21
21

23
24
25
12

25
26
27

FORBO ANNUAL REPORT 2015 – 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.

2015

2014

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

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
123.6

Note

5

6

7
8
10
11
12
28

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

13
13

62.14
62.13

62.04
61.95

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

13
13

62.14
62.13

61.92
61.83

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

13
13

0.00
0.00

0.12
0.12

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

96

FORBO ANNUAL REPORT 2015 – 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.

2015

2014

115.7

123.6

– 10.0– 6.2– 48.7– 58.7
57.0
57.0

0.6
– 5.6
118.0
118.0

Note

12

FORBO ANNUAL REPORT 2015 – CONSOLIDATED FINANCIAL STATEMENTS

97

Consolidated statementof changes in equity
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

SharecapitalTreasuryshares0.2– 0.1

Reserves

– 0.0

0.0

0.2

– 0.1

982.9
115.7
– 10.0105.7
3.8– 210.1– 30.3852.0

Share
capitalTreasurysharesReserves

0.2

– 0.1

Translationdifferences– 244.2– 48.7– 48.7– 292.9

Translationdifferences

Total

738.8
115.7
– 58.757.0
3.8– 210.1– 30.3
559.2

2014

CHF m
December 31, 2013
Group profit for the year
Other comprehensive income for the year, net of tax
Total comprehensive income
Share-based payments
Treasury shares
Dividend payment
December 31, 2014

– 0.0

0.0

0.2

– 0.1

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

1,031.5
123.6
– 6.2
117.4
4.2
– 141.6– 28.6982.9– 244.8
0.6
0.6– 244.2

Total

786.8
123.6
– 5.6
118.0
4.2
– 141.6– 28.6738.8

98

FORBO ANNUAL REPORT 2015 – CONSOLIDATED FINANCIAL STATEMENTS

Consolidated cash flow statement

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

2015

2014

115.7
0.0
28.7
– 1.6
29.3
2.8
0.1
3.8
– 28.1
2.0
– 8.9
– 2.9
140.9

123.6
– 0.2
30.9
– 4.9
32.8
2.9
– 1.2
4.2
– 27.1– 1.4– 15.73.4
147.3– 39.5
0.2
50.2
0.5
11.4

– 39.52.2
23.7
0.6– 13.0

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

– 0.1
0.0
– 0.2
– 152.7
9.3– 28.6– 172.3– 79.5
– 9.3
205.1
116.3

– 38.0
2.1
241.0
205.1

Note

12
14
15
22

Note

18
10

Note

11

Note

19
19

FORBO ANNUAL REPORT 2015 – 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 9, 2016, and released for
publication on March 15, 2016. This financial report issubject to approval by the Ordinary General Meetingof April 29, 2016.

2 Summary of significant
accounting policies
The principal accounting policies applied in the prep­
aration of these consolidated financial statements are
set out below. These policies have been consistently
applied to all the years presented.
Basis of preparation
The consolidated financial statements of Forbo 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 ac­
cordance with the principle of historical costs with the
exception 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 in es­
timates 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 involvement in
the company or possesses rights to the returns and isable to influence these returns by means of its discre­tionary control over the company. The financial state­ments of subsidiaries are included in the consolidated
financial statements from the point at which control
begins.
The purchase method of accounting is used to ac­
count for business combinations. The value of thetransferred consideration in a business combinationand the acquired identifiable net assets are recognizedat the fair value on the acquisition date. The consider­ation includes cash payments and the fair value of theassets transferred, liabilities incurred or acquired, andequity instruments issued by the acquirer on the trans­
action date. Liabilities dependent on future events
which are based on agreements on contingent con­siderations are accounted for at their fair value in theaccounting treatment of the acquisition. Acquisition
costs are reported as expenditure in the income state­ment. Non-controlling interests are measured at theacquisition date with their proportionate share in theidentifiable net assets of the acquired entity.

100 FORBO ANNUAL REPORT 2015 – 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.
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 recognized inother comprehensive income and taken to profit orloss for the period (reclassified) in the event the foreign
Group company is disposed of.
On consolidation, exchange differences arising fromthe translation of net investments in independent for­eign operations are recognized in other comprehen­sive income. The same applies to borrowings and othercurrency instruments designated as hedges of such in­vestments. 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 2015 – 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 consideration re­ceived or to be received for the sale of goods and ser­vices as part of ordinary business activity. Net sales arereported net of revenue reductions such as sales tax,
returns, discounts, and rebates.
Revenue from the sale of goods and services is 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)

2015

2014

2015

2014

1.06840.96271.47120.795415.3200
11.41811.21460.91551.50710.865314.8600
13.35171.08781.00191.47720.832915.4300
11.85611.20300.9943
1.54860.830816.0200
12.7370

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
and exploit or sell the asset. Other development ex­penses that do not meet these criteria are taken to theincome statement as soon as they are incurred. Cap­italized development costs are measured at the costof acquisition or production less cumulative amortiza­
tions and impairments.
Share-based payments
Equity-settled share-based payments to employees
are valued at the fair value of the equity instrument on
the date on which the instruments are granted. The
fair value determined on granting equity-settled sharebased payments is recognized in the income state­ment over the vesting period and is included in per­sonnel expenses.

102 FORBO ANNUAL REPORT 2015 – CONSOLIDATED FINANCIAL STATEMENTS

Earnings per share
The number of shares used for calculating earnings per
share is determined on the basis of the weighted aver­
age number of the shares issued less the weighted av­
erage number of treasury shares held. To calculate di­luted earnings per share, an adjusted number of sharesis determined from the total number of shares used
to calculate earnings per share plus the potentially di­lutive effects of shares from option programs. To takeaccount of the dilutive effect of option programs, thenumber of shares is determined that could have beenpurchased at the market price on the basis of the cu­
mulative difference between the market price and thestrike 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 the pe­
riod 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 2015 – 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 30 ‘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 25 years
30 years
3 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 is clas­sified in this category if acquired principally for the pur­pose of selling in the short term. Derivatives are alsoclassified in this category unless they are designated ashedges.
The Group uses derivative financial instruments solely
to manage financial risks and not for the purpose of
speculation. The derivatives used are accounted foron 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 ‘Cur­
rent 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 31 ‘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 of stat­
istically determined default risks.

104 FORBO ANNUAL REPORT 2015 – 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 twelve months after
the reporting date or enjoys unlimited right to post­
pone payment of the debt by at least twelve 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 orloss are initially recognized at fair value, and transaction
costs are expensed in the income statement. Financial
assets are derecognized when the rights to receive
cash flows from the investments have expired or havebeen transferred and the Group has transferred sub­stantially all risks and rewards incidental to ownership.

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

FORBO ANNUAL REPORT 2015 – CONSOLIDATED FINANCIAL STATEMENTS 105

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

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 averagecost. Adjustments are made for unsaleable inventories
and inventories with insufficient turnover. Inter-com­pany profits on intra-Group deliveries are eliminated in
the income statement.

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
or losses resulting from pension plan curtailments or
settlements are immediately taken to the income
statement.
Revaluation components include actuarial gains andlosses due to changes in the present value of the pen­sion obligations arising from changes in assumptions
and experience adjustments plus the return on plan
assets less the contributions contained in net interest
expense. Revaluation components are recognized inother comprehensive income, taking deferred taxes
into account, and are never subsequently reclassified tothe income statement.

106 FORBO ANNUAL REPORT 2015 – 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 tothe carrying amounts of assets and liabilities. The esti­mates and the underlying assumptions are based on
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 is de­termined based on expected future revenues. This cor­
responds 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 2015 – 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 24 ‘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 25 ‘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 2015 – CONSOLIDATED FINANCIAL STATEMENTS

4 Application of new or revised­accounting standards
Applied new and revised standards
and interpretations
The following new or revised standards and inter­
pretations of the International Accounting Standards
Board (IASB) were applied for the first time in the busi­
ness year that began on January 1, 2015:

Introduction of new standards
in 2016 and beyond
The following new and revised standards and interpret­
ations that were published by end-2015 but are not yet
mandatory were not applied in advance in the present
consolidated financial statements. Since their impact
on the consolidated financial statements has not yet
been systematically analyzed, the anticipated effects
shown in the corresponding note to the table below
represent an estimate by management.

–– Annual improvements to IFRS 2010 – 2012 Cycle–– Annual improvements to IFRS 2011 – 2013 Cycle
The first-time application of the before-mentioned IAS
standards had no effect on the Annual Report pre­sented here.

Standards
New standards or interpretations
IFRS 15 ‘Revenue from Contracts with Customers’
IFRS 9 – ‘Financial instruments’
Amendments and changes to standards and interpretations
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)
Sales or contributions of assets between an investor and its associate/joint venture(amendments to IFRS 10 and IAS 28)*

No significant impact on the consolidated financial statements is
expected.
** Mainly additional disclosures in the consolidated financial state­ments are anticipated.

Date effective

Plannedapplication****

January 1, 2018
January 1, 20182018 business year2018 business year**

January 1, 2016
January 1, 20162016 business year
2016 business year***

January 1, 2016
January 1, 2016
undefined2016 business year
2016 business year
undefined

FORBO ANNUAL REPORT 2015 – 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 various­accessory products required for laying, processing,cleaning, and care of flooring. In the Movement Sys­
tems ­division, the Group develops, produces, and sells
high-quality conveyor and processing belts, as well as

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

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)

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

Flooring
Systems
884.7
– 0.1
884.6
123.4
149.6
563.7
29.9
3,059

Movement
Systems
342.2
– 0.0
342.2
37.0
46.1
222.6
9.1
2,060

Corporate/
Elimination
– 0.1
0.1

– 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

Segment information on the reportable segments forthe prior year:
2014
CHF m
Total net sales
Inter-segment sales
Net sales to third parties
EBIT
EBITDA
Operating assets
Capital expenditure
Number of employees (December 31)– 11.0– 10.6
17.2
0.5
42

Total
1,226.8
0.0
1,226.8
149.4
185.1
803.5
39.5
5,161

110 FORBO ANNUAL REPORT 2015 – 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 m
Segment result (EBIT)
Financial result
Group profit before taxes

CHF mOperating assets
Non-operating assets
Total assets

Inter-segment sales are transacted at arm’s length. The
segments apply the same accounting principles as theGroup. Sales to third parties, as they are reported to
the Executive Chairman of the Board of Directors andthe Chief Executive Officer, are identical with the sales
reported in the income statement.
Reconciliation of segment results to the income state­ment and balance sheet:
2015

2014

142.8
1.6
144.4

149.4
4.9
154.3

31.12.2015

31.12.2014

756.1
156.0
912.1

803.5
292.1
1,095.6

FORBO ANNUAL REPORT 2015 – CONSOLIDATED FINANCIAL STATEMENTS 111

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

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

CHF m
Switzerland (domicile)
FranceGermany
Great Britain and Ireland
Benelux
Scandinavia
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.

2015
Third-party sales

2014
Third-party sales

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

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

31.12.2015
Operating assets

31.12.2014
Operating assets

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

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

112 FORBO ANNUAL REPORT 2015 – 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 (2014: CHF 16.5 million).

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

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,partly in connection with the sale of tangible assets, therelease of provisions for legal proceedings, insurance
payments, rental income, and the sale of material forrecycling purposes.

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, 2015, the headcount was 5,222(2014: 5,161). The average headcount over the year
was 5,223 (2014: 5,141).

2015

2014

267.7
65.6
3.9
337.2

287.4
64.8
5.4
357.6

Salaries and wages include share-based payments­expenses of CHF 3.8 million (2014: CHF 4.2 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 (seenote 22 (‘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

2015

2014

0.5
0.8
0.7
2.0

0.6
5.3
0.0
5.9

FORBO ANNUAL REPORT 2015 – 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

2015

2014

0.0
0.0
0.4
0.4

0.2
0.2
0.6
1.0

2015

2014

31.5
– 2.8
28.7

29.6
1.3
30.9

2015

2014

144.4
– 32.5154.3– 35.6

– 1.2
2.9
2.4
0.0
– 0.3
– 28.7

– 2.1
3.8
2.8
0.3
– 0.1
– 30.9As 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
Previously unrecognized tax losses
Utilization of previously unrecognized tax losses
Previous-year and other positions
Effective income tax expenses

Since the Group operates in various countries with dif­ferent tax laws and rates, the expected and effective
tax expense depends every year on the origin of 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 22.5% (2014: 23.1%).

114 FORBO ANNUAL REPORT 2015 – CONSOLIDATED FINANCIAL STATEMENTS

Capitalized and non-capitalized tax loss carry-for­wards, by expiry date:
2015
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

0.3
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

Not capitalized

Capitalized

Total

0.6
0.8
1.6
1.3
1.2
103.4
108.9

0.0
0.1
0.3
0.1
0.1
35.4
36.0

0.6
0.9
1.9
1.4
1.3
138.8
144.9

2014
CHF m
Expiry after:
1 year
2 years
3 years
4 years
5 years
More than 5 years
Total tax loss carry-forwards

In 2015, unused tax loss carry-forwards of CHF 0.3 mil­lion expired (2014: CHF 0.0 million).
Deferred income tax assets and liabilities are offset
when they relate to the same tax jurisdiction, provided

CHF mDeferred tax assets
Deferred tax liabilities
Deferred tax assets, netthat the legal right to offset exists, and they are intend­
ed either to be settled net or to be realized simultane­
ously. The following amounts are shown in the balance
sheet:

31.12.2015

31.12.2014

39.5– 24.015.5

37.2– 26.5
10.7

FORBO ANNUAL REPORT 2015 – 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, 2014
Increase/decrease (–) in deferred tax assets
As at December 31, 2015
Netting
As at December 31, 2015, net

Inventories
7.0
0.7
7.7

Property,plant, andequipment
3.6
– 0.5
3.1

Inventories
3.5
– 0.2
3.3

Property,plant, andequipment
5.1
– 0.4
4.7

Provisions
5.1
– 0.3
4.8

Loss carryforwards
9.6
1.6
11.2

Employeebenefitobligations
16.0
– 0.4
15.6

Other
8.1
– 0.3
7.8

Total
49.4
0.8
50.2
– 10.7
39.5

Provisions
6.8
– 0.2
6.6

Intangible
assets
18.7
– 1.4
17.3

Employeebenefitobligations
2.7
– 1.0
1.7

Other
1.9
– 0.8
1.1

Total
38.7
– 4.0
34.7
– 10.7
24.0

Deferred tax liabilities

CHF m
As at December 31, 2014
Decrease (–) in deferred tax liabilities
As at December 31, 2015
Netting
As at December 31, 2015, net
Increase in deferred tax assets, net
Of which recognized in othercomprehensive income

4.8
2.0

Of which recognized in theincome statement

2.8

As at December 31, 2015, 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:
2015

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

2014

Before tax

Tax income

After tax

Before tax

Tax income

After tax

– 12.0– 48.7– 60.7

2.0
0.0
2.0

– 10.0– 48.7– 58.7

– 8.9
0.6
– 8.3

2.7
0.0
2.7

– 6.2
0.6
– 5.6

116 FORBO ANNUAL REPORT 2015 – 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 infor­
mation: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

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

2014
123.4
0.2
123.6
1,992,635
2,915
1,995,550

FORBO ANNUAL REPORT 2015 – CONSOLIDATED FINANCIAL STATEMENTS 117

14 Property, plant, and equipment

Cost on acquisition
CHF m
As at January 1, 2014
Additions
Disposals
Transfers
Translation differences
As at December 31, 2014
Additions
Disposals
Transfers
Translation differences
As at December 31, 2015

Land andbuildings

Machineryandequipment

Other
property,plant, andequipment

131.5
1.1
– 5.1
2.0
– 2.1
127.4
1.1
– 2.3
1.5
– 19.7
108.0

692.0
7.3
– 4.3
12.3
– 5.8
701.5
5.3
– 23.215.0– 53.2
645.4

126.8
2.2
– 1.8
2.9
– 1.2
128.9
1.2
– 5.3
1.2
– 9.5
116.5

Land andbuildings

Machineryandequipment

Other
property,plant, andequipment

13.8
7.3
– 4.4
0.4
– 1.0
16.1
6.6
– 2.2
– 12.6
7.9

594.8
21.0
– 4.1
– 0.4
– 4.3
607.0
18.5
– 23.1– 45.4
557.0

115.6
4.5
– 1.7

117.7
111.3
100.1

97.2
94.5
88.4

11.2
11.8
8.9

Accumulated depreciation and impairments
CHF m
As at January 1, 2014
Depreciation
Disposals
Transfers
Translation differences
As at December 31, 2014
Depreciation
Disposals
Translation differences
As at December 31, 2015
Net carrying amountAs at January 1, 2014
As at December 31, 2014
As at December 31, 2015

Property, plant, and equipment is recognized at am­
ortized cost. As in the previous year, no impairments
occurred in the year under review.
Maintenance and repair costs amounted to CHF 21.2
million (2014: CHF 22.6 million). The depreciation ex­pense of CHF 29.3 million (2014: CHF 32.8 million) is
included in the items ‘Cost of goods sold’, ‘Devel­
opment costs’, ‘Marketing and distribution costs’, and­‘Administrative costs’.
Property, plant, and equipment also includes leased
assets with a net book value of CHF 1.0 million (2014:

– 1.3
117.1
4.2
– 5.2
– 8.5
107.6

Assetsunderconstruction

7.8
28.7
– 1.6
– 17.2
– 0.4
17.3
31.4

Total
property,plant, andequipment

958.1
39.3
– 12.8
– 9.5
975.1
39.0
– 30.8– 17.7– 1.1
29.9– 83.5899.8

Assetsunderconstruction

Total
property,plant, andequipment

1.6
– 1.6

725.8
32.8
– 11.8

0.0

– 6.6
740.2
29.3
– 30.5– 66.5
672.5

6.2
17.3
29.9

232.3
234.9
227.3

0.0

CHF 1.4 million). The leasing liability for fixed assets car­ried in the balance sheet amounts to CHF 1.0 million(2014: CHF 1.5 million) and is found in note 23 ‘Noncurrent financial debt’.
As at December 31, 2015 there were no assets forwhich interest on borrowed capital was capitalized
during the preparation phase.
As at December 31, 2015 the Group had outstanding
purchase orders for capital goods amounting to
CHF 1.7 million (2014: CHF 15.4 million).

118 FORBO ANNUAL REPORT 2015 – CONSOLIDATED FINANCIAL STATEMENTS

15 Intangible assets and goodwill

Cost on acquisition
CHF m
As at January 1, 2014
Additions
Disposals
Translation differences
As at December 31, 2014
Additions
Disposals
Translation differences
As at December 31, 2015

Accumulated amortization and impairments
CHF m
As at January 1, 2014
Amortization
Disposals
Translation differences
As at December 31, 2014
Amortization
Disposals
Translation differences
As at December 31, 2015
Net carrying amountAs at January 1, 2014
As at December 31, 2014
As at December 31, 2015

Other
intangible assets

Goodwill

Trademarks

92.7

33.9

– 1.1
91.6

0.4
34.3

– 5.7
85.9

– 0.3
34.0

– 3.2
84.1

Goodwill

Trademarks

Otherintangible assets

9.7

25.8

– 0.2
9.5

0.0
25.8

– 0.7
8.8

0.0
25.8

– 0.5
33.7

66.7
2.9
– 2.9
0.0
66.7
2.8
0.0
– 1.2
68.3

83.0
82.1
77.1

8.1
8.5
8.2

55.3
55.5
50.4

146.4
146.1
135.7

86.5
0.2
– 2.9
3.1
86.9
0.4

31.2
2.9
– 2.9
0.2
31.4
2.8

Total

213.1
0.2
– 2.9
2.4
212.8
0.4
0.0
– 9.2
204.0

Total

FORBO ANNUAL REPORT 2015 – CONSOLIDATED FINANCIAL STATEMENTS 119

Goodwill is distributed among the following groups ofcash-generating units:31.12.2015
73.5
3.6
77.1

Flooring Systems
Movement Systems

The goodwill in Flooring Systems as at December 31,
2015, 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).

31.12.2014
78.1
4.0
82.1

Cash flows beyond the detailed planning period are
extrapolated to the terminal value by means of using
sustainable earnings. During the detailed planning­period, relatively constant EBITDA margins are as­
sumed, which are around 17% (2014: 17%) for Flooring
Systems and around 15% (2014: 13%) for Movement
Systems. The discount rate corresponds to the total
weighted cost of capital before taxes including an av­
erage risk charge estimated by management, whichlies between 9.3% and 11.8% (2014: between 9.5% and12.3%). The intangible assets with an indefinite usefullife were also subject to impairment testing in the formof 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.

120 FORBO ANNUAL REPORT 2015 – CONSOLIDATED FINANCIAL STATEMENTS

16 Inventories

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

31.12.2015

31.12.2014

39.6
73.4
129.4
– 27.9
214.5

44.0
75.0
139.5
– 27.9230.6

31.12.2015

31.12.2014

137.2
16.0
– 5.9
147.3

139.9
17.3
– 6.6
150.6

Expenses for inventories recognized in the reporting
year came to CHF 443.1 million (2014: CHF 496.7 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 indi­
cation that debtors would fail to meet their payment
obligations in respect of trade receivables for which
no allowance was made or which were past due. Val­uation allowances are made in the form of specific val­uation allowances. A specific valuation allowance isrequired if the debtor is unable to pay, if the debt has
been past due for more than 90 days, or if the debtor
has given notice of payment difficulties. Valuation al­
lowances take due account of default risks.

FORBO ANNUAL REPORT 2015 – 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 22.8 million in trade receivables
past due as at December 31, 2015 (2014: CHF 20.2 mil­lion), CHF 17.8 million (2014: CHF 14.8 million) were notsubjected to a valuation allowance. Overall, valuation

31.12.2015

31.12.2014

153.2
130.4
11.4
5.4
3.1
2.9
– 5.9
147.3

157.2
137.0
8.7
6.2
3.7
1.6
– 6.6
150.6

allowances of CHF 5.9 million (2014: CHF 6.6 million)
were made for receivables with a nominal value of
CHF 21.2 million (2014: CHF 24.4 million).

Gross value of trade receivables by currency:

CHF m
CHF
EUR
USD
JPY
GBP
CNY
SEK
Other
Total trade receivables, gross31.12.2015

31.12.2014

0.7
70.1
23.4
13.4
11.8
9.6
5.3
18.9
153.2

1.9
74.8
18.4
12.6
16.2
8.7
5.5
19.1
157.2

2015

2014

– 6.6
– 0.9
0.1
1.0
0.5
– 5.9

– 7.1
– 1.3
0.7
1.2
– 0.1
– 6.6

Changes in valuation allowances for doubtful trade­receivables during the reporting year:

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

122 FORBO ANNUAL REPORT 2015 – CONSOLIDATED FINANCIAL STATEMENTS

Allowances of CHF 1.9 million (2014: CHF 2.0 million)
were made for trade receivables not yet due and of
CHF 4.0 million (2014: CHF 4.6 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 Other current financial assets
In the previous year, ‘Other current financial assets’contained securities (stocks and funds), which weresold in the reporting year. As explained in note 31 ‘Ad­
ditional information on financial instruments’, this po­
sition was valued on the basis of listed market prices.

19 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.

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

31.12.2015

31.12.2014

0.1
107.9
8.3
116.3

0.1
160.7
44.3
205.1

21 Share capital
As at December 31, 2015, the share capital of Forbo
Holding Ltd stood at CHF 199,000 (2014: CHF 215,000),
divided into 1,990,000 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, 1,968,581
registered shares were eligible for dividends as at De­
cember 31, 2015 (2014: 2,128,581).

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

31.12.2015
Number
1,990,000

ChangeNumber– 160,000

31.12.2014
Number2,150,000

70,123
190,000
21,419281,542
1,708,458– 11,141
31,533

81,264
158,467
21,419261,150
1,888,850

20,392– 180,392

FORBO ANNUAL REPORT 2015 – CONSOLIDATED FINANCIAL STATEMENTS 123

At the Ordinary General Meeting of Forbo Holding Ltd
held on April 24, 2015, the shareholders approved acapital reduction from CHF 215,000 to CHF 199,000
by cancellation of the 160,000 shares acquired in con­nection with the share buyback program approved at
the Ordinary General Meeting on April 25, 2014, at
the fixed price and via the second trading line of the
SIX Swiss Exchange, 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 10, 2015 and was published in the SHAB on July
15, 2015. The exchange adjustment took place on thesame day.
The Board of Directors was furthermore authorized tobuy back the company’s own shares, over a period of
three years, for the purpose of subsequent cancella­tion of the share certificates, up to a maximum of 10%of the share capital. In the framework of this new sharebuyback program approved at the Ordinary General
Meeting of Forbo Holding Ltd on April 24, 2015,
190,000 shares were repurchased until its finalization
on December 23, 2015.

22 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 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 shares in
the first 14 trading days in January of the respective
year.
Options
Change in the number of outstanding options andtheir weighted average strike price:
2015

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

2014

Numberof options

Weighted
averagestrike pricein CHF

Numberof options

616

9,047

674

22,088616– 8,547714– 13,041

616

500

616

9,047

Weighted
averagestrike pricein CHFOf the 500 (2014: 9,047) options outstanding, all were
exercisable as at December 31, 2015 (2014: 0). The­exercise of 8,547 (2014: 13,041) options resulted in theissue of 8,547 (2014: 13,041) Forbo Holding shares at

a weighted average issue price of CHF 616 (2014:
CHF 714). The weighted average share price on the­exercise days was CHF 1,174 (2014: CHF 945).

124 FORBO ANNUAL REPORT 2015 – CONSOLIDATED FINANCIAL STATEMENTS

Information on the outstanding options as at Decem­
ber 31, 2015:

Series2012
Total options outstanding

SharesIn the year under review, 1,894 shares of Forbo Holding
Ltd were issued under the MIP (2014: 1,373). A further
416 shares were allocated to Executive Board membersin the reporting year as part of base remuneration(2014: 440). The share price at valuation date was CHF
966 (2014: CHF 760).
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 79 and 80 of the remuneration report.

Strike price
(CHF)

616

Number ofoutstanding
options

Averageremainingterm (years)

Number of
exercisable
options

500
500

1.3

500

The number of shares with a three-year lock-up period
allocated to the non-executive members of the Boardof Directors came to 284 in the reporting year (2014:
290).
In the year under review, the amount charged to theincome statement in application of IFRS 2 for sharesissued came to CHF 3.8 million (2014: CHF 4.2 million).

FORBO ANNUAL REPORT 2015 – CONSOLIDATED FINANCIAL STATEMENTS 125

23 Non-current financial debt

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

31.12.2015

31.12.2014

1.0
– 0.1
0.9

1.5
– 0.1
1.4

The item ‘Non-current financial debt’ now contains
only financial 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:24 Employee benefit obligations–– Hedging of liabilities: 60% of the assets of the fundare held in physical form in corporate bonds and afurther 10% in funds geared to the pension liabilities.
This approach hedges a substantial portion of inter­est rate and inflation risks. The target hedge ratio is
80% of the assets held by the FSF.
–– Return-seeking assets: 30% of the assets of the FSF
are held in the form of diversified growth 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 and­defined benefit plans exist in the Group that insure
employees against the risks of death and invalidity andprovide old-age pensions.
The liabilities and assets under the main defined bene­
fit plans are assessed annually by independent 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 is apension 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, 36% todeferred members and 61% 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 partic­
ipants 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
Switzerland
The Group pays contributions to an independent pen­sion fund as part of the occupational pension provi­sion (known in Switzerland as the ‘second pillar’). As
a minimum benefit, this independent pension fundmust provide the beneficiary with an old-age pension
at the time of retirement. This pension is paid out of
the retirement savings capital at the start of the pen­sion. The Group meets these liabilities through agree­ments with pension funds that cover the pension li­
abilities in full.
The pension liabilities of the Swiss Group companies
account for about 19% of the Group’s entire pension
liabilities. 96% of the liabilities are to active members
and 4% to retired beneficiaries.
The Swiss pension system includes guarantees that ex­pose the company to the risk that it may have to pro­vide additional financing. Such a situation may occur,for instance, if the pension fund is unable to meet its
obligations or decides to end the insurance relation­
ship. The pension fund guarantees a minimum returnand is responsible for the payment of a pension for life

126 FORBO ANNUAL REPORT 2015 – CONSOLIDATED FINANCIAL STATEMENTS

once the insurance benefits fall due. As a result of theseguarantees, Swiss pension plans are treated as defined
benefit plans under IFRS, even though they contain es­
sential elements of defined contribution plans.
The company cannot participate in any surplus of thepension plan. According to Swiss pension law, all sur­pluses belong to the pension plan and hence to its
members.
OthersThe Group has a number of other, smaller defined con­tribution and defined benefit plans in other countries,
in accordance with the legal provisions for employees.
The main plans exist in France, Germany, Japan, Nor­way, Sweden, and the USA.

The latest actuarial valuations of the present valuesof defined benefit liabilities and of service costs were
performed as at December 31, 2015, by independentactuaries using the projected unit credit method. The
fair value of the plan assets was determined as at De­
cember 31, 2015, based on the information available
when the annual financial statements were prepared.
The average duration of the pension plans until pay­
ment of benefits (plan duration) is 14.5 years for theUnited Kingdom, 18.9 years for Switzerland, and 15.2
years for the other countries.
The principal assumptions underlying the actuarial cal­culations are summarized as follows.

2015

2014

Actuarial assumptions
Switzer­
land

UK

Other

Weighted

Switzer­
land

UK

Other

Weighted

0.9
2.0
1.5

3.7
3.8
3.1

2.2
2.4
1.4

3.0
2.5
2.7

1.1
1.7
1.2

3.7
4.0
3.3

2.1
2.7
1.7

3.0
2.4
2.8

22
24

22
24

20
23

22
24

22
24

22
24

19
23

23
25

23
25

21
25

23
25

23
25

23
26

21
24

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

Pension costs for defined benefit plans:

2015

2014

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

Switzerland

UK

Other

Total

Switzerland

UK

Other

Total

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

1.3
1.2
– 1.0
1.5

0.6
9.6
– 9.5
0.7

2.1
1.4
– 0.3
3.2

4.0
12.2
– 10.8
5.4

FORBO ANNUAL REPORT 2015 – CONSOLIDATED FINANCIAL STATEMENTS 127

Changes in pension liabilities under the defined bene­
fit plans:
2015

2014

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

Switzerland

UK

Other

Total

Switzerland

UK

Other

Total

62.0
0.0
1.0
0.7
– 1.8
3.5

247.5
1.3
0.0
8.6
– 10.1
5.7

221.2
0.6
0.0
9.6
– 10.4
16.8

48.2
2.1
0.0
1.4
– 2.1
10.1

320.0
4.0
1.0
12.2
– 15.7
38.0

– 9.0
244.0

367.6
3.2
1.1
10.4
– 13.66.2– 1.7– 12.8
360.4

50.6
1.3
1.0
1.2
– 3.2
11.1

65.4

58.1
1.9
0.1
1.1
– 1.7
– 3.0
– 1.7
– 3.8
51.0

62.0

9.7
247.5

– 1.6
58.1

8.1
367.6

Changes in plan assets of the defined benefit plans atfair value:
2015

2014

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

Switzerland

UK

Other

Total

Switzerland

UK

Other

Total

41.3
0.5
1.7
1.0
0.3

257.9
9.0
0.1
0.0
– 6.0

7.9
0.2
1.6
0.1
– 0.1

307.1
9.7
3.4
1.1
– 5.8

40.9
1.0
1.7
1.0
– 0.1

219.5
9.5
0.1
0.0
29.3

7.8
0.3
2.2
0.0
– 0.1

268.2
10.8
4.0
1.0
29.1

– 1.8

– 10.1– 10.4– 2.1– 15.7

– 9.4
241.5

– 13.6
– 1.7
– 9.9
290.3

– 3.2

43.0

– 1.7
– 1.7
– 0.5
5.8

41.3

9.9
257.9

– 0.2
7.9

9.7
307.1

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

Most of the pension plans are financed in full or in partvia outsourced funds. Pension liabilities amounting to
CHF 34.8 million (2014: CHF 37.0 million) out of a totalof CHF 360.4 million (2014: CHF 367.6 million) are un­funded.

128 FORBO ANNUAL REPORT 2015 – CONSOLIDATED FINANCIAL STATEMENTS

Changes in the net liabilities of defined benefit plans
recognized in the balance sheet:
2015

2014

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

Switzerland

UK

Other

Total

Switzerland

UK

Other

Total

20.7
0.2
– 1.7
3.2

– 10.4
0.9
– 0.1
11.7
0.4
2.5

50.2
2.8
– 1.6
– 2.9
– 3.3
45.2

60.5
3.9
– 3.4
12.0
– 2.9
70.1

9.7
1.5
– 1.7
11.2

1.7
0.7
– 0.1
– 12.5– 0.2– 10.4

40.4
3.2
– 2.2
10.2
– 1.4
50.2

51.8
5.4
– 4.0
8.9
– 1.6
60.5

22.4

20.7

Gains and losses of defined benefit pension plans offset
in the comprehensive income statement for all divi­
sions:
2015

2014

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

Switzerland

UK

Other

Total

Switzerland

UK

Other

Total

– 3.0

3.0

3.2

3.2

– 10.5– 16.8– 9.7– 37.0

Based on adjustment of demo­
graphic assumptions

0.0

0.2

0.0

0.2

0.0

0.0

0.0

0.0

Based on adjustment offinancial assumptions

– 3.0

2.8

3.2

3.0

– 10.5– 16.8– 9.7– 37.0Experience adjustment
Return on pension assets (exclud­ing amounts in interest income)

– 0.5
0.3

– 8.7
– 6.0

– 0.2
– 0.1

– 9.4
– 5.8

– 0.6
– 0.1

0.0
29.3

– 0.1
– 0.4

– 0.7
28.8

Total losses (–)/gains recognizedin the comprehensive income
statement, before taxes– 3.2– 11.72.9– 12.0– 11.212.5– 10.2– 8.9

FORBO ANNUAL REPORT 2015 – CONSOLIDATED FINANCIAL STATEMENTS 129

Change in the present value of defined benefit liabil­ities:+ 0.5%– 0.5%

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

Switzerland

UK

Other

Switzerland

UK

Other

– 5.9
1.9
1.5
1.5

– 15.8
0.3
8.4

– 3.6
2.5
3.2

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 pa­
rameter, assuming that all other parameters remain­unchanged. The table illustrates the overall effect foreach region. However, sensitivities may differ for indi­vidual plans within the regions. Sensitivity analysis aims
to visualize the uncertainty in valuating pension liabili­ties under market conditions at the date of valuation.

The results cannot be extrapolated owing to possible
non-linear effects in the event of changes to the ac­
tuarial assumptions. Moreover, the analysis cannot sayany­thing about the likelihood of these changes occur­
ring, nor can it present the view of the Group regarding­anticipated future changes in pension liabilities. Anymeasures taken by management to reduce the risks in­herent in pension liabilities are also not taken into ac­
count in the analysis.

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 37.9% (2014: 36.3%)
consisted of 23.0% listed investments (2014: 22.8%)
and 14.9% unlisted investments (2014: 13.5%). The
shares and bonds are all listed investments. The plan
assets do not include any shares or other securities of
the Forbo Group.
Future contributions to defined benefit plans in the fol­lowing year are estimated on the basis of the period
under review.

2015

2014

2.0
59.2
37.9
0.9
100.0

2.4
60.7
36.3
0.6
100.0

The expense for the contributions to defined contribu­
tion plans, which is included in personnel expenses,
amounted to CHF 12.5 million in 2015 (2014: CHF 13.7
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.

130 FORBO ANNUAL REPORT 2015 – CONSOLIDATED FINANCIAL STATEMENTS

25 Provisions

Provisions
CHF m
As at January 1, 2015
Additions
Used during the year
Released during the year
Translation differences
As at December 31, 2015
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

2.9
2.9
– 1.4
– 0.1
– 0.2
4.1

12.0

– 0.5
11.5

2.3
1.8

0.0
11.5

Provisions
for legal
claims

Personnel
provisions

Other
provisions

Total
2015

3.9
0.8
– 0.3

12.5

11.3
3.7
– 2.7
– 0.8
– 0.1
11.4

– 0.2
4.2

42.0
9.0
– 4.4
– 1.9
– 1.0
43.7

1.4
11.1

11.1
0.3

3.2
1.0

18.0
25.7

11.9
1.6
0.0
– 1.0

In connection with the sale of the industrial adhe­sives activity, including synthetic polymers, provisionsof 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).

26 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 vol­31.12.2015

31.12.2014

35.6
44.3
79.9

35.4
55.0
90.4

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

27 Current financial debt

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

31.12.2015

31.12.2014

0.0
0.1
0.1

0.5
0.1
0.6

FORBO ANNUAL REPORT 2015 – CONSOLIDATED FINANCIAL STATEMENTS 131

28 Discontinued operations and assets
held for sale as well as liabilities directly
associated with assets held for sale
As reported in note 25 ‘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.

29 Contingent liabilities
As announced in a media release on July 3, 2013, theactivity of Flooring Systems in France is being inves­tigated 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 investigationis ongoing, the Group is unable to provide any further
information at present or estimate the possible reper­
cussions.

In this connection, there was neither any cash flow nor
any changes in provisions in the reporting year. In
the previous year, the Group had received a paymentof CHF 0.3 million from H.B. Fuller from a control andprofit and loss transfer agreement still in effect for the
short fiscal year 2012.

30 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 2015 income statement totaled CHF 18.3 million(2014: CHF 20.6 million). The Group has no individual­
ly significant operating leasing contracts.

31.12.2015

31.12.2014

8.3
21.7
6.1
36.1

9.8
22.3
6.4
38.5

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

132 FORBO ANNUAL REPORT 2015 – CONSOLIDATED FINANCIAL STATEMENTS

31 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 financial instruments in the fair value
hierarchy levels nor was there any regrouping between
the levels of the fair-value hierarchy. The financial in­struments held at the balance sheet date were all val­ued at amortized costs:

Classification of financial instruments
CHF m
31.12.2015
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
Financial liabilities valued at amortized costs:
Non-current financial debt
Trade payables
Current financial debt
Other current liabilities

A fair value hierarchy is not required, since for all finan­cial instruments, the carrying amount is a reasonableestimate of the fair value.

Carrying amount
Fair value throughprofit or loss –held for trading

Loans andreceivables

Other
financial liabilities

0.3
147.3
5.4

Total

0.3
147.3
5.4
116.3

0.9
77.4
0.1
8.7

0.9
77.4
0.1
8.7

FORBO ANNUAL REPORT 2015 – CONSOLIDATED FINANCIAL STATEMENTS 133

Classification of financial instruments
CHF m
31.12.2014
Financial assets valued at fair value:
Other current financial assets

Carrying amount
Fair value throughprofit or loss –held for trading

Loans andreceivables

Other
financial liabilities

49.5

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

The other current financial assets are all allocated to
the first fair-value hierarchy level (listed shares). For the­other financial instruments, the carrying amount is areasonable estimate of the fair value.

Total

49.5

0.3
150.6
24.0

0.3
150.6
24.0
205.1

1.4
86.5
0.1
10.3

1.4
86.5
0.1
10.3

134 FORBO ANNUAL REPORT 2015 – CONSOLIDATED FINANCIAL STATEMENTS

32 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 1.6 million (2014: CHF 1.7
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 sharesof Forbo Holding Ltd, and the variable remuneration
within the framework of the MIP (see note 22 ‘Employ­ee participation plan’) for the reporting year, amount­ing to CHF 1.1 million (variable remuneration payablein spring 2016, subject to approval by the 2016 Ordi­nary General Meeting).
The remuneration of the Board of Directors amounted
to CHF 1.0 million in the year under review (2014: CHF
1.1 million). This includes the gross base remunerationin cash, the employer contributions to the usual social
insurances, the lump sum and on-site expenses, andprivate use of the company car (only for the Executive
Chairman of the Board of Directors). The employer con­tributions to the pension fund for the Executive Chair­man of the Board of Directors are reported separately.
The share-based remuneration of the Board of Direc­
tors includes the portion of the gross base remunera­tion in shares. This consists on the one hand of the 40%
portion of the remuneration paid in shares to non-ex­
ecutive Board members, amounting to CHF 0.3 million(2014: CHF 0.3 million) and, on the other, of the share
package of the Executive Chairman of the Board of Di­
rectors amounting to CHF 2.2 million (2014: CHF 2.2
million).

2015
1.6
0.2
1.1
2.9

2014
1.7
0.2
1.5
3.4

Board of Directors
2015
1.0
0.2
2.5
3.7

2014
1.1
0.2
2.5
3.8

With effect from May 2013, the employment contract
with the Delegate and as of April 25, 2014 the Executive
Chairman of the Board of Directors was extended toencompass the period from May 1, 2013 to December
31, 2016. The bulk of the compensation will again be
paid in locked-up shares which have lock-up periods ofthree, four, and five years respectively, and in an annual
cash payment of CHF 310,000 to be used in part fortaxes and for employee contributions to the pension
fund and social security payments. The underlying
share price used to calculate the number of shares is
the weighted average price of the first and last five dayson which shares of Forbo Holding Ltd were traded on
the stock market in 2012 (CHF 522.12), less the discountas a result of the shares being locked up. The share
package corresponds to annual compensation of CHF
2,200,000 (5,314 shares). As per IFRS 2, they are recog­
nized pro rata for each calendar year.
With this share package and the cash remuneration,
all benefits such as bonuses, inflation, salary adjust­ments, options, etc. are settled. This share package
may not be either pledged or assigned. The last thirdof the locked-up shares will be available on May 1,
2018, at the earliest.

Total
2015
2.6
0.4
3.7
6.7

2014
2.8
0.4
4.0
7.2

FORBO ANNUAL REPORT 2015 – CONSOLIDATED FINANCIAL STATEMENTS 135

The Ordinance against Excessive Remuneration in List­
ed Public Companies (OaER) entered into force on
Janu­ary 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 2016 amounts to
CHF 2,200,000. In order to comply with and implement
the provisions of the OaER, the Group and This E.
­Schneider have agreed that he will repay the Group in
cash the amount of his fixed compensation for the pe­
riod 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 will be paid out to him again in monthly in­stalments in 2016 after approval by the 2015 Ordinary
General Meeting. The compensation package and therelevant 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, 2015 and 2014, Forbo had no sig­
nificant receivables due from or liabilities to relatedparties.

33 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 oper­
ational risks are dealt with appropriately and that they
are duly reported. This approach gives the Board a­complete overview of the key risks and measures. This
broad overview enables the Group to set priorities andallocate the necessary resources.
Financial risk management
In its day-to-day operations, the Forbo Group uses de­rivative and non-derivative financial instruments tomanage the risks and opportunities arising from fluctu­
ations in exchange rates and interest rates. The various
risks associated with existing assets and liabilities aswell as planned and anticipated transactions are mon­itored and managed centrally – with due regard to theGroup’s overall risk exposure. In line with the Group’s
hedging policy, Corporate Treasury constantly moni­
tors both the risk exposure and the effectiveness ofthe hedging instruments and issues recommendations
with regard to partial or complete hedging of existingrisks.
The Group’s financial risk management policy does not
permit the use of derivative financial instruments for
speculation. In order to manage counterparty risk, de­rivative financial transactions are concluded only with
first-class banks. The creditworthiness of these 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 2015 – 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 of as­
sets and liabilities denominated in foreign currencies(translation risks) are managed by establishing an ap­
propriate 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
2015
Change inexchange rate

Impact on profit
before tax– 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

Change inexchange rate

Impact on profit
before tax

CHF m
EUR/CHF

Net exposure

Transaction risks from financial instruments
2014
CHF m
EUR/CHF

Net exposure

6.4

5%
– 5%

0.3
– 0.3

USD/CHF

13.2

5%
– 5%

0.7
– 0.7

EUR/USD

4.6

5%
– 5%

0.2
– 0.2

GBP/USD

– 3.3

5%
– 5%

– 0.2
0.2

FORBO ANNUAL REPORT 2015 – 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
2015
Change ininterest rate

Impact on profit
before tax

50bp– 50bp

0.2
– 0.2

USD

50bp
– 50bp

0.1
– 0.1

CHF

50bp
– 50bp0.1– 0.1

Change ininterest rate

Impact on profit
before tax

50bp– 50bp

0.3
– 0.3

USD

50bp
– 50bp

0.1
– 0.1

CHF

50bp
– 50bp

0.4
– 0.4

CHF m
EUR

Interest rate risks from cash and cash equivalents,
interest-bearing debt and financial derivatives
2014
CHF m
EUR

138 FORBO ANNUAL REPORT 2015 – 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 64% on December 31, 2015.
At present, the Group regards a cash level of roughly
CHF 45 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 corre­
spond to contractually agreed maturities and represent
nominal payment outflows. Inflows and outflows offunds from derivative financial instruments are shown
separately.

As at December 31, 2015

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

Remaining term
to maturity up to
1 year
86.1
0.1
0.0
0.0

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

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

Remaining term
to maturity
1 – 2 years

Remaining term
to maturity
2 – 5 years

Remaining term
to maturity
over 5 years

0.1

0.4

0.9

As at December 31, 2014

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

Management of credit risks
Credit risks arise from the possibility that customers
may not be able to meet their agreed commitments.
To manage this risk adequately, the financial 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 2015 – 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, 2015, shareholders’ eq­uity stood at CHF 559.2 million. The objectives of cap­
ital management are to ensure that the Group remains
a going concern, to preserve its financial flexibility forinvestments, and to achieve a risk-adjusted return on
equity for investors.
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.

34 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 2015 annual fi­
nancial statements.

140 FORBO ANNUAL REPORT 2015 – CONSOLIDATED FINANCIAL STATEMENTS

Group companies(as at December 31, 2015)

Currency

Share capital

Equityinterest

Wetherill Park, NSW
Wetherill Park, NSW

AUD
AUD

500,000
6,000,000

100%
100%

S

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

ViennaViennaEUR
EUR

73,000330,000

100%
100%

S

Belgium
Forbo Flooring N.V.

Groot-Bijgaarden

EUR

250,000

100%

S

BrazilForbo Pisos Ltda.
Forbo Siegling Brasil Ltda.

São PauloSão Paulo

BRL
BRL

2,000,000
7,008,746

100%
50%

S

CanadaForbo Flooring Canada Corp.
Forbo Siegling Canada Corp.

Halifax
Halifax

CAD
CAD

500,200
501,000

100%
100%

S

Chile
Forbo Siegling Chile S.A.

Santiago

CLP

335,631,092

50%

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

Liberec
PragueCZK
CZK100,000
500,000

100%
100%

Denmark
Forbo Flooring A/SForbo Siegling Danmark A/S

Glostrup
Brøndby

DKK
DKK

500,000
32,300,000

100%
100%

S

Finland
Forbo Flooring Finland Oy

HelsinkiEUR

33,638100%

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

Château-Renault
Reims
Reims
Reims
Lomme

EUR
EUR
EUR
EUR
EUR

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

100%
100%
100%
100%
100%

MS

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, 2015
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 2015 – 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%

Hong Kong

HKD

1

100%

Delhi
Pune

INR
INR

15,000,000
26,000,000

100%
100%

Indonesia
PT Forbo Siegling Indonesia

Kabupaten Bandung

IDR

2,883,900,000

100%

Ireland
Forbo Ireland Ltd.

DublinEUR125,000

100%

S

Segrate (Milan)
Paderno Dugnano(Milan)EUR
EUR

60,000120,000

100%
100%

S

Japan
Forbo Siegling Japan Ltd.

Tokyo

JPY

330,000,000

100%

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

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

Zaanstad
Krommenie
Krommenie
Krommenie
Coevorden
Spankeren

EUR
EUR
EUR
EUR
EUR
EUR

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

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

Group company

Registered office

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

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

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

S Sales
MS Manufacturing and Sales
H Holding/Services
N Not consolidated as at December 31, 2015
D Direct participation of Forbo Holding Ltd

D

D

Flooring
Systems

Move­
ment
Systems

Equityinterest

Holding/Services

H
MS
S
MS
S

H

S
S

S

S

MS
MS
MS
H
MS
S

142 FORBO ANNUAL REPORT 2015 – CONSOLIDATED FINANCIAL STATEMENTS

Currency

Share capital

Equityinterest

Auckland

NZD

650,000

100%

NorwayForbo Flooring AS

Asker

NOK

1,000,000

100%

S

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

Shanghai
Shenyang

CHF
USD

4,000,000
16,221,000

100%
100%

S

Portugal
Forbo-Revestimentos, S.A.

Maia (Porto)

EUR

74,850100%

S

Romania
Forbo Siegling Romania S.R.L.

Bucharest

RON

38,000100%

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

Moscow
MoscowSaint Petersburg
Stary Oskol

RUB
RUB
RUB
RUB

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

100%
100%
100%
100%

Slovakia
Forbo Siegling s.r.o.

Malacky

EUR

15,281,639

100%

South Korea
Forbo Korea Ltd.

Seoul

KRW

900,000,000

100%

S

Barcelona
Montcada i Reixac(Barcelona)

EUR
EUR

60,101
1,532,550

100%
100%

S

SEK
SEK
SEK

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

100%
100%
100%

S

Group company

Registered office

New Zealand
Forbo Siegling Ltd.

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

SwedenForbo Flooring AB
Forbo Project Vinyl AB
Forbo Siegling Svenska AB

S Sales
MS Manufacturing and Sales
H Holding/Services
N Not consolidated as at December 31, 2015
D Direct participation of Forbo Holding Ltd

Gothenburg
GothenburgKållered (Gothenburg)

D
D

Flooring
Systems

Move­
ment
Systems

Holding/Services

S

MS
MS

S

S
MS
S
MS

MS

S

S

H
S

FORBO ANNUAL REPORT 2015 – CONSOLIDATED FINANCIAL STATEMENTS 143

Group company

Registered office

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

Baar
Baar
Baar
Giubiasco
Baar

Thailand
Forbo Siegling (Thailand) Co. Ltd.

Bangkok

TurkeyForbo Hareket ve Zemin Sistemleri Ticaret
Limited irketi

Currency

Share capital

D
D

CHF
CHF
CHF
CHF
CHF

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

100%
100%
100%
100%
100%

D

THB

9,000,000

100%

S

TRY

2,000,000

100%

S

GBP
GBP
GBP
GBP
GBP
GBP

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

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

USD
USD
USD
USD

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

100%
100%
100%
100%

D
D

Istanbul

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

Derbyshire
Kirkaldy
Derbyshire
Dukinfield
Derbyshire
Derbyshire

D

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

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

D

S Sales
MS Manufacturing and Sales
H Holding/Services
N Not consolidated as at December 31, 2015
D Direct participation of Forbo Holding Ltd

Flooring
Systems

Move­
ment
Systems

Equityinterest

Holding/Services

H
H
H
MS
MS

H

MS
H
H
S
H
H

H
H
S
MS

144 FORBO ANNUAL REPORT 2015 – CONSOLIDATED FINANCIAL STATEMENTS

Report of the statutory auditor

Report of the statutory auditor to the General Meetingof Forbo Holding Ltd, Baar
Report of the statutory auditor on the consolidated financial statements
As statutory auditor, we have audited the accompanying consolidated financial statements on pages 94 to 143
of Forbo Holding Ltd, which comprise the consolidated balance sheet, consolidated income statement, compre­
hensive income statement, consolidated statement of changes in equity, consolidated cash flow statement andnotes for the year ended December 31, 2015.
Board of Directors’ responsibility
The Board of Directors is responsible for the preparation of the consolidated financial statements in accordancewith International Financial Reporting Standards (IFRS) and the requirements of Swiss law. This responsibility
includes designing, implementing and maintaining an internal control system relevant to the preparation of
consolidated financial statements that are free from material misstatement, whether due to fraud or error. The
Board of Directors is further responsible for selecting and applying appropriate accounting policies and making
accounting estimates that are reasonable in the circumstances.
Auditor’s responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We
conducted our audit in accordance with Swiss law and Swiss Auditing Standards as well as International Stand­ards on Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance
whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud
or error. In making those risk assessments, the auditor considers the internal control system relevant to the­entity’s preparation of the consolidated financial statements in order to design audit procedures that are appro­
priate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s
internal control system. An audit also includes evaluating the appropriateness of the accounting policies used
and the reasonableness of accounting estimates made, as well as evaluating the overall presentation of theconsolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appro­
priate to provide a basis for our audit opinion.
OpinionIn our opinion, the consolidated financial statements for the year ended December 31, 2015, give a true and fairview of the financial position, the results of operations and the cash flows in accordance with International Finan­cial Reporting Standards (IFRS) and comply with Swiss law.
Other matter
The consolidated financial statements of Forbo Holding Ltd for the year ended December 31, 2014 were auditedby another auditor who expressed an unmodified opinion on those statements on March 11, 2015.

FORBO ANNUAL REPORT 2015 – CONSOLIDATED FINANCIAL STATEMENTS 145

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

Rolf Hauenstein
Licensed Audit Expert
Auditor in Charge

Zurich, March 9, 2016

Regula Tobler
Licensed Audit Expert

146 FORBO ANNUAL REPORT 2015 – CONSOLIDATED FINANCIAL STATEMENTS

Consolidated income statements
2011 – 2015
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

2015

2014

2013

2012

2011

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

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

FORBO ANNUAL REPORT 2015 – CONSOLIDATED FINANCIAL STATEMENTS 147

Consolidated balance sheets
2011 – 2015
Assets
CHF m
Non-current assets
Property, plant, and equipment
Intangible assets
Deferred tax assets
Other non-current financial assets
Current assets
Assets held for sale
Inventories
Trade receivables
Other receivables
Deferred income and prepaid charges
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 and accrued expenses
Current financial debt
Current tax liabilities
Other current liabilities
Liabilities directly associated with assets held for sale
Total liabilities
Total shareholders’ equity and liabilities

31.12.2015

31.12.2014

31.12.2013

31.12.2012

31.12.2011

402.8
227.3
135.7
39.5
0.3
509.3

418.5
234.9
146.1
37.2
0.3
677.1

408.2
232.3
146.4
29.3
0.2
718.8

410.4
233.8
149.2
27.2
0.2
802.9

214.5
147.3
18.8
12.4
0.0
116.3
912.1

230.6
150.6
24.0
17.3
49.5
205.1
1,095.6

213.4
148.8
29.2
18.3
68.1
241.0
1,127.0

218.6
150.2
28.9
11.8
142.1
251.3
1,213.3

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

31.12.2015

31.12.2014

31.12.2013

31.12.2012

31.12.2011

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

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

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

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

352.9
912.1

356.8
1,095.6

340.2
1,127.0484.1
1,213.3

815.3
0.3
– 0.1
815.1
276.2
144.5
42.7
39.5
49.5
410.4
86.1
125.0
47.5
27.6
26.6
97.6
686.6
1,501.9

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

149
150
151
152
157
158

150 FORBO ANNUAL REPORT 2015 – 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
Other income
Total income

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

2015

2014

222,556,666
46
0
222,556,712

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

2015

2014

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

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

Note

2
3

Note

4
5

FORBO ANNUAL REPORT 2015 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY 151

Balance sheet for Forbo Holding Ltd(before appropriation of available earnings)
AssetsCHF
Current assets
Cash and cash equivalents
Other receivables from third parties
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

31.12.2015

31.12.2014

12,464,831
4,407,843
0
7,786,996
269,992
441,591,225
119,094,504
322,496,721
454,056,056

12,434,622
10,550,821
8,402
1,053,586
821,813
328,326,487
13,170,266
315,156,221
340,761,109

31.12.2015

31.12.2014

10

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

37,693,304
20,45030,571,400
7,101,454
303,067,805
215,000

12

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

15,600,000
73,636,128
13,903,016

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

214,997,673
157,429,623– 172,713,635
340,761,109

Note

6
7

Note

8
9

12

152 FORBO ANNUAL REPORT 2015 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY

Notes to the financial statements
for Forbo Holding Ltd
1 Accounting

4 Administrative expenses

These financial statements have been prepared for the
first time in accordance with the new provisions on
accounting and financial reporting of the Swiss Codeof Obligations, which are mandatory as of January 1,
2015.

Administrative expenses include the fees paid to themembers of the Board of Directors, the auditor’s fees,
and usual administrative costs, mainly for the Ordinary
General Meeting, the Share Register, insurance and­announcements. Forbo Holding Ltd does not employ
any personnel.

To ensure comparability, the figures for the previous
year have been restated according to the new classifi­
cation standards. Treasury shares are now carried as adebit item in equity. The reserve for directly held treas­
ury shares has therefore been dissolved.

2 Financial income from investments inand loans to Group companies
Income from investments in and loans to Group com­panies amounting to CHF 222.6 million (2014: CHF
153.2 million) consisted mainly of dividend income,which came to CHF 221.5 million (2014: CHF 140.9 mil­lion) as well as interest income and realized price gains
on loans.

3 Other income
The item ‘Other income’ included in the previous year
the release of impairments on loans to subsidiaries,
since the loans were repaid in full.

Compared with the previous year, administrative ex­penses includes costs for services that were provided
by Forbo International SA.

5 Financial expenses from investments
in and loans from Group companies
Financial expenses include losses on foreign currency
accounts and interest expense for liabilities to Group
companies.

6 Loans to Group companies
Loans to Group companies are denominated in euros(CHF 106.4 million) and in Swiss francs (CHF 12.7 mil­lion).

FORBO ANNUAL REPORT 2015 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY 153

7 Investments in Group companies

As at December 31, 2015, Forbo Holding Ltd held thefollowing direct investments:

Investments in Group companies are measured at
the cost of acquisition less necessary valuation allow­
ances. In the year under review, these investments
were higher because a loan of CHF 7.3 million to Forbo
Flooring UK Ltd. was converted into equity.
Investments in Group companies
Currency

Share capitalin 1,000

Equityinterest

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

USD
EUR
CHF
CHF
SEK
GBP
CHF
CHF

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

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

Holding/Services
Services
Sales

EUR
SEK
THB

5,000
50,000
9,000

100%
100%
99.8%

Company

Registered office

Activity

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

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

FR-Reims
SE-Gothenburg
TH-Bangkok

8 Current liabilities to third parties

9 Other liabilities to Group companies

Current liabilities to third parties, amounting to CHF
12.9 million, corresponds to the withholding tax to be
paid from the repurchase of the company’s own sharesin December 2015.

Other liabilities to Group companies as at December
31, 2015, includes in particular advances from Forbo
Finanz AG in connection with its cash pool.

154 FORBO ANNUAL REPORT 2015 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY

10 Share capital
As at December 31, 2015, the share capital of Forbo
Holding Ltd totaled CHF 199,000 (2014: CHF 215,000),
divided into 1,990,000 registered shares with a par val­ue of CHF 0.10 each. 21,419 registered shares without
voting or dividend rights are at the disposal of theBoard of Directors.
At the Ordinary General Meeting of Forbo Holding Ltd
held on April 24, 2015, the shareholders approved acapital reduction from CHF 215,000 to CHF 199,000 bycancellation of the 160,000 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 25,
2014, 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 10, 2015 and was published in the SHAB on July 15,
2015. The exchange adjustment took place on thesame day.
The Board of Directors was furthermore authorized tobuy back the company’s own shares, over a period of
three years, for the purpose of subsequent cancellationof the share certificates, up to a maximum of 10% of theshare capital. In the framework of this new share buy­back program approved at the Ordinary General Meet­ing of Forbo Holding Ltd on April 24, 2015, 190,000­
Treasury shares
As at January 1, 2014
Additions
Disposals
As at December 31, 2015

shares were repurchased at a fixed price and via thesecond trading line until its finalization on December
23, 2015.

11 Conditional capital
Originally, conditional capital of CHF 8,500,000 for the
exercise of shareholder options and warrants in con­nection with a bond issue was created by a resolutionof the Annual General Meeting held on April 27, 1994.
Following the exercise of options in 1994, 1995 and1997 and reductions in the par value by CHF 22 pershare in 2003, CHF 8 per share in 2004, CHF 6 per sharein 2007, CHF 10 per share in 2008, and CHF 3.90 per
share in 2009, the conditional capital on December 31,
2015, remained unchanged against the previous year
at CHF 16,645.

12 Treasury shares
The treasury shares in Forbo Holding Ltd amounting
to CHF 235.8 million on the balance sheet date corre­
spond to the value of all 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 8.8 mil­lion. Overall, the treasury shares held directly andindirectly developed as follows over the period underreview:

Cost
CHF
186,616,651
213,568,056– 155,552,897
244,631,810

Number ofregistered shares
261,150
191,533– 171,141
281,542FORBO ANNUAL REPORT 2015 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY 155

13 Contingent liabilities
Guarantees and letters of support to third parties in fa­
vor of Group companies amounted to CHF 9.4 million
at year-end 2015 (2014: CHF 8.2 million), of which CHF
0.0 million (2014: CHF 2.8 million) was 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.

14 Significant shareholders
According to information available to the Board of Di­
rectors, the following shareholders or groups of share­
holders with restricted voting rights constituted signifi­
cant 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
544,122281,542As percentage
27.34%
14.15%

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

500

500

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

156 FORBO ANNUAL REPORT 2015 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY

IN 2014
As at December 31, 2014, the current and former mem­bers of the Board of Directors and the Executive Board(including related parties) held the following number ofshares in Forbo Holding Ltd:
Shareholdings 2014
SharesName and function
This E. Schneider, Executive Chairman3)
Michael Pieper, Vice Chairman
Dr. Peter Altorfer, Vice Chairman4)
Claudia Coninx-Kaczynski5), member
Dr. Reto Müller, member
Vincent Studer, member
Total Board of Directors
Stephan Bauer, Chief 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 three, four, and five years. The last
third of the shares will be available on May 1, 2018, at the earliest.

2) Subscription ratio.

4) Vice Chairman since the 2014 Ordinary General Meeting (previ­
ously member).
5) New member of the Board of Directors since the 2014 Ordinary
General Meeting.

For further information regarding granted shares to theBoard of Directors and the Executive Board we refer topages 87 and 88 of the remuneration report.

15 Events after the balance sheet date
Between the balance sheet date and the date of pub­lication of this annual report no event occurred that
could have a significant effect on the 2015 annual fi­
nancial statements.

Options1)
2012 series
1:12)

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

3,051

3,051

FORBO ANNUAL REPORT 2015 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY 157

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:2015
CHF
Net profit
Retained earnings
Release of general capital contribution reserves1)
Treasury shares
Total at the shareholders’ meeting’s disposal

211,569,033
227,049,935
29,043,786– 235,835,129
231,827,625

be appropriated as follows:
2015
CHF
Withholding tax-free distribution2)
To be carried forward
Total at the shareholders’ meeting’s disposal

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

29,043,786
202,783,839
231,827,625

2) At the Ordinary General Meeting of April 29, 2016, the Board of
Directors will propose a dividend payment of CHF 17 (2014: CHF
16) per registered share out of the capital contribution reserves,
with the exception of the treasury shares held by Forbo Holding
Ltd or a subsidiary thereof, for which no dividend is paid. The de­finitive amount may therefore still change.

158 FORBO ANNUAL REPORT 2015 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY

Report of the statutory auditor

Report of the statutory auditor to the General Meeting
Forbo Holding Ltd, Baar
Report of the statutory auditor on the financial statements
As statutory auditor, we have audited the accompanying financial statements on pages 150 to 156 of Forbo
Holding Ltd, which comprise the income statement, balance sheet and notes for the year ended December 31,
2015.
Board of Directors’ responsibility
The Board of Directors is responsible for the preparation of the financial statements in accordance with the re­quirements of Swiss law and the company’s articles of incorporation. This responsibility includes designing, im­plementing and maintaining an internal control system relevant to the preparation of financial statements thatare free from material misstatement, whether due to fraud or error. The Board of Directors is further responsible
for selecting and applying appropriate accounting policies and making accounting estimates that are reasonable
in the circumstances.
Auditor’s responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our
audit in accordance with Swiss law and Swiss Auditing Standards. Those standards require that we plan andperform the audit to obtain reasonable assurance whether the financial statements are free from material mis­statement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the­financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of
the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers the internal control system relevant to the entity’s preparation of the financial
statements in order to design audit procedures that are appropriate in the circumstances, but not for the purposeof expressing an opinion on the effectiveness of the entity’s internal control system. An audit also includes eval­uating the appropriateness of the accounting policies used and the reasonableness of accounting estimates
made, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence
we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OpinionIn our opinion, the financial statements for the year ended December 31, 2015, comply with Swiss law and thecompany’s articles of incorporation.
Other matter
The financial statements of Forbo Holding Ltd for the year ended December 31, 2014, were audited by anotherauditor who expressed an unmodified opinion on those statements on March 11, 2015.

FORBO ANNUAL REPORT 2015 – ANNUAL STATEMENTS FOR THE HOLDING COMPANY 159

Report on other legal requirements
We confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act (AOA) andindependence (article 728 CO and article 11 AOA) and that there are no circumstances incompatible with our
independence.
In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an in­
ternal control system exists, which has been designed for the preparation of financial statements according to the
instructions of the board of directors.
We further confirm that the proposed appropriation of available earnings complies with Swiss law and the com­pany’s articles of incorporation. We recommend that the financial statements submitted to you be approved.
KPMG AG

Rolf Hauenstein
Licensed Audit Expert
Auditor in Charge

Zurich, March 9, 2016

Regula Tobler
Licensed Audit Expert

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

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