Financial statements Georg Fischer Ltd

Notes to the financial statements

1 Principles

Notes to the financial statements

1 Principles

1.1 General

These annual financial statements were prepared in accordance with the provisions of the Swiss accounting law (Title 32 of the Swiss Code of Obligations). The main valuation principles applied that are not prescribed by law are described below.

Georg Fischer Ltd, Schaffhausen (Switzerland), reports its consolidated financial statements based on a recognized standard (Swiss GAAP FER) and, in accordance with the legal provisions, the company has decided not to provide notes on the audit fees, a cash flow statement or an annual report.

1.2 Securities with market price

Securities held for the short term are valued at the market price on the balance sheet date. No equalization reserve has been created.

1.3 Loans to Corporate Companies and other financial assets

Loans granted to Corporate Companies and other financial investments in foreign currencies are valued at the market rate on the actual closing date. Unrealized currency losses are booked, while unrealized gains are deferred (imparity principle). The valuation is at nominal values, taking into consideration any value adjustments required.

1.4 Investments

Investments are valued in line with the principle of individual valuation. In addition, further flat-rate value adjustments can be applied.

1.5 Dividend income

Dividend income is booked when paid out.

1.6 Share-based compensation

More information about share-based compensation is available in the compensation report as well as in note 6 of the Annual Report.

1.7 Long-term interest-bearing liabilities

Interest-bearing liabilities are recognized at nominal value.

2 Information on balance sheet positions 

2 Information on balance sheet positions 

2.1 Cash and cash equivalents and short-term investments with a quoted market price

This balance sheet position contains securities in the amount of CHF 3.3 million (previous year: CHF 3.5 million).

2.2 Other current receivables due from Corporate Companies

The balance sheet position includes short-term receivables and loans to Corporate Companies and positions from cash pooling with Corporate Companies. These are reported as a gross amount under “Other current receivables due from Corporate Companies” and “Short-term interest-bearing liabilities due from Corporate Companies”.

2.3 Loans to Corporate Companies

The activities of Corporate Companies are, whenever possible and suitable, financed by loans from the Corporation instead of credit facilities from local banks.

2.4 Investments

Direct and indirect investments in Corporate Companies of Georg Fischer Ltd include the companies listed in note 32 of the Annual Report.

2.5 Short-term interest-bearing liabilities due to Corporate Companies

This balance sheet item includes short-term liabilities and loans from Corporate Companies and items from cash pooling with Corporate Companies. These are reported as a gross amount under “Other current receivables due from Corporate Companies” and “Short-term interest-bearing liabilities due to Corporate Companies”.

2.6 Accrued expenses and deferred income

Accrued expenses and deferred income largely comprises variable compensation for employees and fees for the Board of Directors.

2.7 Long-term provisions

This provision mainly concerns currency risks.

2.8 Share capital

As of 31 December 2016, the share capital amounted to 4ʼ100ʼ898 registered shares at a par value of CHF 1.

Conditional capital: As of 31 December 2016, the conditional capital amounted to CHF 0.6 million and can be created by exercising conversion or option rights granted in connection with debenture loans or similar bonds of Georg Fischer Ltd or its Corporate Companies that were issued on the capital markets.

Authorized capital: In accordance with the resolution of the Annual General Meeting of 23 March 2016, the Board of Directors is authorized to increase the share capital, until no later than 22 March 2018, by a maximum amount of CHF 0.6 million, by issuing a maximum of 600ʼ000 fully paid-in registered shares with a nominal value of CHF 1 each. The increase may be made in partial amounts.

The maximum amount of the authorized or conditional capital is reduced by the amount that authorized or conditional capital is created through the issue of bonds or similar debt instruments or new shares.

2.9 Reserves for treasury shares

Georg Fischer Finanz Ltd, a Corporate Company held by Georg Fischer Ltd, owned 12ʼ338 registered shares of Georg Fischer Ltd on the balance sheet date. Accordingly, a reserve for treasury shares was set up at Georg Fischer Ltd.

3 Information on the income statement 

3 Information on the income statement 

3.1 Dividend income

The dividend income for the year was CHF 139 million (previous year: CHF 132 million).

3.2 Income from services provided to Corporate Companies

The income from Corporate Companies consisted primarily of licensing income for the use of the corporate brand +GF+ as well as income for services provided.

3.3 Financial income

The financial income comes primarily from interest income on the loans granted to Corporate Companies.

3.4 Commission income from Corporate Companies

This position contains commission income from Corporate Companies for issued guarantees. In the previous year, this position was shown as part of the “Financial expenses”.

3.5 Value adjustment on investments

Some investments of Georg Fischer Ltd had to be written down due to the application of the principle of individual evaluation. The principles for the valuation of investments are found in section 1.4.

3.6 Financial expenses

This income statement item includes mainly the interest expense for the debenture loan 3 3/8% with a nominal value of CHF 200 million which was repaid on 12 May 2016 as well as currency gains.

3.7 Other operating expenses

The main expense items related to external consulting services, marketing expenses, fees for the Board of Directors, and data processing costs.

3.8 Direct taxes

Income taxes in the period under review concerned not only the income taxes of Georg Fischer Ltd, but also the corporation taxes of Georg Fischer BV & Co KG, Singen (Germany), acting as the German fiscal unity parent of GF. Georg Fischer Ltd, as the associate of Georg Fischer BV & Co KG, is liable for German corporation taxes. Increased taxable income in Germany but mainly in Switzerland resulted in rising direct taxes.

4 Additional information

4 Additional information

4.1 Full-time equivalents

As of 31 December 2016, Georg Fischer Ltd employed 60 people.

4.2 Contingent liabilities

CHF 1'000

 

2016

 

2015

 

 

 

 

 

Guarantees and pledges in favor of third parties:

 

 

 

 

Guaranteed maximum amount

 

1'787'263

 

1'572'503

Thereof utilized

 

940'168

 

733'118

Georg Fischer Ltd bears joint liability with regard to the Swiss Federal Tax Administration for the amounts due of value-added tax of all the Swiss Corporate Companies.

4.3 Pension fund obligations

At year-end 2016, pension fund obligations amounted to CHF 4 million (previous year: CHF 1.5 million).

4.4 Significant shareholders

An overview can be found in the chapter Share price  of the Annual Report.

4.5 Shareholdings of members of the Board of Directors, Executive Committee, or persons related to them

Information on the shareholdings of members of the Board of Directors, Executive Committee, or persons related to them is provided in note 29 of the Annual Report.

5 Events after the balance sheet date

5 Events after the balance sheet date

There were no events between 31 December 2016 and 17 February 2017 that would require an adjustment to the carrying amounts of assets and liabilities and equity or would need to be disclosed under this heading.

6 Compensation and shareholdings

6 Compensation and shareholdings

Board of Directors

The members of the Board of Directors received cash compensation of CHF 1.159 million in the year under review. In addition, a total of 1ʼ501 GF registered shares with a total market value of CHF 1.251 million were allocated as share-related compensation. In the previous year, the allocation had been 1ʼ534 GF registered shares, equivalent to a total market value of CHF 1.042 million. Together with other benefits, the total compensation paid to the Board of Directors in the year under review amounted to CHF 2.523 million (previous year: CHF 2.331 million).

At the General Assembly of 23 March 2016, a maximum sum of CHF 2.774 million for remuneration of the members of the Board was approved for the period from the 2016 Annual Shareholders’ Meeting to the 2017 Annual Shareholders’ Meeting.

The detailed disclosure of compensation to the Board of Directors is as follows:

Compensation paid to the members of the Board of Directors 2016

 

 

Compensation

 

Social insurance funds3

 

Total compen- sation 20164

 

Total compen- sation 20154

 

 

Cash compensation1

 

Number of shares

 

Share-based compensation2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Andreas Koopmann

 

270

 

300

 

250

 

23

 

543

 

499

Chairman Board of Directors

 

 

 

 

 

 

 

 

 

 

 

 

Chairman Nomination Committee

 

 

 

 

 

 

 

 

 

 

 

 

Hubert Achermann

 

150

 

150

 

125

 

12

 

287

 

254

Chairman Audit Committee

 

 

 

 

 

 

 

 

 

 

 

 

Gerold Bührer

 

123

 

150

 

125

 

10

 

258

 

235

Vice Chairman Board of Directors

 

 

 

 

 

 

 

 

 

 

 

 

Member Audit Committee

 

 

 

 

 

 

 

 

 

 

 

 

Roman Boutellier5

 

105

 

150

 

125

 

9

 

239

 

201

Member Nomination Committee

 

 

 

 

 

 

 

 

 

 

 

 

Member Compensation Committee

 

 

 

 

 

 

 

 

 

 

 

 

Riet Cadonau6

 

54

 

116

 

97

 

8

 

159

 

 

Member Board of Directors

 

 

 

 

 

 

 

 

 

 

 

 

Ulrich Graf7

 

25

 

35

 

29

 

2

 

56

 

222

Chairman Compensation Committee

 

 

 

 

 

 

 

 

 

 

 

 

Roger Michaelis

 

123

 

150

 

125

 

13

 

261

 

230

Member Audit Committee

 

 

 

 

 

 

 

 

 

 

 

 

Eveline Saupper8

 

106

 

150

 

125

 

12

 

243

 

159

Chairwoman Compensation Committee

 

 

 

 

 

 

 

 

 

 

 

 

Jasmin Staiblin

 

90

 

150

 

125

 

11

 

226

 

202

Member Compensation Committee

 

 

 

 

 

 

 

 

 

 

 

 

Zhiqiang Zhang

 

113

 

150

 

125

 

13

 

251

 

227

Member Nomination Committee

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

1'159

 

1'501

 

1'251

 

113

 

2'523

 

2'229*

(all in CHF 1'000, except column "Number of shares")

*The total compensation in 2015 amounted to CHF 2.331 million, including a compensation for Rudolf Huber (Chairman Audit Committee until 18 March 2015) of CHF 58'000 and compensation for Isabelle Welton (Member Compensation Committee until 18 March 2015) of CHF 44'000.

1The cash compensation includes reimbursements for international travel amounting to CHF 45'000.

2The share-based compensation consists in the allocation of a fixed number of shares. The amount of the share-related compensation is calculated on the basis of the full value of the shares at the year-end price of CHF 834 on 31 December 2016.

3Social insurance funds represent employer contributions to social insurance funds.

4The total compensation encompasses the cash compensation, the share-based compensation and the contribution to social insurance funds.

5Member of the Compensation Committee since 23 March 2016.

6Member of the Board of Directors since 23 March 2016.

7Chairman Compensation Committee until 23 March 2016.

8Chairwoman of the Compensation Committee since 23 March 2016.

The compensation paid to the Board of Directors for the year 2016 was above that of the previous year. The increase is explained by the increased value of the shares from CHF 679 in 2015 to CHF 834 in 2016.

In the year under review, Mr. Ulrich Graf, Chairman of the Compensation Committee, was remunerated until the General Assembly of 23 March 2016. Both, Mr. Roger Michaelis and Mr. Zhiqiang Zhang, received each CHF 22ʼ500 for international travel time spent; these reimbursements are included in the cash compensation. No further compensation was paid to members of the Board of Directors. No compensation was paid to parties closely related to members of the Board of Directors.

Executive Committee

The members of the Executive Committee received cash, share-related compensation, social security and pension contributions amounting to CHF 8.320 million for the year under review (previous year: CHF 7.736 million). Under the new long-term incentive plan, 2ʼ126 GF registered shares (1ʼ063 restricted shares and 1ʼ063 performance shares) with a total value of CHF 1.773 million, based on a share price of CHF 834 at year end 2016, were granted to members of the Executive Committee for the year under review and thereof 1ʼ063 GF registered shares were transferred. (previous year: 2ʼ050 GF registered restricted shares with a total value CHF 1.392 million).

At the General Assembly of 18 March 2015, a maximum sum of CHF 9.412 million for remuneration of the members of the Executive Committee for the business year 2016 was approved.

The detailed disclosure of compensation to the Executive Committee in accordance with the Ordinance against excessive pay in stock exchange-listed companies is as follows:

Compensation paid to the members of the Executive Committee 2016

 

 

Fixed salary in cash

 

Short-term incentive in cash1

 

Restricted shares

 

Perfor- mance shares

 

Share-based remune- ration2

 

Social insu- rance funds3

 

Pension funds4

 

Jubilee premium5

 

Total com- pen- sation 20166

 

Total compen- sation 2015

Executive Committee*

 

2'993

 

2'247

 

1'063

 

1'063

 

1'773

 

398

 

838

 

71

 

8'320

 

7'736

Of whom Yves Serra, CEO (highest individual compensation)

 

873

 

933

 

425

 

425

 

709

 

134

 

256

 

71

 

2'976

 

2'781

(all in CHF 1'000, except rows "Restricted shares" and "Performance shares")

*The Executive Committee compensation includes the compensation for Pietro Lori (Executive Committee member until 31 July 2016) and includes the compensation for Joost Geginat (Executive Committee member since 1 May 2016).

1The short-term incentive is based on the short-term incentive plan. The amount is determined by the fulfillment of personal performance objectives and by the financial results of the Divisions and the Corporation. The short-term incentive for the 2016 financial year was approved by the Board of Directors on 17 February 2017. Payment will be made in 2017.

2The share-based remuneration is based on the long-term incentive plan: Each year, numbers of restricted (RS) and performance shares (PS) are allocated. RS are blocked for five years. The amount of the RS-based compensation is calculated on the basis of the full value of the shares at the year-end price of CHF 834 on 31 December 2016. RS are transferred in 2017. The amount of the PS-based compensation is calculated on the basis of the grant value of the PS at the year-end price of CHF 834 on 31 December 2016. The number of PS vesting after the vesting period of 3 years depends on meeting the respective performance criteria.

3The social insurance fund expenses represent employer contributions to social security.

4The pension fund expenses represent employer contributions to pension funds.

5Based on the Company's regulation for all employees, the CEO received a jubilee premium of one monthly salary for 25 years employment with GF.

6The total compensation is comprised of the fixed salary, the short-term incentive, the share-based remuneration and the social and pension contributions.

Total compensation for the Chief Executive Officer and the other members of the Executive Committee in 2016 was higher than in 2015. The increase is explained by the following factors:

  • The Executive Committee compensation includes the compensation for Pietro Lori (Executive Committee member until 31 July 2016) and includes the compensation for Joost Geginat (Executive Committee member since 1 May 2016).
  • The value of the shares increased from CHF 679 in 2015 to CHF 834 in 2016.
  • The short-term incentive related to the financial results of the Corporation and the divisions and to the individual performance was comparable to 2015. Consequently, the overall short-term incentive percentage ranges from 56.9% to 71.8% of the base salary for the Executive Committee members and amounts to 106.9% of the base salary for the Chief Executive Officer.
  • The fixed salary was slightly adjusted in order to keep competitive levels in line with the market practice of GF’s industrial sector.
  • The employer’s contributions to social security and to company retirement plans have increased following the adjustments of fixed salary. Please note that a significant portion of the social security payments of the employer to the Swiss social security system represents a solidarity payment as the individuals will not get any return or benefit due to these payments.

Starting 1 August 2016 until 31 December 2016, Pietro Lori continued his employment with GF as non-Executive Committee member and the compensation package for this period amounted to CHF 528ʼ384.

In the year under review, no further compensation was paid to former members of the Executive Committee. No compensation was paid to parties closely related to members of the Executive Committee.

Shareholdings of members of the Board of Directors, Executive Committee, or persons related to them

Related persons and companies are defined as family members and persons or companies over which a significant influence can be exercised. Transactions with related persons and companies must be settled on prevailing market terms.

Apart from the compensation paid to the Board of Directors and the Executive Committee and the regular contributions to the various pension fund institutions, no transactions with related persons or companies took place.

Shareholdings Board of Directors

 

 

 

 

 

Number of Georg Fischer registered shares as of 31 Dec. 2016

 

Number of Georg Fischer registered shares as of 31 Dec. 2015

 

 

 

 

 

 

 

 

Andreas Koopmann

 

Chairman Board of Directors Chairman Nomination Committee

 

 

2'181

 

1'881

Hubert Achermann

 

Chairman Audit Committee

 

 

417

 

267

Gerold Bührer

 

Vice Chairman Board of Directors Member Audit Committee

 

 

2'872

 

2'722

Roman Boutellier1

 

Member Nomination Committee Member Compensation Committee

 

 

2'949

 

2'799

Riet Cadonau2

 

Member Board of Directors

 

 

116

 

 

Ulrich Graf3

 

Chairman Compensation Committee

 

 

 

1'166

Roger Michaelis

 

Member Audit Committee

 

 

717

 

567

Eveline Saupper4

 

Chairwoman Compensation Committee

 

 

778

 

628

Jasmin Staiblin

 

Member Compensation Committee

 

 

895

 

745

Zhiqiang Zhang

 

Member Nomination Committee

 

 

1'937

 

2'387

Total Directors

 

 

12'862

 

13'162

1Member Compensation Committee since the Annual Shareholders' Meeting 2016 (23 March 2016).

2Member of the Board of Directors since the Annual Shareholders' Meeting 2016 (23 March 2016).

3Chairman Compensation Committee until the Annual Shareholders' Meeting 2016 (23 March 2016).

4Chairwoman Compensation Committee since the Annual Shareholders' Meeting 2016 (23 March 2016).

Shareholdings Executive Committee

 

 

 

 

 

Number of Georg Fischer registered shares as of 31 Dec. 2016

 

Number of Georg Fischer registered shares as of 31 Dec. 2015*

 

 

 

 

 

 

 

 

Yves Serra

 

President and CEO

 

 

5'478

 

5'528

Roland Abt

 

CFO, Head of Corporate Finance & Controlling

 

 

2'364

 

2'064

Joost Geginat1

 

Head of GF Piping Systems

 

 

 

Josef Edbauer

 

Head of GF Automotive

 

 

2'032

 

1'732

Pascal Boillat

 

Head of GF Machining Solutions

 

 

1'005

 

705

Total Executive Committee

 

 

 

 

10'879

 

10'029

*The number of Georg Fischer registered shares amounted to 11'963 in 2015 and included the number of registered shares of Pietro Lori (Member Executive Committee until 31 July 2016) of 1'934.

1Member Executive Committee since 1 May 2016.

The registered shares transferred as part of share-based compensation to the Executive Committee are blocked for at least five years.

As of 31 December 2016, members of the senior management registered a total of 21ʼ374 shares of Georg Fischer Ltd (inclusive Pietro Lori). A total of 45ʼ115 Georg Fischer shares were held by the Board of Directors, the Executive Committee, and the senior management as of 31 December 2016, corresponding to 1.10% of issued shares.

Neither Georg Fischer Ltd nor its Corporate Companies granted any guarantees, loans, advances, or credit facilities to members of the Executive Committee or the Board of Directors or related parties.

Compensation has not involved the allocation of options to current or past members of the Executive Committee or Board of Directors. Neither they nor any related persons possess option rights allocated by GF. As of 31 December 2016, the members of the Executive Committee held no option rights for Georg Fischer registered shares.

In 2016, GF did not make any severance payments to members of the Board of Directors or Executive Committee who left the company in the period under review or earlier.