Notes to the financial statements

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 on the basis of a recognized standard (Swiss GAAP FER) and has therefore, in accordance with the legal provisions, decided not to provide notes on the audit fees, to issue a cash flow statement or report on the business situation.

Short-term securities are valued at the market price on the balance sheet date. No equalization reserve has been created. 

Loans 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 recognized, whereas unrealized gains are not recognized (imparity principle). The valuation is carried out at nominal values, taking into account any value adjustments required.

Investments are valued according to the principle of individual valuation. In addition, further flat-rate value adjustments can be made.

Dividend income is recognized when paid out.

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

Interest-bearing liabilities are recognized at nominal value.

Treasury shares are recognized at cost and deducted from shareholder’s equity. The gain or loss from the sale or transfer of treasury shares is recognized in shareholder’s equity as an increase or reduction in retained earnings.

The dividend income for the year under review was CHF 174 million (previous year: CHF 156 million).

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. 

The financial income includes interest income on the loans granted to Corporate Companies and related parties.

This position contains commission income from Corporate Companies for issued guarantees.

This position includes value adjustments of investments held by Georg Fischer Ltd. The principles for the valuation of investments are found in note 1.4.

This position includes interest expense for the bond of CHF 200 million issued in the previous year as well as losses on foreign currencies. More information on the bond can be found in note 3.8.

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

This position includes 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.

This balance sheet item consists of bank balances.  In the previous year, securities in the amount of CHF 3.1 million were included.

This balance sheet item includes short-term receivables and loans to 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”.

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

Other financial assets include loans to related parties of CHF 66 million (previous year: CHF 0 million). CHF 47 million of these loans to related parties are subordinated loans.

Direct and indirect investments in Corporate Companies of Georg Fischer Ltd include the companies listed in note 4.2 in the consolidated financial statements.

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”.

Accrued expenses and deferred income comprises variable compensation for employees and fees for the Board of Directors as well as other deferred items.

On 20 April of the previous year, Georg Fischer Ltd issued a bond of CHF 200 million on the Swiss capital market. The bond has a duration of 10 years and carries a coupon of 1.05%.

This provision mainly concerns currency risks.

As of 31 December 2019, the share capital amounted to 4’100’898 registered shares at a par value of CHF 1, unchanged from the previous year.

Conditional capital: As of 31 December 2019, 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 18 April 2018, the Board of Directors is authorized to increase the share capital, until no later than 17 April 2020, by a maximum amount of CHF 0.6 million, by issuing a maximum of 600’000 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.

Georg Fischer Ltd held 7’173 own shares (previous year: 7’568 own shares) on the balance sheet date. The principles for the valuation of treasury shares are found in note 1.8.

As of 31 December 2019, Georg Fischer Ltd employed 78 people including trainees (previous year: 76).

In addition, 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.

At year-end 2019, pension fund obligations amounted to CHF 1.1 million (previous year: CHF 4.2 million).

An overview can be found in the chapter Corporate Governance (GF share and shareholders).

Information on the shareholdings of members of the Board of Directors, Executive Committee, or persons related to them is provided in note 4.3 in the consolidated financial statements.

There were no events between 31 December 2019 and 20 February 2020 that would require an adjustment to the carrying amounts of assets and liabilities and equity or would need to be disclosed under this heading.

The Members of the Board of Directors received cash compensation of CHF 1.143 million in the year under review (previous year: CHF 1.159 million). In addition, a total of 1’501 GF registered shares with a total market value of CHF 1.472 million were allocated (previous year: 1’500 GF shares with a market value of CHF 1.180 million). Together with other benefits, the total compensation paid to the Board of Directors in 2019 amounted to CHF 2.735 million (previous year: CHF 2.449 million).

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

The compensation paid to the Board of Directors for the year 2019 was higher compared to previous year. The increase results from the difference in the value of the shares (CHF 983.00 on 31 December 2019 compared to CHF 786.50 on 31 December 2018) only. The compensation system for the Board of Directors remained unchanged compared to previous year.

At the 2018 Annual Shareholders’ Meeting, shareholders approved a maximum aggregate compensation amount of CHF 3.750 million (based on a share value of CHF 1’600.00) for the Board of Directors for the compensation period from the 2018 Annual Shareholders’ Meeting until the 2019 Annual Shareholders’ Meeting. For this period, the effective compensation amounted to CHF 2.540 million (based on a share value of CHF 786.50 for the period in 2018 and CHF 983.00 for the period in 2019) and is thus within the approved limits.

At the 2019 Annual Shareholders’ Meeting, shareholders approved a maximum aggregate compensation amount of CHF 3.750 million for the Board of Directors for the compensation period from the 2019 Annual Shareholders’ Meeting until the 2020 Annual Shareholders’ Meeting. This compensation period is not yet completed, a conclusive assessment will be provided in the 2020 Compensation Report.

In the reporting year, no further compensation was paid to Members of the Board of Directors and no compensation was paid to parties closely related to Members of the Board of Directors.

The Members of the Executive Committee received cash, share-based compensation, social security and pension contributions amounting to CHF 7.488 million for the year under review (previous year: CHF 8.417 million) compared to a total amount of CHF 10.531 million approved by the shareholders at the 2018 Annual Shareholders’ Meeting.

Under the LTI plan, 1’644 performance shares with a total value at grant of CHF 1.628 million were granted to Members of the Executive Committee for the year under review (previous year: 1’752 performance shares with a total value of CHF 1.378 million).

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

The total compensation for the CEO and the other Members of the Executive Committee in 2019 was lower than in 2018, which can be explained by the following factors:

The ratio between fixed and awarded variable compensation in 2019 was as follows:

For a former Executive Committee member a compensation amounting to CHF 543’323 was paid in the year 2019, reflecting the compensation for the remainder of the notice period (not included in the figures above).

No compensation was paid to parties closely related to Members of the Executive Committee.

The achievement of the business objectives for the 2019 short-term incentive is as follows:

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.

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 2019, members of the Senior Management registered a total of 20’781 shares of Georg Fischer Ltd. A total of 44’992 Georg Fischer shares were held by the Board of Directors, the Executive Committee, and the Senior Management as of 31 December 2019, 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 2019, the members of the Executive Committee held no option rights for Georg Fischer registered shares.

In 2019, 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.