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 to provide neither a note on the audit fees nor a cash flow statement and a management report.

Short-term securities are valued at the market price on the balance sheet date. No fluctuation 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 157 million (previous year: CHF 174 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 on 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 outstanding bonds of CHF 400 million as well as losses on foreign currencies. More information on the bonds can be found in note 3.8.

The main expense items relate 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 includes bank accounts in the amount of CHF 102 million (previous year: CHF 132 million) and fixed-term deposits in the amount of CHF 305 million (previous year: CHF 0 million).

This balance sheet item includes short-term receivables and loans to Corporate Companies and items from cash pooling with 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.

This item includes loans to subordinated third parties in the amount of CHF 64 million. In the previous year, loans to related parties were included in the amount of CHF 66 million, of which CHF 47 million were subordinated.

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.

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

This balance sheet item contains a 10-year bond in the amount of CHF 200 million with a coupon of 1.05% and a maturity date of 20 April 2028, as well as a 9.5-year bond issued on 25 September 2020 in the amount of CHF 200 million with a coupon of 0.95% and a maturity date of 25 March 2030.

This provision mainly concerns currency risks.

As of 31 December 2020, 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 2020, the conditional capital amounted to CHF 0.4 million and can be created through the exercise of conversion rights and/or warrants granted in connection with the issue on capital markets of bonds or similar debt instruments of Georg Fischer Ltd or one of its corporate subsidiaries.

Authorized capital: In accordance with the resolution of the Annual General Meeting of 15 April 2020, the Board of Directors is authorized to increase the share capital, no later than 14 April 2022, by a maximum amount of CHF 0.4 million, by issuing a maximum of 400’000 fully paid-in registered shares with a nominal value of CHF 1 each. The increase may be made in installments.

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 7’682 own shares (previous year: 7’173 own shares) as of the balance sheet date. In the reporting period, 8’065 own shares (previous year: 10’280 own shares) were purchased and 7’556 own shares (previous year: 10’693 own shares) were offered under the different share-based compensation models to the Board of Directors, the Executive Management and the Senior Management. For further information on share-based compensation for the Board of Directors and the Executive Management see note 6. The principles for the valuation of treasury shares are found in note 1.8.

As of 31 December 2020, Georg Fischer Ltd employed 93 full-time equivalents including trainees (previous year: 78).

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 2020, pension fund obligations amounted to CHF 2.2 million (previous year: CHF 1.1 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.

The financial statements of Georg Fischer Ltd were approved and released for publication by the Board of Directors on 25 February 2021. They must also be approved at the Annual Shareholders’ Meeting.

On 16 December 2020, GF Piping Systems announced the acquisition of FGS Brasil Indústria e Comércio Ltda. (FGS), Cajamar (Brazil). FGS has become Brazil’s leading manufacturer of high-density polyethylene pipes (HDPE), fittings, and additional equipment within a few years. FGS generates sales of approximately BRL 160 million (approx. CHF 27 million) with a workforce of 240 employees. Both parties have agreed not to disclose any financial details of the transaction. Closing is expected in the first quarter of 2021.

The Members of the Board of Directors received cash compensation of CHF 1.009 million in the year under review (previous year: CHF 1.143 million). In addition, a total of 1’396 GF registered shares with a total market value of CHF 1.591 million were allocated (previous year: 1’501 GF shares with a market value of CHF 1.472 million). Together with other benefits, the total compensation paid to the Board of Directors in 2020 amounted to CHF 2.726 million (previous year: CHF 2.735 million).

The total compensation paid to the Board of Directors for the year 2020 was slightly lower compared with the previous year. Although the value of the shares increased (CHF 1’140.00 on 31 December 2020 compared with CHF 983.00 on 31 December 2019), the number of board members declined by one compared with the previous year, which contributed to a slightly lower compensation overall.

Except for the Board Vice-Chairmanship fee that was discontinued after the 2019 Annual Shareholders’ Meeting and the implementation of the Independent Lead Director fee in 2020, the compensation system for the Board of Directors was unchanged compared with the previous year.

At the 2019 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 2019 Annual Shareholders’ Meeting until the 2020 Annual Shareholders’ Meeting. For this period, the effective compensation amounted to CHF 2.774 million (based on a share value of CHF 983.00 for the period in 2019 and CHF 1’140.00 for the period in 2020) and is thus within the approved limits.

At the 2020 Annual Shareholders’ Meeting, shareholders approved a maximum aggregate compensation amount of CHF 3.450 million for the Board of Directors for the compensation period from the 2020 Annual Shareholders’ Meeting until the 2021 Annual Shareholders’ Meeting. This compensation period is not yet completed, a conclusive assessment will be provided in the 2021 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, pension contributions, and other compensation amounting to CHF 7.415 million for the year under review (previous year: CHF 7.488 million) compared with a total amount of CHF 10.531 million approved by the shareholders at the 2019 Annual Shareholders’ Meeting.

Under the LTI plan, 1’764 performance shares with a total value at grant of CHF 1.977 million were granted to Members of the Executive Committee for the year under review (previous year: 1’644 performance shares with a total value of CHF 1.628 million).

The total compensation for the CEO and the other Members of the Executive Committee in 2020 was lower than in 2019. The change in the compensation was due to the following factors:

The ratio between fixed and awarded variable compensation in 2020 was as follows:

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

The achievement of the business objectives for the 2020 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 at 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 2020, members of the Senior Management registered a total of 22’244 shares of Georg Fischer Ltd. A total of 39’737 Georg Fischer shares were held by the Board of Directors, the Executive Committee, and the Senior Management as of 31 December 2020, corresponding to 0.97% 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 2020, the members of the Executive Committee held no option rights for Georg Fischer registered shares.

In 2020, 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.