Notes to the consolidated financial statements

Information to the report

This section explains the basis for the preparation of the consolidated financial statements and provides a summary of the main general accounting principles as well as management assumptions and estimates.

Basis for the preparation of the consolidated financial statements

The consolidated financial statements of Georg Fischer Ltd (“GF”) have been prepared in accordance with all of the current guidelines of the Accounting and Reporting Recommendations (Swiss GAAP FER) and, furthermore, with the provisions of the Listing Rules of SIX Swiss Exchange and with Swiss company law. The consolidated financial statements are based on the financial statements of the GF Corporate Companies for the year ended 31 December, prepared in accordance with uniform corporate accounting principles.

Accounting policies

The consolidated financial statements have been prepared in accordance with the historical cost method with the exception of marketable securities and derivative financial instruments, which are measured at actual value. The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets, liabilities, and contingent liabilities at the balance sheet date. If in the future such estimates and assumptions, which are based on management’s best judgment at the balance sheet date, deviate from the actual circumstances, the original estimates and assumptions will be modified as appropriate in the year in which the circumstances change.

Changes in accounting principles

In the year under review, the Swiss GAAP FER accounting principles remained unchanged.

Scope and principles of consolidation

The scope of consolidation includes GF and all GF Corporate Companies, which GF controls directly or indirectly by either holding more than 50% of the voting rights or by otherwise having the power to control their operating and financial policies (GF and these GF Corporate Companies are also collectively referred to as the Corporation). These GF Corporate Companies are fully consolidated; assets, liabilities, income, and expenses are incorporated in the consolidated financial statements. Intercompany balances and transactions are eliminated upon consolidation. Non-controlling interests are presented as a component of consolidated equity in the consolidated balance sheet and consolidated net income in the consolidated income statement. Gains arising from intercompany transactions are eliminated in full. Capital consolidation is based on the purchase method, whereby the acquisition cost of a GF Corporate Company is eliminated at the time of acquisition against the fair value of net assets acquired, with the remainder recorded as goodwill that is subsequently offset against the equity of the Corporation. In the event of an increase in ownership in a GF Corporate Company, any difference between the purchase price and the acquired equity is recognized as goodwill.

Joint ventures in which the GF Corporation exercises joint control together with a joint venture partner are proportionately consolidated.

Companies in which GF has a non-controlling interest of at least 20% but less than 50%, or over which it otherwise has significant influence, are accounted for using the equity method and included in the consolidated financial statements as investments in associates. Investments with less than 20% voting rights are accounted for at fair value and presented under other financial assets.

Foreign currencies

GF Corporate Companies prepare their financial statements in their functional currency. Assets and liabilities held in other currencies are converted at the spot rate on the balance sheet date. Foreign exchange gains and losses resulting from transactions and from the conversion of balance sheet items into the functional currency are reported in the income statement.

The consolidated financial statements are prepared and presented in Swiss francs. For consolidation purposes, the financial statements of the GF Corporate Companies that report in another currency than Swiss francs are translated into Swiss francs as follows: balance sheets at year-end rates, income and cash flow statements at average rates for the year under review. Any translation differences resulting from the different translation of the balance sheets and income statements or from the translation of corporate loans with equity character denominated in foreign currencies are recognized in equity, including deferred tax. Upon the divestment of a foreign GF Corporate Company, the related cumulative exchange differences are recycled to the income statement.

Other valuation principles

Other relevant valuation principles, if relevant for the understanding of the valuation of the respective asset or liability, are reflected in the notes.

Management assumptions and estimates

The preparation of the consolidated financial statements requires management to make estimates and assumptions that could materially affect the financial position of the Corporation. The management of GF has identified the following assumptions and estimates to be of special relevance to the presentation of the consolidated financial statements:

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Management assumptions and estimates


Income taxes


Impairment of non-current assets


Impairment of intangible assets


Provisions for warranties and onerous contracts


Impairment of financial assets


Key figures not defined by Swiss GAAP FER

GF uses certain key figures to measure its performance that are not defined by Swiss GAAP FER. As these key figures are not defined by Swiss GAAP FER, there might be limited comparability to similar figures presented by other companies. In order to better explain these key figures, the following definitions are presented. In addition, the reconciliation of certain key figures can be found on the GF website for further explanation: 

Alternative Performance Measures (APMs)

“Order intake” refers to receiving or processing a customer’s order. It must only be recognized if a binding order or order confirmation is received.

“Orders on hand” at the end of the period equals orders on hand at the end of the previous period, plus the order intake of the reporting period minus gross sales of the reported period.

“Sales growth” refers to the growth in sales compared to the previous year period.

“Organic growth” refers to the growth in sales adjusted for the impacts from movements in foreign currencies as well as impacts from changes in the scope of consolidation compared to the previous year period.

“Gross value added” includes all operating income less cost of materials and products, changes in inventory, and operating expenses. As the subtotal “Gross value added” is an important key figure to GF, it is reported separately in the income statement.

“EBITDA” corresponds to the operating result (EBIT) before depreciation on tangible fixed assets and amortization on intangible assets.

“One-offs” refer to impacts arising from one-time occurrence of a specific transaction that is not expected to occur again in the future.

“EBIT before one-offs” correspond to the operating result (EBIT) before one-off transactions. It is defined as:

+/– Operating result (EBIT)
+ One-offs

“EBIT after taxes” corresponds to the operating result (EBIT) after current taxes. It is defined as: 

+/– Operating result (EBIT)
Current taxes

“Free cash flow” consists of cash flow from operating activities together with cash flow from investing activities and is reported separately in the cash flow statement. It is defined as: 

+/– Cash flow from operating activities
+/– Cash flow from investing activities

“Free cash flow before acquisitions/divestments” excludes the cash effective movements arising from acquisitions/divestments. It is defined as:

+/– Free cash flow
+/– Cash flow from acquisitions/divestments

“Net debt” describes the interest-bearing liabilities minus cash and cash equivalents and marketable securities. It is defined as:

+ Interest-bearing financial liabilities
Cash and cash equivalents
Marketable securities

“Net debt-to-EBITDA” ratio is a debt ratio that shows how many years it would take for GF to pay back its debt if “Net debt” and “EBITDA” are held constant. It is defined as: net debt divided by EBITDA.

“Equity ratio” shows how much of the Corporation’s assets are funded by equity. It is defined as: equity in relation to liabilities and equity.

“Return on equity (ROE)" represents the profitability on shareholders’ equity. It is defined as: net profit in relation to average shareholders’ equity incl. non-controlling interests. 

“Capital expenditures (Capex)" measures the addition in property, plant, and equipment.

“Net working capital (NWC)" is the difference between the Corporation’s current assets and current liabilities. It is defined as:

+ Inventories
+ Trade accounts receivable
+ Prepayments to creditors
Trade accounts payable
Prepayments from customers

“Invested capital (IC)" is an indicator that measures the total capital invested by shareholders, lenders and any other financing sources. It is defined as:

+/– Net working capital
+ Income taxes receivable
+ Other accounts receivable
+ Property, plant, and equipment for own use
+ Intangible assets
Current tax liabilities
Accrued liabilities and deferred income
Pension benefit obligations
Other liabilities

“Return on invested capital (ROIC)" measures the Corporation’s ability to efficiently use invested capital. It is defined as: EBIT after taxes divided by average invested capital multiplied by 100. The average invested capital is calculated by adding the invested capital at the beginning of the period to that at the end of the period and dividing the sum by two.

“Asset turnover” shows how frequently invested capital is turned over during the period under review. It is defined as: sales in relation to average invested capital.

“Research and Development” refers to innovative activities in developing new services or products, or improving existing services or products.