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Balance sheet

as per 31 December 2013

million CHFNotes2013 %2012%
Cash and cash equivalents 641 330 
Marketable securities 12 8 
Trade accounts receivable(3)568 524 
Inventories(4)647 630 
Income taxes receivable(5)6 5 
Other accounts receivable(6)63 62 
Prepayments to creditors 16 15 
Accrued income 13 10 
Assets held for sale(7)23   
Current assets 1 989641 58459
Property, plant and equipment for own use(8)965 923 
Investment properties(8)43 47 
Intangible assets(9)23 20 
Deferred tax assets(12)90 79 
Other financial assets(11)16 11 
Non-current assets 1 137361 08041
Assets 3 1261002 664100
Trade accounts payable 421 348 
Other financial liabilities(15)149 124 
Loans from pension fund institutions(15, 16)26 27 
Other liabilities(17)60 50 
Prepayments from customers 47 45 
Current tax liabilities(14)43 39 
Provisions(13)38 29 
Accrued liabilities and deferred income(18)175 177 
Liabilities held for sale(7)23   
Current liabilities 1 2824183931
Bonds(15)496 497 
Other financial liabilities(15)34 24 
Pension benefit obligations(16)128 124 
Other liabilities(17)46 45 
Provisions(13)120 116 
Deferred tax liabilities(12)42 40 
Non-current liabilities 8662884632
Liabilities 2 148691 68563
Share capital(19)41 41 
Share premium 60 121 
Treasury shares(21)–9 –5 
Retained earnings 843 778 
Equity attributable to shareholders of Georg Fischer Ltd 9353093535
Non-controlling interests 431442
Liabilities and equity 3 1261002 664100

The consolidated financial statements have been prepared in accordance with Swiss GAAP FER since the beginning of 2013.
Prior year figures have been adjusted accordingly (see Corporate accounting principles). 

Download the Notes to the consolidated financial statements

Income statement

for the year ended 31 December 2013

million CHFNotes2013 %2012%
Sales 3 7661003 720100
Other operating income(25)28 38 
Income 3 7941013 758101
Cost of materials and products –1 804 –1 859 
Changes in inventory of unfinished and finished goods –38 21 
Operating expenses(26)–658 –654 
Gross value added 1 294341 26634
Personnel expenses(27)–914 –915 
Depreciation on tangible fixed assets(8)–126 –125 
Amortization on intangible assets(9)–3 –4 
Operating result (EBIT) 25172226
Interest income(28)3 2 
Interest expense(28)–36 –35 
Other financial result(28)–12 –2 
Share of results of associates   1 
Ordinary result 20651885
Non-operating result(29)1 1 
Extraordinary result(30)–26 –16 
Profit before taxes 18151735
Income taxes(31)–36 –35 
Net profit 14541384
– Thereof attributable to shareholders of Georg Fischer Ltd 139 132 
– Thereof attributable to non-controlling interests 6 6 
Basic earnings per share in CHF(20)34 32 
Diluted earnings per share in CHF(20)34 32 

The consolidated financial statements have been prepared in accordance with Swiss GAAP FER since the beginning of 2013.
Prior year figures have been adjusted accordingly (see Corporate accounting principles). 

Download the Notes to the consolidated financial statements

Statement of changes in equity

for the year ended 31 December 2013

million CHFNotesShare capital Share premium Treasury shares Cumulative translation adjustmentsCash flow hedgingOther retained earningsRetained earnings Equity attributable to share- holders of Georg Fischer Ltd Non-controlling interestsEquity
Balance as per 31 December 2011 (according to IFRS) 41176 –289–11 2519611 178451 223
Adjustments Swiss GAAP FER (see Corporate accounting principles)  7–7289 –551–262–262 –262
Balance as per 1 January 2012 Swiss GAAP FER 41183–7 –170069991645961
Net profit      1321321326138
Translation adjustments recognized in the reporting period    –5  –5–5–1–6
Changes of cash flow hedges(10, 17)    –10 –10–10 –10
Goodwill offset via equity(2, 9)     –38–38–38 –38
Purchase of treasury shares(21)  –19    –19 –19
Disposal of treasury shares(21)  18    18 18
Share-related compensation(21, 32)  3    3 3
Dividends(19) –62     –62–6–68
Balance as per 31 December 2012 41121–5–5–1179477893544979
Net profit      1391391396145
Translation adjustments recognized in the reporting period    2  22–2 
Changes of cash flow hedges(10, 17)    –6 –6–6 –6
Goodwill offset via equity(2, 9)     –75–75–75 –75
Addition to non-controlling interests(2)        11
Purchase of treasury shares(21)  –9    –9 –9
Disposal of treasury shares(21) 12    3 3
Share-related compensation           
– Transferred for 2012(21, 32)  3    3 3
– Granted for 2013(21, 32)     555 5
Dividends(19) –62     –62–6–68
Balance as per 31 December 2013 4160–9–3–1786384393543978

The consolidated financial statements have been prepared in accordance with Swiss GAAP FER since the beginning of 2013.
Prior year figures have been adjusted accordingly (see Corporate accounting principles). 

Statement of cash flows

for the year ended 31 December 2013

million CHFNotes2013 2012
Net profit 145138
Income taxes(31)3635
Financial result(28)4535
Depreciation and amortization(8)129129
Impairment on property, plant and equipment(7, 8, 30)7 
Other non-cash income and expenses 423
Increase in provisions, net(13, 30)4321
Use of provisions(13)–24–25
Loss/profit from disposal of tangible fixed assets  16
Changes in   
– Inventories –18–22
– Trade accounts receivable 6–13
– Other receivables and accrued income –4–5
– Trade accounts payable 27–22
– Other liabilities and accrued liabilities and deferred income –13–14
Interest paid –31–32
Income taxes paid –43–34
Cash flow from operating activities 309230
Additions to   
– Property, plant and equipment(8)–130–132
– Intangible assets(9)–6–4
– Other financial assets –7 
Disposals of   
– Property, plant and equipment(8)43
– Other financial assets 21
Cash flow from acquisitions(2)–65–79
Cash flow from divestitures(2)–1–1
Interest received 21
Cash flow from investing activities –201–211
Free cash flow 10819
Purchase of treasury shares –9–19
Disposal of treasury shares 318
Dividend payments to shareholders of Georg Fischer Ltd –62–62
Dividend payments to non-controlling interests –6–6
Issuance of bonds(15)298 
Issuance of long-term financial liabilities(15)111
Repayment of long-term financial liabilities(15)–29–53
Changes in short-term financial liabilities 122
Cash flow from financing activities 207–99
Translation adjustment on cash and cash equivalents –4–2
Net cash flow 311–82
Cash and cash equivalents at beginning of year 330412
Cash and cash equivalents at end of year1  641330

1 Cash, postal and bank accounts: CHF 319 million (previous year: CHF 307 million), fixed-term deposits: CHF 322 million (previous year: CHF 23 million).

The consolidated financial statements have been prepared in accordance with Swiss GAAP FER since the beginning of 2013.
Prior year figures have been adjusted accordingly (see Corporate accounting principles).

Download the Notes to the consolidated financial statements

Notes to the consolidated financial statements

Contact us

Corporate Communications
Georg Fischer Ltd
Amsler-Laffon-Strasse 9
8201 Schaffhausen

kommunikation #at# georgfischer dot com

Corporate accounting principles

Accounting policies

General //

The consolidated financial statements of Georg Fischer Ltd have been prepared in accordance with the entire existing guidelines of Swiss GAAP FER (Generally Accepted Accounting Principles/FER = Fachempfehlung zur Rechnungslegung). The regulations of Swiss GAAP FER 31 “Complementary Recommendation for Listed Public Companies” have been early adopted. Furthermore, the accounting complies with the provisions of the listing rules of the 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.

Furthermore, the consolidated financial statements have been prepared in accordance with the purchase cost method with the exception of marketable securities, participations under 20%, and derivative financial instruments, which are measured at fair value. The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the date of the consolidated financial statements. If in the future such estimates and assumptions, which are based on management’s best judgment at the closing date, deviate from the actual circumstances, the original estimates and assumptions will be modified as appropriate in the year in which the circumstances change.

Adjustments as a result of the changeover in accounting principles //

Until 31 December 2012, GF had prepared its consolidated financial statements in accordance with IFRS (International Financial Reporting Standards). With the media release as per 15 May 2013 the switch from the accounting principles of the IFRS to those of Swiss GAAP FER as of the 2013 business year was announced. The following reasons triggered the decision to change the accounting standard:

1. The Chinaust group, a 50/50 joint venture of GF Piping Systems in China, is with approximately CHF 400 million of sales one of the largest entities of GF today. Its disclosure as equity investment according to the new IFRS 11 accounting standard would no longer give an accurate picture of GF in China. Under Swiss GAAP FER, GF will continue to consolidate the 50% share of Chinaust in its balance sheet and income statement. This better reflects the economic reality of GF.

2. The new IAS 19 revised standard calls for the inclusion of the over- or underfunding of pension funds in a company’s other comprehensive income. Swiss pension funds, however, are basically independent, and their performance is not linked to a company’s success. Adding or subtracting their under- or overcoverage would lead to considerable volatility in the equity of GF. Under Swiss GAAP FER, those fluctuations are to a large extent eliminated.

The accounting principles applied in the preparation and presentation of the 2013 consolidated financial statements deviate in the following essential points from the consolidated annual financial statements for 2012 prepared according to IFRS:

1. Goodwill from acquisitions
Goodwill from acquisitions as well as brandnames, customer relationships and technologies which are identified during the purchase price allocation and which are part of the goodwill under Swiss GAAP FER, are directly offset, as at the acquisition date, with retained earnings in equity in accordance with the allowed treatment under Swiss GAAP FER 30 “Consolidated Financial Statements”. Under IFRS, goodwill was capitalized and tested for its recoverable value annually. Brandnames, customer relationships and technologies under IFRS were separately capitalized and amortized over their estimated economic useful lives as part of the purchase price allocation. Under Swiss GAAP FER, transaction costs incurred in connection with acquisitions are treated as part of acquisition costs. Under IFRS transaction costs were booked to the income statement.

2. Employee benefit obligations
In accordance with Swiss GAAP FER 16 “Pension Benefit Obligations” an economical obligation or a benefit from Swiss pension schemes is determined from the statements made on the basis of Swiss GAAP FER 26 “Accounting of Pension Plans”. The economical impact from pension schemes of foreign subsidiaries is determined in accordance with the local valuation methods in effect. Employer contribution reserves and comparable items are capitalized in accordance with Swiss GAAP FER 16. Under IFRS, defined benefit plans were calculated in accordance with the projected unit credit method and recognized in accordance with IAS 19. Retirement provisions not directly linked to the obligations were reclassified to the provisions for personnel and social security in accordance with Swiss GAAP FER 16, paragraph 6. A review of this allocation after the midyear report 2013 lead to a subsequent reclassification from the provisions to the employee benefit obligations not affecting net income as per 31 December 2013 of CHF 13 million.

3. Derivative financial instruments
In accordance with Swiss GAAP FER 27 “Derivative Financial Instruments” derivatives are recognized on the balance sheet as soon as the definition of an asset or liability has been met. Under Swiss GAAP FER 27, there are no exceptional rules for own use contracts, wherefore those are recognized under Swiss GAAP FER. Own use contracts are commodity futures which are concluded for the purpose of an actual purchase or sale of goods or raw materials. The hedging of contractually agreed future cash flows is recognized in equity with no effect on the income statement in accordance with the allowed treatment under Swiss GAAP FER 27. Under IFRS, the exceptional rule for own use contracts was utilized. For hedging transactions that were not booked according to hedge accounting, fair value fluctuations were taken to the income statement under IFRS.

4. Deferred income taxes
The above-mentioned valuation and balance sheet adjustments have consequences for deferred income taxes in the balance sheet and income statement.

5. Translation differences
As a result of the switch to Swiss GAAP FER, accumulated translation differences are offset with retained earnings. Under Swiss GAAP FER, therefore, the result from divestitures only contains foreign exchange translation differences that have occurred after 1 January 2012.

Presentation and structure //

The presentation and structure of the balance sheet, income statement, statement of changes in equity, and statement of cash flows were adjusted to meet the requirements of Swiss GAAP FER.

The previous year was restated in order to ensure comparability with the presentation of the year under review.

With the adoption of the Swiss GAAP FER balance sheet structure, positions of the liabilities were relocated in the year under review. The respective previous year numbers have been adjusted accordingly. This reclassification did not affect net income and did not affect equity.

The implications of the above-mentioned adjustments for equity and the income statement of GF are summarized in the following table:

Adjustments equity

million CHF1 Jan. 201231 Dec. 2012
Equity according to IFRS1 2231 286
Adjustments according to Swiss GAAP FER  
Offset goodwill from acquisitions–194–216
Offset identified brandnames, customer relationships and technologies of purchase price allocation–27–44
Adjustment pension benefit obligations and provisions–60–59
Adjustment derivative financial instruments–19–37
Deferred tax assets and liabilities, net3849
Equity according to Swiss GAAP FER961979

Adjustments net profit

million CHF Jan. – Dec. 2012
Net profit according to IFRS 127
Adjustments according to Swiss GAAP FER  
Adjustment transaction costs from acquisitions 1
Adjustment amortisation intangible assets 4
Adjustment pension benefit obligations and provisions –2
Adjustment derivative financial instruments –1
Adjustment translation difference discontinued operations 10
Change deferred income taxes –1
Net profit according to Swiss GAAP FER 138

Definition of non-Swiss GAAP FER measures //

The subtotal “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 a major key figure for GF it is reported separately in the income statement.

“Free cash flow” consists of cash flow from operating activities and cash flow from investing activities together and is reported separately in the statement of cash flows.

“Free cash flow” is not only an important performance indicator for GF but is also a generally accepted and widely used performance figure in the financial sector.

Scope and principles of consolidation //

The scope of consolidation includes Georg Fischer Ltd and all Swiss and foreign Corporate Companies which the parent company, directly or indirectly, controls either by holding more than 50% of the voting rights or by having otherwise the power to govern their operating and financial policies. Those entities are fully consolidated, whereby assets, liabilities, income and expenses are incorporated in the consolidated accounts. Intercompany balances and transactions (accounts receivable, accounts payable, income and expenses) are eliminated upon consolidation. Non-controlling interests in the equity and net income of consolidated companies are presented separately but as a component of consolidated equity and consolidated net income respectively. Gains arising from intercompany transactions are eliminated in full. Capital consolidation is based on the acquisitions method, whereby the acquisition cost of a Corporate Company is eliminated at the time of acquisition against the fair value of net assets acquired, determined according to uniform corporate accounting principles.

Companies acquired are consolidated from the date on which control is obtained, while companies sold are excluded from the scope of consolidation as of the date on which control is given up, with any gain or loss recognized in income.

Joint ventures in which the GF Corporation exercises joint control together with a joint venture partner are treated according to the method of proportionate consolidation.

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

Sales and revenue recognition //

Billings for goods and services are recognized as sales when they are delivered or when the risks and benefits incidental to ownership are transferred. Assessing whether the principal risks and opportunities were transferred for a particular delivery is made separately for each sales transaction on the basis of the contractual agreement underlying the transaction. The transfer of legal ownership alone does not necessarily result in the transfer of the principal risks and opportunities. This is the case, for instance, if

  • the recipient of the delivery has a claim for insufficient quality of the item delivered that goes beyond the normal warranty claims
  • the receipt of the proceeds depends on the sale of the goods by the buyer
  • the installation of the goods at the recipient’s is an essential part of the contract
  • the buyer has the right to return the item for a contractually specified reason and the likelihood of such a return cannot be assessed with any certainty

Services rendered are booked as sales depending on the degree of their completion if the result of the service can be reliably assessed.

Sales are stated before value added tax, sales tax, and after any deduction of discounts and credits. Appropriate warranty provisions are recognized for anticipated claims.

Foreign currencies //

Corporate Companies prepare their financial statements in their functional currency. Monetary assets and liabilities held in foreign currencies are translated at the spot rate on the balance sheet date. Foreign exchange gains and losses resulting from transactions and from the translation of balance sheet items denominated in foreign currencies are reported in the income statement. Derivative financial instruments used to hedge such balance sheet items are stated at fair value. In hedging contractually agreed future cash flows (hedge accounting), the effective portion of changes in the derivative financial instruments’ fair value is recognized in equity with no effect on the income statement. An ineffective portion is therefore recognized in the income statement. As soon as an asset or liability results from the hedged underlying transaction, the gains and losses previously recognized in equity are derecognized and transferred at the same time with the valuation effect from the hedged underlying transaction to the income statement.

The consolidated financial statements are prepared and presented in Swiss francs. For consolidation purposes, the financial statements of the foreign entities 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 balance sheets and income statements or from the translation of equity-like corporate loans denominated in foreign currencies are recognized in equity. On divestment of a foreign subsidiary, the relevant cumulative exchange differences are transferred to the income statement.

Maturities //

Assets that are either realized or consumed in the course of the Corporation’s normal operating cycle within one year or held for trading are included in current assets. All other assets are included in non-current assets.

All liabilities that the Corporation intends to settle in the course of its normal operating cycle or that fall due within one year of the balance sheet date are included in current liabilities. All other liabilities are included in non-current liabilities.

Segment information //

In accordance with the management structure and the reporting made to the Executive Committee and the Board of Directors, the reportable segments are the three operating divisions GF Piping Systems, GF Automotive and GF Machining Solutions. GF Piping Systems develops, manufactures, and distributes piping systems for industry, utility and building technology. GF Automotive produces castings for the automotive industry. GF Machining Solutions develops, manufactures, and distributes electric discharge machines, milling machines, laser machines and automation solutions. GF Machining Solutions also provides services for these products. Business units within these segments have been aggregated as a single reportable segment because they manufacture similar products with comparable production processes and supply them to similar customer groups using similar distribution methods. Segment accounting is prepared up to the level of operating result (EBIT) because this is the key figure used for management purposes. All operating assets and liabilities that are directly attributable or can be allocated on a reasonable basis are reported in the respective divisions. No distinction is made between the accounting policies of segment reporting and those of the consolidated financial statements.

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 an original maturity of up to 90 days.

Marketable securities //

Marketable securities include investments held for trading and derivative financial instruments. Acquisitions and disposals are recognized on the trade date, rather than the settlement date. Heldfor- trading investments are stated at market value, unrealized gains and losses being recognized in the income statement and presented in the financial result.

Derivative financial instruments //

Derivative financial instruments are reported under marketable securities and other current liabilities respectively. Foreign currency and interest rate risks are hedged by the Corporation using forward foreign currency rate contracts, currency options, and swaps. Foreign currency risks related to highly probable future cash flows from sales in foreign currencies are hedged in particular with cash flow hedges.

Accounts receivable //

Short-term accounts receivable are stated at nominal value. Value adjustments for doubtful debts are established based on maturity structure and identifiable solvency risks. Besides individual value adjustments with respect to specific identifiable risks, value adjustments are also recognized based on statistically determined credit risks.

Inventories //

Goods held for trading are generally stated at average cost and internally manufactured products at manufacturing cost, including direct labor and materials used, as well as a commensurate share of related overhead costs. If the net realizable value is lower, valuation adjustments are made accordingly. Cash discount deductions are treated as purchase cost reduction. Inventories with an unsatisfactory turnover are partly or fully adjusted in value.

Property, plant and equipment //

Items of property, plant and equipment are stated at cost or manufacturing cost less depreciation and impairment. Borrowing costs for the financing of assets under construction are part of the costs of the asset if they are material. Assets acquired under finance lease contracts are capitalized at the lower of minimum lease payments and fair value. The related outstanding finance lease obligations are presented under liabilities. Assets are depreciated on a straight-line basis over their estimated useful lives or lease terms: investment properties and buildings 30 to 40 years, building components 8 to 20 years, machinery and production equipment 6 to 20 years and other equipment (vehicles, IT systems, etc.) 1 to 5 years. Assets under construction are usually not depreciated. Assets held under finance lease are described in the section “Leases”. Where components of larger assets have different useful lives, these components are depreciated separately. Useful lives and residual values are reviewed annually on the balance sheet date and any adjustments are recognized in the income statement. Any gains or losses on the disposal of items of property, plant and equipment are recognized in the income statement.

Intangible assets //

Acquired licenses, patents, and similar rights are capitalized and, with the exception of land use rights, are amortized on a straight-line basis over their estimated useful lives of 3 to 15 years. Land use rights are amortized over the duration of the usage rights granted. On this position useful lives are up to 50 years. Software is amortized on a straight-line basis over the estimated useful live of 1 to 5 years.

In the event of company acquisitions, goodwill at the date of acquisition is calculated as follows: the fair value of the net assets, plus transaction costs incurred in connection with the company acquisitions, plus the value of the minority interests in the acquired company, less the value of the acquired net assets carried on the balance sheet.

The positive or negative goodwill resulting from acquisitions is offset in equity at the date of acquisition against retained earnings. On the disposal of a portion of the company, the goodwill previously offset in equity is transferred to the income statement. If the purchase price contains elements that are dependent on future results, they are estimated as closely as possible at the date of acquisition and recognized in the balance sheet. In the event of disparities when the definitive purchase price is settled, the goodwill offset in equity is adjusted accordingly. The consequences of a theoretical capitalization and amortization of goodwill are explained in note 9.

Other financial assets //

Other financial assets mainly comprise loans to third parties, non-controlling interests of less than 20% held over the longer term and pension assets. Loans are stated at amortized cost less valuation adjustments; the related interest income is recognized using the effective interest method. Non-controlling interests are stated at their estimated fair value.

Liabilities //

Trade accounts payable as well as other liabilities are stated at nominal value.

Employee benefit plans //

Employee benefit plans in the Corporation comply with the legislation in force in each country. These plans are usually organized as foundations that are financially independent of the Corporation. Pension funds are generally financed by employee and employer contributions.

The economical impact of the employee benefit plans is assessed each year. Surpluses or deficits are determined by means of the annual statements of the particular benefit plan, which are based either on Swiss GAAP FER 26 for Swiss plans or on accepted methods in each foreign country for foreign plans. An economical benefit is capitalized if the surplus is used to reduce the employee contributions and in case this is permissible and intended. If employer contribution reserves exist, they are also capitalized. An economical obligation is recognized as a liability if the conditions for an accrual are met. They are reported under “Employee benefit obligations”. Changes in the economical benefit or economical obligation, as well as the contributions incurred for the period, are recognized in “Personnel expenses” in the income statement.

Provisions //

Provisions are recognized for any present obligation incurred as a result of a past event if it is probable that an outflow of resources will be required to settle the obligation and the amount can be estimated reliably.

Taxes //

Taxes are accrued for all tax obligations, irrespective of their due date. Current income taxes are calculated on the taxable profit. Deferred taxes are calculated by applying the balance sheet liability method for any temporary difference between the carrying amount according to Swiss GAAP FER and the tax basis of assets and liabilities. Tax loss carryforwards are recognized only to the extent that it is probable that future taxable profits or deferred tax liabilities will be available against which they can be offset. Calculation of deferred taxes is based on the country-specific tax rates. Tax assets and liabilities are offset if they concern the same taxable entity and tax authority and if there exists an offset entitlement for current taxes. No deferred tax is provided on temporary differences on investments in subsidiaries where the timing of the reversal of the temporary difference is controlled by the Corporation and it is probable that the temporary difference will not reverse in the foreseeable future.

Leases //

The present value of finance leases is recognized in the non-current assets and in the other financial liabilities on the balance sheet if the significant contractual risks and rewards have been transferred to the consolidated entity. Lease installments are divided into an interest and a redemption component based on the annuity method. Assets held under such finance leases are depreciated over the shorter of their estimated useful life and the lease term. Operating lease installments are charged to the income statement on a straight-line basis over the lease term.

Financial liabilities //

Financial liabilities comprise bank loans, mortgages, convertible and other bonds. They are carried at amortized cost. Borrowing costs are recognized in the income statement using the effective interest method with the exception of borrowing costs that can be allocated directly to the construction, build-up or purchase of a qualifying asset. These borrowing costs are capitalized as part of the costs of this asset.

Research and development //

All research costs are recognized in the income statement as incurred. Development costs are recognized as an asset only to the extent that the following specific recognition criteria are cumulatively met:

  • costs are clearly defined, clearly attributable to the product or process and can be separately identified and measured reliably
  • technical feasibility can be demonstrated
  • the company intends to produce and market or use the product or process
  • the existence of a market can be demonstrated
  • adequate resources exist or their availability can be demonstrated to complete the project and market or use the product or process
  • the amount recognized is recoverable through future cash flows

Impairment //

The recoverable amount of non-current assets (especially property, plant and equipment, intangible assets, financial assets as well as the goodwill reported in the sample accounting in note 9) is reviewed at least once a year. If there is any indication of an impairment, an impairment test is performed immediately. If the carrying amount exceeds the recoverable amount, an impairment loss is recognized in the income statement. As the goodwill is already offset with equity at the date of the acquisition an impairment of the goodwill does not affect the income statement but leads to a disclosure in the notes only.

Contingent liabilities //

Contingent liabilities are assessed on the basis of likelihood and the amount of the future liabilities and are disclosed in the notes.

Assets held for sale //

Assets and disposal groups are classified as “held for sale” if the asset’s carrying amount is to be recovered principally by a sales transaction rather than by a continued use.

For this purpose, such assets or disposal groups are recognized as a separate item in current assets. The assets are reclassified only if and when management has decided on the disposal and has begun to look for buyers. Moreover, the asset or disposal group must be available for immediate sale in its current condition, and it must be highly likely that the disposal will take place within a year.

Assets or disposal groups that are classified as “held for sale” are stated at the lower of carrying amount or fair value less costs to sell, and any impairments from the initial classification as “held for sale” are recognized in the income statement. Moreover, assets and disposal groups “held for sale” are no longer amortized on a straight-line basis from the time of reclassification. Current and deferred taxes paid on divestiture gains are to be reported as income tax expense.

Debt from the sale of assets held for sale is to be reported separately from other debt in the balance sheet and may not be offset against assets. The debt is carried at amortized cost.

Discontinued operations //

Discontinued operations are reported as soon as a part of the company with business activities and cash inflows and outflows that can be clearly delimited from the rest of the company operationally and for the purposes of accounting is classified as held for sale or has already been disposed of, and this part of the company either

  • represents a separate major line of business or geographical area of operations and
  • is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations and
  • represents an independet technology

The sales and the operating result (EBIT) from discontinued operations are disclosed separately in the notes. The disclosure includes the previous year figures (as if the operation had been disposed of at the beginning of the reference year).

Information in connection with the discontinued operation is set out separately in notes 2 and 30.

Treasury shares, share-related compensation and earnings per share //

Treasury shares are stated at cost as a separate minus position in equity. Gains or losses arising on the disposal of treasury shares are respectively credited to or deducted from the related share premium.

Share-related compensation to members of the Executive Committee and senior management are measured at fair value at the grant date and recognized as a personnel expense in the period in which the service is performed.

Earnings per share is calculated by dividing the portion of net income attributable to Georg Fischer Ltd shareholders by the weighted average number of shares outstanding in the reporting period. Diluted earnings per share take into account any potential shares that may result from exercised option or conversion rights.

Management assumptions and estimates

Significant accounting policies //

Preparation of financial statements requires management to make estimates and assumptions that could materially affect the consolidated financial statements of GF, particularly with regard to the items described below, should actual results differ from these management estimates and assumptions.

Impairment of non-current assets //

Non-current assets and intangible assets are reviewed whenever there are indications that, due to changed circumstances or events, their carrying amount may no longer be recoverable. If such a situation arises, the recoverable amount is determined on the basis of expected future inflows. It corresponds to either the discounted value of expected future net cash flows or the expected net selling price. If the recoverable amount is below the carrying amount, a corresponding impairment loss is recognized in the income statement. The main assumptions on which these measurements are based include growth rates, margins, and discount rates. The cash inflows actually generated can differ considerably from discounted projections. The carrying amounts and information regarding impairments of the items of property, plant and equipment and intangible assets affected are set out in notes 8 and 9.

Provisions for warranties and onerous contracts //

In the course of their ordinary operating activities, Corporate Companies can become involved in litigation. Provisions for pending legal proceedings are measured on the basis of the information available and a realistic estimate of the expected outflow of resources. The outcome of these proceedings may result in claims against the Corporation that cannot be met at all or in full through provisions or insurance cover.

If there are any contractual obligations for which the unavoidable costs of meeting the obligations under the contract exceed the expected economic benefits to be received (e.g. onerous delivery contracts), provisions for the agreed quantities over the whole or prudently estimated period are made. These provisions are based on management assumptions. The carrying amounts of these provisions are set out in note 13.

Income taxes //

Current tax liabilities are measured on the basis of an interpretation of the tax regulations in place 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 can result in material changes to tax expense. Furthermore, in order to determine whether tax loss carryforwards may be carried as an asset, it is first necessary to critically assess the probability that there will be future taxable profit against which to offset them. This assessment depends on a variety of influencing factors and developments. The carrying amounts of current and deferred tax assets and liabilities are disclosed in the consolidated balance sheet.

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Risk management

Enterprise risk management as a fully integrated risk management process was systematically applied in 2013 on all levels of the Corporation. The three divisions, the corporate staff, and all important corporate companies semi-annually prepared a risk map elaborating on the most important 25 to 30 risks with regard to the topics strategy, markets, operations, management and resources, financials as well as sustainability. The structure of the likelihood was classified into four categories. Whenever possible and suitable, the risks listed were quantified taking into consideration already planned and executed measurements. Alternatively, a qualification of the risk exposure was applied.

The Risk Council, consisting of representatives of the divisions and the corporate staff and headed by the Chief Risk Officer met for two meetings and dealt with the following topics: implementation of a new reporting tool, business continuity management, aggregation and correlation of risks, coordination of all activities in the area of enterprise risk management, and analysis of risk maps.

In accordance with the semi-annually risk reporting process, the Executive Committee and the management of the divisions discussed the risk maps twice during the year under review. They defined the top risks of the Corporation and the divisions and determined adequate measures to mitigate the risks. The Board of Directors is going to deal with enterprise risk management in February 2014, thus comparing its own risk map with the risk assessment of the Executive Committee.

The stepwise procedure, including workshops on the levels of division management, Executive Committee and Board of Directors, has proven to be very effective. Additionally, having the internal audit assessing risk maps prepared by Corporate Companies clearly leads to a raise of the reporting quality.

The following were identified as main risks: lack of achievement of strategic financial targets 2015, loss of reputation due to break down of important production site or insufficient product quality, and dependency of the Corporation on the European market and on the changing market environment.

Clear measures in order to reduce the risk exposure of the above mentioned as well as other identified risks were defined and are in the process of execution. They are in line with strategic targets of the three divisions and the Corporation.

Financial risk management

The Board of Directors bears ultimate responsibility for financial risk management. The Board has tasked the Audit Committee with monitoring the development and implementation of the risk management principles. The Audit Committee reports regularly to the Board on the current status.

The risk management principles are geared to identifying and analyzing the risks to which the Corporation is exposed and to establishing the appropriate control mechanisms. The principles of risk management and the processes applied are regularly reviewed, taking due regard of changes in the market and in the Corporation’s activities. The ultimate goal is to develop controls, based on the existing training and management guidelines and processes, that ensure a disciplined and conscious approach to risks. The Audit Committee is supported by the Head of Finance & Controlling in this task.

Owing to its business activities, GF is exposed to various financial risks such as credit risk, market risk (including currency, interest rate and price risk), and liquidity risk. The following sections provide an overview of the extent of the individual risks and the goals, principles and processes employed for measuring, monitoring and hedging the financial risks.

Credit risk

The credit risk is the risk of suffering financial loss if a customer or counterparty of a financial instrument fails to meet its contractual obligations. At GF the main credit risks arise from trade accounts receivable and bank deposits.

GF invests his cash worldwide and predominantly as deposits in leading Swiss and German banks with at least a single A rating. In accordance with the investment policy of GF, these transactions are entered into only with credit-worthy commercial institutions. As a general rule, the investments have a maturity of less than three months. Besides, Corporate Companies hold current bank accounts. Cash is allocated on several banks to limit counterparty risk.

Transactions involving derivative financial instruments are also entered into only with important financial institutions with at least a single A rating. The purpose of such transactions is to hedge against currency risks and price fluctuations for the purchase of raw materials and electric power for the Corporation.

The danger of cluster risks on trade accounts receivable is limited due to the large number and wide geographic spread of customers. The extent of the credit risk is determined mainly by the individual characteristics of each customer. Assessment of this risk involves a review of the customer’s credit-worthiness based on his financial situation and past experience. In monitoring default risk, customers are classified according to relevant factors such as geographic location, sector, and past financial difficulties.

The maximum credit risk on financial instruments corresponds to the carrying amounts of the relevant financial assets. GF has not entered into appreciable guarantees or similar obligations that would increase the risk over and above the carrying amounts. The maximum credit risk as per balance sheet date was as follows:

million CHF2013 2012
Cash and cash equivalents641330
Other accounts receivable1 2326
Accrued income1310
Trade accounts receivable568524
Derivative financial instruments95
Other financial assets2 1410
Total1 268905

1 Without tax credits.
2 Relates to loans to third parties, security deposits, and long-term invested securities for the settlement of pension liabilities. 

Market risk

Market risk is the risk that changes in market rates and prices, e.g. exchange rates, interest rates, or share prices, may have an impact on the profit and market value of financial instruments held by GF. The aim of managing such market risks is to monitor and control these risks in order to ensure that they do not exceed a defined limit.

Currency risk

Owing to its international activities, GF is exposed to currency risks. These financial risks occur in connection with transactions (in particular the purchase and sale of goods) which are effected in currencies different from the functional currency of the company in question. Such transactions are effected mainly in Swiss francs, euros and US dollars.

Currency risks can be reduced by purchasing and producing goods in the functional currency (“congruency” rule). In some cases, US dollars or euros are hedged for a maximum of twelve months by means of currency futures.

The fair value hedges relate to foreign currency forward rate contracts, which serve to hedge loans to Corporate Companies in foreign currencies. Unrealized gains and losses from changes to fair value are reported for these contracts in the financial result. The fair value hedges also include foreign currency forward rate contracts which serve to hedge currency risks on receivables. Like the currency effects on the underlying balance sheet item, gains and losses from changes to the fair value of these contracts are recognized in “Other operating income”.

The cash flow hedges serve to hedge currency risks on future sales in foreign currencies. The volume of the foreign currency forward rate contracts is limited to maximal 67% of the expected sales. This volume limitation results in 100% effectiveness. Unrealized gains and losses from changes to fair value are recognized directly in equity. They are transferred to the income statement when the service is performed and invoiced; as a result, the foreign currency forward rate contracts become fair value hedges.

The table below shows the contract values and market values of the foreign currency forward rate contracts (net) as per balance sheet date:

Foreign currency forward rate contracts, net

million CHFFair value hedgesCash flow hedges2013 2012
Contract value23119250239
Replacement value1 –7–2–9–5
Market value22417241234

1 Corresponds to the carrying amount recognized as marketable securities.

The fair value hedges cover not only US dollar contracts but also contracts for the Japanese yen and the other currencies. All open foreign currency forward rate contracts fall due and have an effect on liquidity and the income statement within six months after the balance sheet date. Assuming unchanged exchange rates, a cash outflow of CHF 241 million (gross) would be offset by a cash inflow of CHF 250 million (gross), giving a positive replacement value of CHF 9 million. Cash flow hedges account for cash outflows of CHF 17 million and cash inflows of CHF 19 million.

Contract values, net by currencies

million CHF2013 2012
Interest rate risk

The interest rate risk may involve either changes in future interest payments owing to fluctuations in market interest rates or the risk of a change in market value, i.e. the risk that the market value of a financial instrument will change owing to fluctuations in market interest rates.

Market value sensitivity analysis for interest-bearing financial instruments with a fixed interest rate: Market value fluctuations of fixed-interest financial instruments are not recognized in the Corporation’s income statement. Therefore, a change in interest rates would not have any effect on the income statement. “Hedge accounting” was not applied for interest rate hedging.

Cash flow sensitivity analysis for financial instruments with variable interest rates: A one percentage point increase in interest rates would have increased net income by CHF 5.3 million (previous year: CHF 0.3 million). A reduction in the interest rate by the same percentage would have reduced net income by a significantly lower amount, because the actual interest rate level lies considerably below one percent, and an interest yield below zero percent is not expected. The underlying assumption for this analysis is that all other variables remain unchanged.

Price risk

The securities held for trading of CHF 3 million are exposed to price risks (on the stock market). Since the value of the securities held for trading is modest, there is no great sensitivity to changes in share prices. The shares held are those of Swiss blue chip companies.

Liquidity risk

The liquidity risk is the risk that GF is unable to meet his obligations when they fall due.

Liquidity is constantly monitored to ensure that it is adequate. Liquidity reserves are held in order to offset the usual fluctuations in requirements. At the same time, the Corporation has unused credit lines in case more serious fluctuations occur. The total amount of unused credit lines as per 31 December 2013 was CHF 482 million. The credit lines are spread over several banks so that there is no excessive dependence on any one institution.

The following tables show the contractual maturities (including interest rates) of the financial liabilities held by GF at the end of the reporting period and in the previous year: 

million CHFCarrying amountCon-tractual cash flowsUp to 6 months6 to12 months1 to 5 yearsMore than 5 years
Trade accounts payable421421421   
Other liabilities current/non-current1 106106519451
Accrued liabilities and deferred income175175175   
Other financial liabilities18319412136325
Total1 681 1 770 775 365 465 165
million CHFCarrying amountCon-tractual cash flowsUp to 6 months6 to12 months1 to 5 yearsMore than 5 years
Trade accounts payable348348348   
Other liabilities current/non-current9595428441
Accrued liabilities and deferred income177177177   
Other financial liabilities148155864029 
Total1 265 1 329 660 62 606 1

1 For more details see note 17.

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Report of the Statutory Auditor

As statutory auditor, we have audited the consolidated financial statements of Georg Fischer Ltd, which comprise the consolidated balance sheet, consolidated income statement, consolidated statement of changes in equity, consolidated statement of cash flow and notes (pages 60 to 106), for the year ended 31 December 2013. 

Board of Directors’ responsibility

The Board of Directors is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with Swiss GAAP FER and the requirements of Swiss law. This responsibility includes designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation 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. 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 the assessment 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 the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate 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 the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 


In our opinion, the consolidated financial statements for the year ended 31 December 2013 give a true and fair view of the financial position, the results of operations and the cash flows in accordance with Swiss GAAP FER and comply with Swiss law.

Report on other legal requirements

We confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act (AOA) and independence (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 internal 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.

PricewaterhouseCoopers Ltd 


Stefan Räbsamen
Audit expert
Auditor in charge

Zurich, 14 February 2014


Diego J. Alvarez
Audit expert

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Georg Fischer Ltd
Amsler-Laffon-Strasse 9
8201 Schaffhausen

kommunikation #at# georgfischer dot com