Annual Report 2016

Notes to the Consolidated Financial Statements

1. Basic information and principles of the report

The Geberit Group is an international company that focuses on the sanitary industry and, specifically, the areas of sanitary technology and bathroom ceramics. The Group's product range consists of the Sanitary Systems, Piping Systems and Sanitary Ceramics product areas. Worldwide, the vast majority of its products are sold through the wholesale channel. Geberit sells its products in 122 countries. The Group is present in 49 countries with its own sales employees.

The consolidated financial statements include Geberit AG and all companies under its control (“the Group” or “Geberit”). The Group eliminates all intra-group transactions as part of the Group consolidation process. A company is consolidated for the first time or deconsolidated from the date on which the Group exercises or loses control over the company.

The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (“IFRS”).

The term “MCHF” in these consolidated financial statements refers to millions of Swiss francs, “MEUR” refers to millions of euros, “MGBP” refers to millions of British pounds sterling and “MUSD” refers to millions of US dollars. The term “shareholders” refers to the shareholders of Geberit AG.

In 2016, all functions (production, marketing and sales, R&D, corporate functions) of the Sanitec Group acquired in 2015 were integrated fully into the Geberit Group’s functional business model. Among other things, the Sanitec sales organisations were decoupled from the individual Sanitec companies and merged with the corresponding Geberit sales companies. As a result, there is no longer any profit responsibility and information at the level of the group that was originally acquired. The same is true of earlier acquisitions. Management thus no longer monitors the goodwill items at the level of the original cash generating units, but rather at Group level. This also fits in with the current reporting structure. Consequently, the original cash generating units (CGU) were combined into a single CGU and only a single goodwill item is now tested for impairment. The disclosure made in Note 11 was adjusted accordingly.

Main sources of estimation uncertainty

The preparation of consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the balance sheet date, and the reported amounts of revenues and expenses during the reporting period. Actual results can differ from estimates. Estimates and assumptions are continually reviewed and based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the prevailing circumstances.

Important estimates and assumptions (with the related uncertainties) were primarily made in the following areas:

  • Impairment tests for goodwill and intangible assets with an indefinite useful life (see Note 11)
  • Capitalisation of development costs (see Note 27)
  • Assumptions for the recognition of defined benefit pension plans (see Note 16)
  • Valuation of deferred tax assets and liabilities (see Note 3)

2. Changes in Group structure

3. Summary of significant accounting policies

4. Risk assessment and management

5. Management of capital

6. Trade accounts receivable

7. Other current assets and current financial assets

8. Inventories

9. Property, plant and equipment

10. Other non-current assets and non-current financial assets

11. Goodwill and intangible assets

12. Short-term debt

13. Other current liabilities and provisions

14. Long-term debt

15. Financial instruments

16. Retirement benefit plans

17. Participation plans

18. Deferred tax assets and liabilities

19. Other non-current liabilities and provisions

20. Contingencies

21. Capital stock and treasury shares

22. Earnings per share

23. Other operating expenses, net

24. Financial result, net

25. Income tax expenses

26. Operating Leasing

27. Research and development cost

28. Cashflow figures

29. Segment reporting

30. Related party transactions

31. Foreign exchange rates

32. Subsequent events

33. Group companies as of December 31, 2016