Notes to the Consolidated Financial Statements

1. Basic information and principles of the report

2. Changes in Group structure

3. Summary of significant accounting policies

4. Risk assessment and management

5. Management of capital

6. Marketable securities

7. Trade accounts receivable

8. Other current assets and current financial assets

9. Inventories

10. Property, plant and equipment

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

12. Goodwill and intangible assets

13. Short-term debt

14. Other current provisions and liabilities

15. Long-term debt

16. Derivative financial instruments

Where required, the Group hedges foreign currency exchange rate and interest rate risks using derivative financial instruments according to the treasury policy. This policy and the corresponding accounting policies for the Group’s derivative financial instruments are disclosed in Notes  3 and  4. As of December 31, 2014 and 2013, the following derivative financial instruments were outstanding:

a) Contingent FX Forward Transactions

The following instruments were used to hedge foreign exchange rate risks arising from the acquisition of the Sanitec Group (purchase price hedging):

2014 Maturity Strike price Contract amount buy Contract amount sell Fair value 31.12. Calculation method
      MSEK MCHF/
MEUR
MCHF  
SEK buy/CHF sell 31.08.2015 7.3560 3900.0 -530.2 -33.7 Mark-to-Market
SEK buy/EUR sell 31.08.2015 8.9263 4830.0 -541.1 -34.9 Mark-to-Market

These instruments were designated as a cash flow hedge according to IAS 39.86 et seq. The change in fair value is recognized in the Consolidated Statements of Comprehensive Income.

b) Interest rate swaps

The following instruments were used to hedge interest rate risks arising from the financing of the Sanitec Group acquisition (fixation of the interest rate up to the point of bond take-out):

2014 Trade date Effective date Termination date Notional amount Fixed rate (payer Geberit) Floating rate (receiver Geberit) Fair value 31.12. Calculation method
        MCHF/
MEUR
% % MCHF  
Interest rate
swap CHF
20.11.2014 29.01.2015 29.01.2019 150.0 0.1020 6 M CHF-
 LIBOR
-0.8 DCF1
Interest rate
swap EUR
20.11.2014 29.01.2015 29.01.2021 250.0 0.5622 6 M EUR-
EURIBOR
-2.1 DCF1

These instruments were designated as a cash flow hedge according to IAS 39.86 et seq. The change in fair value is recognized in the Consolidated Statements of Comprehensive Income.

c) Cross Currency Interest Rate Hedges

The following instrument was used to hedge foreign exchange rate risks arising from the intercompany financing of subsidiaries:

2014 Maturity Strike price Contract amount buy Contract amount sell Fair value 31.12. Interest rate % Interest rate % Calculation method
      MCHF MUSD MCHF CHF USD  
CHF buy/USD sell 18.12.2015 1.03345 17.6 -17.0 0.8 0.00 0.80 DCF1

The cross currency interest rate swap (CHF buy/USD sell) for MUSD 17.0 was not designated as a cash flow hedge according to IAS 39.86 et seq. The change in fair value of the instrument is recognized directly in the financial result, net.

2013 Maturity Strike price Contract amount buy Contract amount sell Fair value 31.12. Interest rate % Interest rate % Calculation method
      MCHF MUSD MCHF CHF USD  
CHF buy/USD sell 18.12.2014 1.03345 20.7 -20.0 2.9 0.00 0.50 DCF1
1 Discounted Cash Flow

The cross currency interest rate swap (CHF buy/USD sell) for MUSD 20.0 was not designated as a cash flow hedge according to IAS 39.86 et seq. The change in fair value of the instrument is recognized directly in financial result, net.

d) Forward foreign exchange contracts and foreign exchange options

  Contract values Fair value 31.12.   Calculation method
2014 MCZK MEUR MNOK MGBP MPLN MDKK MCHF    
Foreign exchange contracts -7.6 0.0 0.0 -1.2 0.0 -3.0 0.0   Mark-to-Market
                   
                   
2013 MCZK MEUR MNOK MGBP MPLN MDKK MCHF    
Foreign exchange contracts 0.0 -29.0 -3.0 -0.5 -2.5 0.0 0.0   Mark-to-Market

The change in fair value of the instruments is booked in financial result, net.

17. Retirement benefit plans

18. Participation plans

19. Deferred tax assets and liabilities

20. Other non-current provisions and liabilities

21. Contingencies

22. Capital stock and treasury shares

23. Earnings per share

24. Other operating expenses, net

25. Financial result, net

26. Income tax expenses

27. Research and development expenditures

28. Cashflow figures

29. Segment reporting

30. Related party transactions

31. Foreign exchange rates

32. Subsequent events

33. Additional disclosures on financial instruments

34. Group companies as of December 31, 2014