Financial Report

AFG 

Annual Report 

2011 

Financial 

Report 

Consolidated 

Financial Statements 

AFG Arbonia- 

Forster-Group 


AFG Arbonia- 

Forster-Holding AG 

101 

Commentary on the Financial Figures 102 

Consolidated Income Statement 108 

Consolidated Statement of Comprehensive Income 109 

Consolidated Balance Sheet 110 

Consolidated Cash Flow Statement 111 

Consolidated Statement of Changes in Equity 112 

Notes to the Consolidated Financial Statements 113 

Report of the Statutory Auditors on the Consolidated Financial Statements 172 

Income Statement 176 

Balance Sheet 177 

Notes to the Financial Statements 178 

Proposal of the Board of Directors 183 

Report of the Statutory Auditors on the Financial Statements 184

AFG 


2011 

Commentary 

on the Financial 

Figures 

102 

Currency situation hits hard 

The consolidated revenue posted by AFG stagnated adjusted 

for currency and acquisition effects over the past 

year in comparison with 2010. In real terms, however, it 

fell by 4.7 % to CHF 1347.4 million (2010: CHF 1413.5 

million). Like many other industrial enterprises, AFG was 

adversely affected by the unfavourable exchange rate 

situation. At the same time, problems of capacity utilisation 

had a negative effect on revenue. 

Once again, the two home markets, Switzerland and Germany, underpinned 

business activity, with the construction market remaining solid in 

both countries. However, the withdrawal of investment grants in Germany 

and a greater reluctance among investors in all markets due to the 

uncertainties on the financial markets had a negative impact on sales. 

Review of business portfolio puts a strain on income statement 

The company-wide review of the business portfolio's strategic focus carried 

out in the summer of 2011 and the problems already mentioned 

caused impairments in the amount of CHF 73.0 million, leading to a 

Group result of CHF − 70.2 million (2010: CHF 14.2 million). Without 

these one-time effects, AFG would have posted a small Group profit of 

CHF 4.5 million (2010: CHF 27.2 million).

AFG 


2011 

AFG in transition. 

This is reflected by the 

financial figures. But 

this transition has at its 

core a very solid financial 

foundation. 

Felix Bodmer 

Chief Financial Officer 

Commentary on the Financial Figures 

103

AFG 


2011 


104 

After a good start, AFG ended the 2011 financial year clearly short of 

expectations, even though there are some good reasons for this. Mention 

must be made of the challenging currency situation caused by the 

strong Swiss franc, which not only disadvantaged the divisions and business 

units that export out of Switzerland (Steel Technology, Surface 

Technology) but also increased the import pressure on products manufactured 

abroad under euro conditions (Kitchens). Economic growth 

weakened over the course of the year, leading to 2011 being regarded 

as a year of two very different halves. While AFG posted growth of 6.2 % 

adjusted for currency and acquisition effects in the first six months of 

2011, it recorded a 5.0 % decline over last year in the second half, despite 

this period traditionally being stronger. The withdrawal of investment 

grants in Germany undoubtedly played a part in this trend. Once again, 

it became clear that human resources cannot adapt quickly enough to 

changes in sales and production volumes despite flexible working hours 

and short-time working. Coupled with the strong Swiss franc, this led to 

high personnel costs. The programmes designed to cut material costs 

and other operating expenses helped to somewhat compensate for the 

increased pressure on prices and margins in these categories. 

During the 2011 financial year, EBITDA fell to CHF 100.2 million (2010: 

CHF 121.1 million), or 7.4 % of net revenue (2010: 8.6 %). Even without 

the one-time factors, there was only a slight improvement to CHF 102.4 

million (7.6 % of net revenue). With the aforementioned impairments in 

the Heating Technology and Sanitary Equipment, Steel Technology, and 

Surface Technology Divisions and in Corporate Services, EBIT amounted 

to CHF − 34.3 million (2010: CHF 47.5 million). Adjusted for one-time 

factors, EBIT stands at CHF 40.9 million or 3.0 % of net revenue, coming 

in right at the bottom of our expected range. 

Net financial expenses rose slightly over last year, due mainly to the payment 

for the full year on the CHF 200 million debenture bond. Financial 

result was also adversely affected by the strength of the Swiss franc in 

the 2011 financial year. Tax expenses increased as a result of the many 

companies reporting loss carryforwards, with question marks remaining 

regarding their future utilisation.

AFG 


2011 


105 

Net indebtedness further reduced 

As of 31 December 2011, AFG's total assets had fallen to CHF 1271.0 

million (2010: CHF 1388.2 million), primarily due to impairments. On the 

assets side, non-current assets in particular were reduced with the necessary 

measures, whereas on the liabilities side, shareholders' equity 

decreased. This resulted in the equity ratio falling just below the 40 % 

mark for the first time since 2009, reaching 38.9 % on the balance sheet 

date (2010: 41.8 %). In view of the planned restructuring of its portfolio, 

AFG is expecting the equity ratio to climb back inside the target corridor 

of 40 to 50 % relatively quickly. With liquid funds of CHF 249.6 million, 

AFG remains on a sound financial footing. 

Despite the difficulties faced in the first half of the year and sluggish 

revenue growth in the second half, AFG still managed to generate a 

marginally positive free cash flow (cash flow from operating and investing 

activities) in the 2011 financial year. This figure fell from CHF 59.7 

million in the previous year to CHF 12.8 million, mainly because, as 

planned, capital expenditures rose again and are back to a normal level 

in comparison to the last two years. Net working capital was kept more 

or less constant in the 2011 financial year. As in the previous year, free 

cash flow was boosted by the sale of properties deemed non-essential 

to operations. Net indebtedness fell slightly to CHF 167.5 million (2010: 

CHF 169.4 million). As of 31 December 2011, therefore, all key financial 

performance indicators, especially the leverage ratio (net indebtedness 

divided by EBITDA), were comfortably met. 

Felix Bodmer 

Chief Financial Officer

AFG 


2011 

Consolidated 

Financial 

Statements 

AFG Arbonia- 

Forster-Group 

107

AFG 


2011 

Consolidated 

Income Statement 

Consolidated Financial Statements AFG Arbonia-Forster-Group 

108 

2011 2010 

Note in 1000 CHF in % in 1000 CHF in % 

Net revenues 31 1 347 385 100.0 1 413 540 100.0 

Other operating income 20 736 1.5 24 662 1.8 

Capitalised own services 

Changes in inventories 

3 627 0.3 3 202 0.2 

of semi-finished and finished goods 

− 3 345 − 0.2 4 140 0.3 

Net operating performance 1 368 403 101.6 1 445 544 102.3 

Cost of material and goods − 605 266 − 44.9 − 635 931 − 45.0 

Personnel expenses − 470 262 − 34.9 − 489 828 − 34.6 

Other operating expenses − 192 709 − 14.3 − 198 685 − 14.1 

EBITDA 100 166 7.4 121 100 8.6 

Depreciation, amortisation and impairments 37 – 39 − 134 506 − 10.0 − 73 603 − 5.2 

EBIT 31 − 34 340 − 2.5 47 497 3.4 

Financial income 50 4 925 0.4 1 838 0.1 

Financial expenses 50 − 28 258 − 2.1 − 23 882 − 1.7 

Group result before income tax − 57 673 − 4.3 25 453 1.8 

Income tax expense 51 − 12 544 − 0.9 − 11 297 − 0.8 

Group result − 70 217 − 5.2 14 156 1.0 

Attributable to: 

Shareholders of 

AFG Arbonia-Forster-Holding AG 

− 70 239 

14 136 

Non-controlling interests 22 20 

Earnings per share in CHF 

Basic and diluted earnings are identical. 

47 − 3.98 0.80 

The notes on pages 113 to 171 are an integral part of these consolidated financial statements.

AFG 


2011 

Consolidated Statement 

of Comprehensive Income 


109 

2011 2010 

Note in 1000 CHF in 1000 CHF 

Group result − 70 217 14 156 

Other comprehensive income 

Fair value adjustments on cash flow hedges − 985 1 542 

Deferred tax effect on cash flow hedges 77 − 120 

Currency translation differences − 5 140 − 27 947 

Other comprehensive income after taxes 49 − 6 048 − 26 525 

Total comprehensive income − 76 265 − 12 369 

Attributable to: 

Shareholders of 

AFG Arbonia-Forster-Holding AG 

− 76 287 

− 12 389 



AFG 


2011 

Consolidated 

Balance Sheet 


110 

31 / 12 / 2011 31 / 12 / 2010 

Note in 1000 CHF in % in 1000 CHF in % 

Assets 

Cash and cash equivalents 32 249 601 263 318 

Securities 2 697 2 541 

Accounts receivable 33 109 937 123 154 

Other current assets 17 522 19 996 

Inventories 34 181 647 184 564 

Deferred expenses 12 133 9 649 

Current income tax receivables 2 783 708 

Financial assets 35 710 618 

Non-current assets held for sale 36 3 976 677 

Current assets 581 006 45.7 605 225 43.6 

Property, plant and equipment 37 539 862 587 627 

Investment property 38 9 860 19 034 

Intangible assets 39 40 403 70 529 

Goodwill 39 57 454 59 395 

Deferred income tax assets 45 8 313 10 698 

Capitalised pension surplus 46 32 302 34 775 

Financial assets 35 1 778 901 

Non-current assets 689 972 54.3 782 959 56.4 

Total assets 

Liabilities and shareholders' equity 

1 270 978 100.0 1 388 184 100.0 

Accounts payable 97 234 93 278 

Advance payments by customers 47 443 42 490 

Other liabilities 23 664 22 569 

Financial debts 41 19 911 14 434 

Finance lease liabilities 37 1 541 2 607 

Accruals and deferred income 52 059 53 645 

Current income tax liabilities 9 185 15 411 

Provisions 44 15 385 30 340 

Current liabilities 266 422 21.0 274 774 19.8 

Financial debts 41 397 435 416 374 

Finance lease liabilities 37 1 677 2 658 

Other liabilities 114 81 

Provisions 44 10 901 12 062 

Deferred income tax liabilities 45 54 322 53 661 

Employee benefit obligations 46 44 580 47 949 

Non-current liabilities 509 029 40.0 532 785 38.4 

Total liabilities 775 451 61.0 807 559 58.2 

Share capital 47 76 547 76 547 

Share premium 171 364 180 191 

Treasury shares 48 − 24 574 − 24 574 

Other reserves 49 − 65 105 − 59 057 

Retained earnings 

Shareholders' equity attributable to equity 

336 532 406 771 

holders of AFG Arbonia-Forster-Holding AG 

494 764 38.9 579 878 41.8 


Shareholders' equity 495 527 39.0 580 625 41.8 

Total liabilities and shareholders' equity 1 270 978 100.0 1 388 184 100.0 


AFG 


2011 

Consolidated 

Cash Flow Statement 


111 

2011 2010 

Note in 1000 CHF in 1000 CHF 

Group result − 70 217 14 156 

Depreciation, amortisation and impairments 36 – 39 134 506 73 603 

Profit on disposal of non-current assets − 520 − 6 233 

Changes in non-cash transactions 

Changes in working capital 

2 947 − 9 334 

(excluding cash and cash equivalents) 

11 137 

− 9 040 

Changes in current liabilities − 11 000 20 740 

Cash flows from operating activities – net 

To investment activities 

66 853 83 892 

Purchases of property, plant and equipment 37 − 66 913 − 38 513 

Purchases of investment properties 36 / 38 − 43 − 83 

Purchases of intangible assets 39 − 1 208 − 1 682 

Acquisition of subsidiaries (net of cash acquired) 40 − 508 

Issuance of financial assets 

From divestment activities 

Proceeds from sale of property, plant 

− 2 359 − 335 

and equipment 

7 443 

1 928 

Proceeds from sale of investment properties 36 / 38 8 996 14 400 

Repayment of financial assets 489 93 

Cash flows from investing activities – net 

From financing activities 

− 54 103 − 24 192 

Proceeds from financial debts 

To financing activities 

29 199 607 

Repayments of financial debts − 13 983 − 112 268 

Finance lease liability payments − 3 466 − 2 819 

Distribution from capital contribution reserves − 8 827 

Dividends − 6 − 6 

Cash flows from financing activities – net 

Effects of translation differences on cash 

− 26 253 84 514 

and cash equivalents 

− 214 

− 2 943 

Change in cash and cash equivalents 

Reconciliation of change in cash 

and cash equivalents 

− 13 717 141 271 

Cash and cash equivalents as of 01/01 32 263 318 122 047 

Cash and cash equivalents as of 31/12 32 249 601 263 318 

Change in cash and cash equivalents − 13 717 141 271 

Supplementary information for operating activities: 

Interest paid 18 827 15 098 

Interest received 1 576 616 

Income tax paid 14 532 15 186 


AFG 


2011 

Consolidated 

Statement 

of Changes 

in Equity 

Note 


Share 

capital 

in 

1000 CHF 

Share 

premium 

in 

1000 CHF 

Treasury 

shares 

in 

1000 CHF 

Other 

reserves 

in 

1000 CHF 

Retained 

earnings 

in 

1000 CHF 

Attributable 

to 

equity 

holders 

AFG 

in 

1000 CHF 

Noncontrolling 

interests 

in 

1000 CHF 

112 

Total 

shareholders' 

equity 

in 

1000 CHF 

Balance at 31/12/2009 76 547 180 191 − 24 574 − 32 532 392 284 591 915 733 592 648 

Group result 

Other comprehensive 

14 136 14 136 20 14 156 

income after taxes 

Total comprehensive 

49 

− 26 525 

− 26 525 

− 26 525 

income 

− 26 525 14 136 − 12 389 20 − 12 369 


Share based payments 54 351 351 351 

Balance at 31/12/2010 76 547 180 191 − 24 574 − 59 057 406 771 579 878 747 580 625 

Group result 

Other comprehensive 

− 70 239 − 70 239 22 − 70 217 

income after taxes 

Total comprehensive 

49 

− 6 048 

− 6 048 

− 6 048 

income 

Distribution from 

capital contribution 

− 6 048 − 70 239 − 76 287 22 − 76 265 

reserves 

47 

− 8 827 

− 8 827 

− 8 827 


Balance at 31/12/2011 76 547 171 364 − 24 574 − 65 105 336 532 494 764 763 495 527 


AFG 


2011 


113 

Notes to the Consolidated Financial Statements 

A Accounting principles 

1 General information 

AFG Arbonia-Forster-Group (AFG) has leading positions in the European construction 

supply industry and in selected technology markets. AFG is divided into five 

main divisions, namely Heating Technology and Sanitary Equipment, Kitchens and 

Refrigeration, Windows and Doors, Steel Technology and Surface Technology. 

Manufacturing plants are located in Switzerland, Germany, the Czech Republic, 

France, the UK, Slovakia, the United States and China (under construction). AFG 

owns major brands such as Kermi, Arbonia, Prolux, Aqualux, Forster Kitchens, 

Forster Refrigeration, Warendorf, Piatti, EgoKiefer, RWD Schlatter, Slovaktual, 

Forster Precision Steel Tubes, Forster Profile Systems and STI|Hartchrom and possesses 

a strong position in its home markets in Switzerland and Germany. Taking 

into consideration the economic trend, international activities especially in the 

Middle and Far East as well as in Eastern Europe are gaining importance for the 

Group. With around 50 production and distribution companies, agencies and 

partners of its own, AFG is represented in over 70 countries worldwide. 

The ultimate parent company, AFG Arbonia-Forster-Holding AG is a corporation 

organised under Swiss law incorporated and domiciled at Amriswilerstrasse 50, 

CH-9320 Arbon (Canton Thurgau). AFG Arbonia-Forster-Holding AG is listed on 

the SIX Swiss Exchange in Zurich under the valor number 11024060 / ISIN 

CH0110240600. 

These consolidated financial statements have been approved for issue by the 

Board of Directors of AFG Arbonia-Forster-Holding AG on 16 February 2012 and 

require approval from the Annual General Meeting on 20 April 2012. The publication 

of the consolidated financial statements occurred on 6 March 2012 at the 

media and analyst conference. 

2 General principles and basis of preparation 

The consolidated financial statements of AFG have been prepared in accordance 

with International Financial Reporting Standards (IFRS), issued by the International 

Accounting Standards Board (IASB). 

The preparation of financial statements in accordance with IFRS requires the 

use of certain critical accounting estimates and assumptions. It also requires management 

to exercise its judgement in the process of applying the Group's accounting 

policies. Areas involving a higher degree of judgement or complexity, or 

areas where assumptions and estimates are significant to the consolidated financial 

statements, are disclosed in note 30. 

Amendments to significant published standards and interpretations 

In 2011, AFG adopted the following amended standards and new or amended 

interpretations, which were mandatory for annual periods beginning on or after 

1 January 2011: 

– Amendments to IAS 32 “Financial instruments: disclosure” – classification of 

rights issues 

– Amendment to IFRIC 14 “The limit on a defined benefit asset, minimum 

funding requirements and their interaction” – prepayments of minimum 

funding requirements 

– IFRIC 19 “Extinguishing financial liabilities with equity instruments” 

– Annual improvement project to IFRS 2010 

The amendment of IFRIC 14 was already applied when this interpretation first was 

adopted by AFG in 2008. Employer's contribution reserves feature a real economic 

benefit by way of reductions in future contributions and as a consequence 

AFG continued to fully capitalise those contributions. The adoption of the other 

standards and interpretations did not significantly affect the Group's financial 

statements.

AFG 


2011 



114 

Published standards and interpretations that are not yet effective 

nor adopted early 

The following published but as of the balance sheet date not yet effective significant 

new or amended standards have not yet been adopted by AFG: 

– Amendments to IAS 1 “Presentation of financial statements” – presentation 

of items of other comprehensive income 

– Amendments to IAS 12 “Taxes” – exception for investment property at fair 

value 

– Amendments to IAS 19 “Employee benefits” 

– IAS 27 revised “Separate financial statements” 

– IAS 28 revised “Investments in associates and joint ventures” 

– Amendments to IAS 32 “Financial instruments; presentation” 

– Amendments to IFRS 7 “Financial instruments; disclosure” – transfers of 

financial assets and offsetting financial assets and financial liabilities 

– Amendments to IFRS 9 “Financial instruments” – mandatory effective date 

of IFRS 9 and transition disclosures 

– IFRS 9 “Financial instruments: classification and measurement” 

– IFRS 10 “Consolidated financial statements” 

– IFRS 11 “Joint arrangements” 

– IFRS 12 “Disclosure of interests in other entities” 

– IFRS 13 “Fair value measurement” 

AFG will adopt these standards no later than the required effective dates. 

The amendments to IAS 19 effective from 1 January 2013 primarily remove 

the corridor approach. All actuarial gains and losses have to be recognised immediately 

in other comprehensive income. The net interest expense / income 

replaces the previously calculated interest cost on the defined benefit obligation 

and expected return on plan assets and is calculated on the net amount of the 

defined benefit obligation and plan assets using the discount rate. The net 

amount charged for defined benefit plans to the income statement is allocated 

to personnel expenses and financial results. Since AFG applies the corridor method 

under IAS 19, the amendment of this standard will impact the Group's financial 

statements. A higher volatility is therefore expected on capitalised pension surplus 

and employee benefit obligation as well as within shareholders' equity. Because 

of a changed calculation on the basis of net interest expense / income, 

charges for defined benefit plans tend to be higher than under the current standard. 

Had the amendments to IAS 19 already been applied for the 2011 financial 

year, the immediate recognition of all actuarial gains and losses would have lowered 

shareholders' equity as of 31 December 2011 by CHF 45.6 million and the 

charge for defined benefit plans would have been higher by CHF 3.0 million. 

IFRS 9 introduces new principles for the classification and measurement of 

financial assets and liabilities. IFRS 13 replaces the fair value measurement guidance 

contained in individual IFRSs with a single source of fair value measurement 

guidance and extends the disclosure requirements. It is not expected that these 

two as well as the other above mentioned standards will significantly affect the 

Group's financial statements. AFG will soon assess the impact of these standards 

on its financial statements.

AFG 


2011 



3 Reporting entity 

115 

The consolidated financial statements are based on the financial statements of 

the individual Group companies prepared as of 31 December. Subsidiaries are 

fully consolidated from the date on which control is transferred to AFG (generally 

where the interest in votes and share capital is more than 50 %). They are 

deconsolidated from the date that control ceases. 

Investments in associated companies, over which AFG exercises significant 

influence but does not control, are accounted for using the equity method. A 

significant influence is generally assumed by a shareholding of between 20 % to 

50 % of the voting rights. 

The following material changes occurred in the Group: 

In the financial year 2011 

– As of 14 April 2011, 100 % of the shares of Avia Peintures Sàrl, FR-Pau, were 

acquired (see note 40). 

In the financial year 2010 

– None 

An overview of the material Group companies is included in note 58. 

4 Full consolidation 

In line with the full consolidation method, 100 % of all balance sheet and income 

statement items are included in the consolidated financial statements. Intercompany 

transactions, balances and unrealised gains on transactions between Group 

companies are eliminated. 

Minority interests are disclosed in the balance sheet as part of shareholders' 

equity. The result attributable to minority interests in the income statement forms 

part of the Group result for the period. 

5 Capital consolidation 

Subsidiaries are fully consolidated from the date on which control is transferred 

to AFG. The purchase method of accounting is used to account for the acquisition 

of subsidiaries. The cost of an acquisition is measured as the fair value of the assets 

given and liabilities incurred or assumed at the date of exchange. The excess 

of the cost of acquisition over the fair value of the Group's share of the identifiable 

net assets acquired is recorded as goodwill. Contingent considerations are 

measured at fair value as a cost of the acquisition. Directly attributable acquisition-related 

costs are expensed. 

If the cost of acquisition is less than the fair value of the net assets of the 

subsidiary acquired, the difference is recognised directly in the income statement. 

Companies which are sold are deconsolidated from the date that control 

ceases. The difference between the consideration received and the net assets is 

recognised in the income statement as other operating income / expenses.

AFG 


2011 



B Summary of significant accounting policies 

6 Significant accounting policies 

116 

The principal accounting policies applied in the preparation of these consolidated 

financial statements are set out below, from notes 7 to 29. 

These policies have been consistently applied to all the years presented, unless 

otherwise stated. Balance sheet items are generally stated at cost as modified 

by the revaluation of financial instruments at fair value through profit or loss. 

7 Foreign currency translation 

Functional and presentation currency 

Items included in the financial statements of each Group company are measured 

using the currency of the primary economic environment in which the company 

operates (the functional currency). The consolidated financial statements are presented 

in Swiss francs (CHF). 

Transactions and balances 

Foreign currency transactions are translated into the functional currency using the 

exchange rate prevailing at the dates of the transactions. Foreign exchange gains 

and losses resulting from the settlement of such transactions and from the translation 

at year-end exchange rates of monetary assets and liabilities denominated 

in foreign currencies are recognised in the income statement, except when deferred 

in comprehensive income as qualifying cash flow hedges and qualifying net 

investment hedges. 

Group companies 

The results and financial position of all the Group companies that have a functional 

currency different from the presentation currency are translated into the 

presentation currency as follows: 

Assets and liabilities for each balance sheet presented are translated at the 

closing rate at the date of that balance sheet. Income and expenses for each income 

statement as well as the cash flow statements are translated at average 

exchange rates. All resulting exchange differences are recognised as a separate 

component of comprehensive income under other reserves. 

Exchange differences arising on intercompany loans of an equity nature that 

essentially form part of the company's net investment in the foreign entity are 

classified in comprehensive income under other reserves. 

Goodwill and fair value adjustments arising on the acquisition of a foreign 

entity are treated as assets and liabilities of the foreign entity and are translated 

at the closing rate. 

When a foreign operation is sold, exchange differences that were recorded in 

comprehensive income are recognised in the income statement as part of the gain 

or loss on sale.

AFG 


2011 



The following foreign currency rates have been applied: 

Currency Unit 2011 

Year-end rate 

2011 

Average rate 

2010 

Year-end rate 

117 

2010 

Average rate 

EUR 1 1.2176 1.2337 1.2507 1.3820 

GBP 1 1.4551 1.4223 1.4492 1.6100 

USD 1 0.9391 0.8877 0.9366 1.0428 

CZK 100 4.7194 5.0243 4.9908 5.4670 

PLN 100 27.5675 29.9759 31.5809 34.6361 

CNY 100 14.9200 13.7200 14.2100 15.3975 

8 Maturities 

Assets realised or consumed within 12 months in the ordinary course of business 

or held for trading purposes are classified as current assets. All other assets are 

classified as non-current assets. 

Liabilities to be redeemed in the ordinary course of business, held primarily 

for the purpose of trading, falling due within 12 months from the balance sheet 

date or do not have an unconditional right to defer settlement of the liability for 

at least 12 months after the balance sheet date are classified as current liabilities. 

All other liabilities are classified as non-current liabilities. If a binding commitment 

to extend an expiring financial liability has been received as of the balance sheet 

date, the new maturity is also taken into account in the classification. 

9 Financial instruments 

A financial instrument is a transaction that results in the creation of a financial 

asset for one party and simultaneously in the creation of a financial liability or 

equity instrument for the other party. 

Financial assets are divided into the following four categories: (1) financial 

assets at fair value through profit or loss (FA FVTPL), with this category being 

subdivided into financial assets classified from the beginning as held for trading 

purposes (trading) and financial assets classified from the beginning as at fair 

value through profit or loss (designated), (2) loans and receivables (L&AR), (3) financial 

assets held to maturity (HTM), and (4) financial assets available-for-sale 

(AFS). The classification in the balance sheet depends on the purpose for which 

the financial assets have been acquired. Management determines the classification 

on the occasion of the initial reporting and reviews the classification as of 

each balance sheet date. In concrete terms, the financial assets of AFG comprise 

cash and cash equivalents (category 2), securities (1), trade accounts receivable 

(2), other assets (2), loans (2), financial assets available-for-sale (4) and originated 

and derivative financial assets held for trading purposes (1). 

Financial assets are initially measured at fair value. Transaction costs directly 

attributable to the acquisition are also reported with respect to all financial assets 

not carried at fair value through profit or loss in subsequent periods. Fair values 

in the balance sheet, as a rule, correspond to the market prices of the financial 

assets.

AFG 


2011 



118 

Purchases and sales constituting a financial asset are reported in the balance 

sheet as of the execution date and are eliminated when the right to receive payments 

has lapsed or been transferred and AFG has surrendered control of the 

same, i.e. when the related opportunities and risks have been transferred or expired. 

As of each balance sheet date, the book values of financial assets not to be 

carried at fair value through profit or loss are reviewed as to whether there is any 

objective evidence indicating an impairment in relation to an asset or group of 

assets. Any impairment charges are reported through the income statement if the 

book value exceeds the fair value. 

Changes in market value with respect to financial assets available-for-sale 

are reported in comprehensive income without affecting income. A loss relating 

to a permanent impairment or a sale of the financial asset of which accumulated 

gains and losses were previously reported in comprehensive income are transferred 

to the income statement and included in the financial result for the reporting 

period. To the extent that the fair value cannot be reliably determined with 

respect to non-listed equity instruments, these are valued at cost less necessary 

impairments. 

Financial liabilities constitute a claim to redemption in the form of cash or 

cash equivalents or of another financial asset. Financial liabilities are divided into 

the following two categories: (1) financial liabilities at fair value through profit or 

loss (FL FVTPL), with this category being subdivided into financial liabilities classified 

from the beginning as held for trading purposes (trading) and financial liabilities 

classified from the beginning as at fair value through profit or loss (designated), 

and (2) financial liabilities at amortised cost (FL AC). In concrete terms, the 

financial liabilities of AFG comprise trade accounts payable (category 2), other 

liabilities (2), finance lease liabilities (2), financial debts (2) and derivative financial 

liabilities (1). 

With respect to financial liabilities, AFG has not exercised the option to designate 

these as financial liabilities at fair value through profit or loss on the occasion 

of their initial reporting in the balance sheet. 

Financial assets and financial liabilities are normally reported on a gross basis. 

They are only reported on a net basis if there is a right of offset and an intent to 

settle on a net basis. 

10 Derivative financial instruments 

The Group uses derivative financial instruments to minimise interest rate and 

foreign exchange risks resulting from operational business and financial transactions. 

They are initially recognised at fair value on the date a derivative contract 

is entered into and are subsequently remeasured at their fair value. 

The method of recognising the resulting gain or loss depends on whether 

the derivative is designated as a hedging instrument, and if so, the nature of the 

item being hedged. The Group designates certain derivatives as a highly probable 

forecast transaction (cash flow hedge). 

The Group documents at the inception of the transaction the relationship 

between hedging instruments and hedged items, as well as its risk management 

objectives and strategy for undertaking various hedge transactions. The Group 

also documents its assessment, both at hedge inception and on an ongoing basis, 

of whether the derivatives that are used in hedging transactions are highly effective 

in offsetting changes in fair values or cash flows of hedged items. The effective 

portion of changes in the fair value of derivatives that are designated and 

qualify as cash flow hedges along with the related changes in deferred taxes are 

recognised in comprehensive income. The fair value of the hedging derivative is 

classified as financial asset or financial debt. The gain or loss relating to the ineffective 

portion is immediately recognised in the income statement.

AFG 


2011 



119 

Amounts accumulated in comprehensive income are recycled in the income statement 

in the periods when the hedged item affects profit or loss. When a hedging 

instrument expires or is sold, or when a hedge no longer meets the criteria for 

hedge accounting, any cumulative gain or loss existing in comprehensive income 

at that time remains in comprehensive income and is recognised when the forecast 

transaction is ultimately recognised in the income statement. When a forecast 

transaction is no longer expected to occur, the cumulative gain or loss that 

was reported in comprehensive income is immediately transferred to the income 

statement. 

Derivative financial instruments that do not meet the requirements of IAS 39, 

e.g. documentation, probability, effectiveness and reliability of measurement and 

therefore do not qualify for hedge accounting are held for trading financial instruments. 

They are classified as financial instruments at fair value through profit or 

loss and disclosed in the balance sheet as other current assets or other current 

liabilities. 

11 Fair value estimation of financial instruments 

The fair value of financial instruments traded in active markets (such as publicly 

traded derivatives and securities) is based on quoted market prices at the balance 

sheet date. The quoted market price used for financial assets is the current bid 

price, for financial liabilities the current asking price. 

The fair value of financial instruments that are not traded in an active market 

is determined by using appropriate valuation techniques, e.g. comparison with 

similar at arm's length transactions, valuation using the discounted cash flow 

method or other established valuation methods. 

Financial instruments measured at fair value are disclosed under the following 

hierarchy: 

Level 1 – quoted prices in active markets for identical assets or liabilities. 

Level 2 – inputs other than quoted prices included within level 1 that are 

observable for the asset or liability, either directly or indirectly (derived 

from prices). 

Level 3 – unobservable market data. 

Due to its current nature, the nominal value less estimated allowance of accounts 

receivable is assumed to approximate their fair value. The nominal value of accounts 

payable is assumed to approximate their fair value. The fair value of financial 

liabilities disclosed in the notes is estimated by discounting the future contractual 

cash flows at the current market interest rate that is available to the 

Group for similar financial instruments. 

12 Cash and cash equivalents 

Cash and cash equivalents includes cash on hand, deposits held at call with post 

and banks, other short-term highly liquid investments with original maturities not 

exceeding three months.

AFG 


2011 



13 Securities 

120 

Securities within current assets are marketable and easily disposable securities. 

Furthermore are time deposits with maturities of between 4 to 12 months classified 

therein. Marketable securities are carried at fair value through profit or loss, 

based on market prices obtained from the banks. Changes in fair value are recorded 

and disclosed in the income statement under financial results. Time deposits 

with maturities of between four to twelve months are carried at face value. 

As of the balance sheet date, AFG did not hold any time deposits or securities, 

such as bonds or similar items, with the intention of holding to maturity. 

14 Receivables 

Accounts receivable and other current assets are recognised initially at fair value 

and subsequently measured at amortised cost using the effective interest method, 

less provision for impairment. A provision for impairment of accounts receivable 

is established when there is objective evidence that AFG will not be able to 

collect all amounts due. The carrying amount of the asset is reduced through the 

use of an allowance account. When an account receivable is uncollectible, it is 

written off against the allowance account for accounts receivable. In connection 

with a factoring agreement certain accounts receivable are sold. Since AFG neither 

transfers nor retains substantially all the risks and rewards of ownership and 

still retains control, the receivables have to be recorded in the balance sheet to 

the extent of the so-called continuing involvement as stipulated under the provision 

of IAS 39. In particular the late payment risk is completely retained by AFG 

up until a certain point in time. Other current assets include WIR credits. They are 

carried at fair value, which approximates face value less an appropriate provision. 

15 Inventories 

Inventories are stated at the lower of cost and net realisable value. Cost is determined 

using the weighted average cost method based on normal operating capacity. 

It excludes borrowing costs. Net realisable value is the estimated selling 

price in the ordinary course of business, less applicable variable selling expenses. 

Claimed cash discounts are treated as a reduction of cost. Items with a low turnover 

rate are depreciated and obsolete items are fully written off. 

16 Non-current assets held for sale 

Non-current assets held for sale are classified as such if their carrying amount will 

be recovered principally through a sale transaction, not through continuing use. 

These assets are stated at the lower of carrying amount and fair value less costs 

to sell. Potential impairments are directly recorded within the income statement. 

17 Property, plant and equipment 

Land is stated at cost. Buildings, plant, machinery and other equipment are stated 

at cost less depreciation. Depreciation is calculated using the straight-line 

method based on estimated useful lives as stipulated under note 21. 

Impairments (see also note 20) are separately disclosed under accumulated 

depreciation. Repair and maintenance costs are expensed.

AFG 


2011 



18 Investment property 

121 

Investment property, principally comprising land and buildings, is held for longterm 

rental yields or appreciation and is predominantly rented to third parties. 

Investment property is carried at cost less accumulated depreciation and any 

accumulated impairment losses. Depreciation is calculated using the straight-line 

method. 

The fair value of investment property is determined using the discounted 

cash flow method. Based on attainable net rental income (gross rental income 

minus operating costs and future refurbishment costs), the discounted cash flows 

are calculated for the next 10 years with a residual value for the time thereafter. 

The fair value of undeveloped land is determined by considering current local 

market conditions. The fair value of land with buildings and undeveloped land of 

acquired subsidiaries is determined by external valuers. The fair value of certain 

other undeveloped land has been estimated internally. 

19 Intangible assets 

Intangible assets include goodwill, which represents the excess of the cost of an 

acquisition over the fair value of the Group's share of the net identifiable assets 

of the acquired subsidiary at the date of acquisition. Goodwill is seen as an intangible 

asset with an indefinite useful life. Impairment on goodwill (see note 20) is 

separately disclosed under accumulated impairment losses. 

Intangible assets comprise purchased computer software and licenses at 

costs incurred. They are measured at cost less accumulated amortisation, calculated 

using the straight-line method based on estimated useful lives as stipulated 

under note 21. 

Intangible assets acquired in a business combination (trademarks, patents, 

technologies, client relationships, distribution channels, etc.) are carried at fair 

value less accumulated amortisation, calculated using the straight-line method 

based on estimated useful lives as stipulated under note 21. 

Expenses relating to research activities are directly charged to the income 

statement in the period in which they are incurred. Development costs are capitalised 

at acquisition cost or production cost and reported under intangible assets 

if all criteria under IAS 38 have been met on a cumulative basis, including evidence 

of technical and economic feasibility, evidence of expected future economic benefit 

and attributability of costs and their reliable valuation. They are amortised 

over the expected useful life on the basis specified in note 21. Development costs 

not meeting the criteria under IAS 38 are directly charged to the income statement 

in the period in which they are incurred. 

20 Impairment of assets 

Assets subject to amortisation and depreciation, such as property, plant and 

equipment, other non-current assets and intangible assets with a definite useful 

life are reviewed for impairment whenever events or changes in circumstances 

indicate that the carrying amount may not be recoverable. Assets that have an 

indefinite useful life, such as goodwill, are tested annually for impairment. An 

impairment loss is recognised for the amount by which the asset's carrying 

amount exceeds its recoverable amount. The recoverable amount is the higher of 

its fair value less costs to sell and its value in use. The value in use is based on 

discounted future cash flows. The applied discount rate is a pre-tax rate using the 

weighted average cost of capital (WACC) method. For the purpose of assessing 

impairment, assets are grouped at the lowest levels for which there are separately 

identifiable cash flows (cash-generating units – CGU).

AFG 


2011 



21 Estimated useful lives 

122 

Asset categories Useful lives 

(in years) 

Office buildings 35 – 60 

Factory buildings 25 – 40 

Investment properties – buildings 25 – 50 

Production machinery 8 – 20 

Transport and storage equipment 8 – 15 

Intangible assets from business acquisitions except goodwill 5 – 20 

Vehicles 5 – 10 

Tools and moulds 5 

Office furniture and equipment up to 5 

IT-hardware up to 5 

Capitalised research and development costs up to 5 

Intangible assets (mainly IT-software) up to 5 

Land is not systematically depreciated. 

22 Provisions 

Provisions are recognised only when AFG has a present legal or constructive obligation 

as a result of past events, the amount has been reliably estimated and it 

is more likely than not that an outflow of resources will be required to settle the 

obligation. 

Provisions for restructuring are only recognised when costs for such a programme 

can be reliably estimated by virtue of a detailed formal plan and AFG has 

a legal or constructive obligation or has raised a valid expectation in those affected. 

Provisions are measured at the present value of the expenditures expected 

to be required to settle the obligation. The increase in provision due to passage 

of time is recognised as interest expense. 

23 Employee benefit obligations 

AFG manages various pension plans within Switzerland and abroad. The plans are 

funded through payments to trustee-administered funds or insurance companies 

or are unfunded arrangements. 

Based on their characteristics the pension plans qualify under IAS 19 as 

defined benefit plans. A defined benefit plan is a pension plan that defines an 

amount of pension benefit that an employee will receive on retirement, usually 

dependent on one or more factors such as age, years of service and compensation. 

The liability recognised in the balance sheet to pay future retirement benefits 

is determined using the projected unit credit method, which is the present value 

of the defined benefit obligation at the balance sheet date less the fair value of 

plan assets, together with adjustments for unrecognised actuarial gains or losses 

and past service costs. The present value of the defined benefit obligation is determined 

by discounting the estimated future cash outflows using interest rates 

of high-quality bonds. Actuarial valuations are carried out on a regular basis by 

independent actuaries. Actuarial gains or losses arising from experience adjustments 

and changes in actuarial assumptions in excess of the greater of 10 % of 

the value of plan asset or defined benefit obligation are charged or credited to 

the income statement over the employees' expected average remaining working 

lives. 

Prepaid contributions (e.g. employer contribution reserves) are disclosed as 

capital pension surplus. Other surplus from pension plans is recognised as an asset 

to the extent that a cash refund or a reduction in future payments is available.

AFG 


2011 



24 Financial debts 

123 

Current and non-current financial debts consist mainly of a bond, private placements, 

syndicated loans, bank loans and mortgages. Financial debts are initially 

recognised at fair value, net of transaction costs incurred. They are subsequently 

stated at amortised cost. Any difference between the proceeds (net of transaction 

costs) and the redemption value is recognised in the income statement over the 

period of the financial debt, using the effective interest method. 

25 Leases 

Leases of property, plant and equipment where AFG has substantially all the risk 

and rewards of ownership are classified as finance leases. Finance leases are 

capitalised at the lease's inception at the lower of the fair value of the leased 

asset and the present value of the minimum lease payments. The corresponding 

rental obligations, net of finance charges, are included in finance lease liabilities. 

Property, plant and equipment acquired under finance leases is depreciated over 

the shorter of the assets' useful lives and the lease term unless there is reasonable 

certainty that ownership will be obtained by the end of the lease term. 

Payments made under operating leases are charged on a straight-line basis 

over the term of the lease to the income statement as other operating expenses. 

26 Deferred income tax 

Deferred income tax is provided in full, using the liability method, on temporary 

differences arising between the tax bases of assets and liabilities and their carrying 

amounts in the consolidated financial statements. However, the deferred income 

tax is not accounted for if it arises from initial recognition of an asset or 

liability in a transaction other than a business combination that at the time of the 

transaction affects neither accounting nor taxable profit or loss. Deferred income 

tax is determined using tax rates that have been enacted by the balance sheet 

date. Deferred income tax is provided on temporary differences arising on investments 

in subsidiaries, except where the timing of the reversal of the temporary 

difference is controlled by AFG and it is probable that the temporary difference 

will not reverse in the foreseeable future. 

Deferred income tax assets including unused tax loss carryforwards are recognised 

to the extent that it is probable that future taxable profit will be available 

against which the temporary differences can be utilised. 

The book value of capitalised deferred income tax assets is assessed for 

impairment at each balance sheet date and a loss is recognised in case of insufficient 

future taxable profit. 

27 Share-based payment 

Group Management and certain employees participate in a share-based payment 

plan. The fair value of the equity compensation instruments granted to employees 

is estimated at the grant date and recorded over the service period to the income 

statement as personnel expenses. The allocation will occur for the first time in 

2012 for the 2011 financial year. 

AFG managed until 21 November 2010 for a member of Group Management 

a share-based payment plan, which compensates by issuing treasury registered 

shares. The fair value of these registered shares was determined based on the 

then official closing price of the AFG Arbonia-Forster-Holding AG bearer shares 

at the day of grant. A deduction was granted due to a lack of marketability of the 

registered shares as well as for the extended endorsement retention period of 

those shares. The difference between the fair value and the pre-determined purchase 

price was charged over the service period to the income statement as 

personnel expenses with a corresponding entry in equity under other reserves. 

The payment of the pre-determined purchase price was recorded in equity under 

treasury shares.

AFG 


2011 



28 Shareholders' equity 

124 

The share premium relates to the Company going public back in 1988 and the 

capital increases in 2007 and 2009. 

Treasury shares are deducted from shareholders' equity. The cost of these 

treasury shares and the consideration received from the sale of these instruments 

(net of transaction cost and taxes) are recorded directly in shareholders' equity. 

29 Income statement 

Net revenue 

Net revenue comprises the fair value of the consideration received or receivable 

for the sale of goods and is recognised when risks and rewards of ownership have 

been transferred to the buyer, which in general is when delivery of the shipment 

has been accepted. In some business divisions, revenue is recognised only with 

the existence of a signed acceptance protocol. Revenue also comprises the fair 

value of the consideration received or receivable for the sale of services and is 

recognised in the period when the service has been rendered based on the services 

performed to date as a percentage of the total services to be performed. 

Revenue is shown net of value-added tax, returns, rebates, discounts and other 

deductions. 

Other operating income 

Other operating income is recognised when the service has been rendered and 

comprises amongst others proceeds from the sale of scrap metal, license income, 

rental income and gains on the sale of investment property and property, plant 

and equipment. 

Net operating performance 

Net operating performance comprises net revenues, other operating income, 

capitalised own services and changes in inventories of semi-finished and finished 

goods. 

EBITDA 

EBITDA shows earnings before financial results, tax, depreciation and amortisation. 

EBIT 

EBIT shows earnings before financial results and tax. 

Financial income 

Financial income comprises amongst others interest income, dividend and security 

income, income from securities designated at fair value through profit or loss 

and income of held for trading derivative financial instruments. Interest income 

is recognised on a time-proportion basis using the effective interest method. 

Dividend income is recognised when the right to receive payment is established. 

Financial expenses 

Financial expenses primarily includes interest expenses, expenses from securities 

designated at fair value through profit or loss, expenses of held for trading derivative 

financial instruments, impairment of loans and bank charges. Interest 

expenses are recognised using the effective interest method. Foreign exchange 

gains and losses are shown on a net basis.

AFG 


2011 



30 Significant accounting judgments, estimates and assumptions 

125 

All estimates and judgements are continually evaluated and are based on historical 

experience and other factors, including expectations of future events that 

are believed to be reasonable under the circumstances. AFG makes judgments, 

estimates and assumptions concerning the future. The resulting accounting estimates 

will, by definition, seldom equal the related actual results. The judgments, 

estimates and assumptions that have a significant risk of causing a material adjustment 

to the carrying amounts of assets and liabilities within the next financial 

year are discussed below. 

Allowances for doubtful debts 

Allowances for doubtful debts are recorded for specific known and expected 

losses as well as for potentially claimed cash discounts. In determining the amount 

of the allowances, several factors such as ageing of receivables, financial solvency 

of the customer, changes in payment history, historical experience with 

receivable losses and existence of credit insurance are considered. As of 31 December 

2011, the carrying amount of accounts receivable totalled CHF 109.9 

million. Therein an allowance for doubtful debts of CHF 11.3 million is included. 

A deterioration of the financial situation of the customers could lead to higher 

than originally expected receivable losses. For further information on allowances 

for doubtful debts, see note 33. 

Inventory provision 

In order to determine the adequacy of the inventory provision, factors such as 

expected sales prices, inventory turnover and coverage days of inventory are 

considered. As of 31 December 2011, the carrying amount of inventory was at 

CHF 181.6 million. Therein a provision for inventories of CHF 27.3 million is included. 

A falling market demand or falling sales prices could lead to additional 

provisions needed. For further information on the inventory provision, see note 

34. 

Useful lives for property, plant and equipment 

AFG has a significant amount of its assets invested in property, plant and equipment. 

As of 31 December 2011, the carrying amount of property, plant and equipment 

totalled CHF 539.9 million. At the time of the purchase useful lives for such 

assets are based on estimates, as technical obsolescence or competition could 

lead to shorter useful lives than initially anticipated. Therefore the determination 

of useful lives is based on stringent standards and thereafter continuously reviewed 

and if necessary adjusted. A change in estimate could impact the level of 

future depreciation charges. For further information on property, plant and equipment, 

see note 37. 

Estimated impairment of goodwill 

As of 31 December 2011, the carrying amount of goodwill was at CHF 57.5 million. 

AFG tests at least annually whether goodwill has suffered any impairment, 

in accordance with the accounting policy stated in note 20. The recoverable 

amounts of cash-generating units have been determined based on value in use 

calculations. These calculations require the use of estimates such as expected 

future cash flows, margins, discount rates and growth rates. These estimates 

could change or differ from the actual outcome and therefore lead to additional 

impairments. For further information on goodwill, see note 39.

AFG 


2011 



126 

Intangible assets acquired in a business combination 

Brands, technologies, client relationships and distribution channels are amortised 

over their estimated useful lives. This involves the use of estimates and assumptions 

on expected future cash flows such as sales prices, margins, discount rates, 

attrition rates of clients and technological development which of course are exposed 

to some uncertainties. As of 31 December 2011, the carrying amount of 

intangible assets acquired in a business combination amounted to CHF 34.3 million. 

For further information on such acquired intangible assets, see note 39. 

Provisions 

Provisions are recognised based on the criteria as set out under note 22. As of 31 

December 2011, the carrying amount of the provisions totalled CHF 26.3 million. 

In estimating the amount of provision, assumptions are used and depending on 

the outcome of the various business transactions, the actual cash outflow and its 

timing could significantly differ from the booked provision. For further information 

on provisions, see note 44. 

Employee benefit obligations 

Employee benefit obligations for defined benefit plans are based on actuarial 

valuations, which use statistical calculations and actuarial assumptions (see note 

23). Such assumptions include amongst others discount rates, expected return on 

plan assets, future salary and pension increases, probable turnover rates as well 

as life expectancy of plan participants. The assumptions underlying these calculations 

are dependent on a number of prospective factors, therefore actual results 

could significantly differ from the original valuations and as a consequence impact 

the carrying amount of capitalised pension surplus and employee benefit 

obligation. As of 31 December 2011, the underfunding amounted to CHF 12.3 

million, thereof CHF 32.3 million recorded in the balance sheet as capitalised 

pension surplus and CHF 44.6 million as employee benefit obligation. For further 

information on employee benefit obligation, see note 46. 

Income taxes 

AFG is subject to income taxes in numerous jurisdictions. Significant judgment is 

required in determining the worldwide provision for income taxes. There are 

many transactions and calculations for which the ultimate tax determination is 

uncertain during the ordinary course of business. AFG recognises liabilities for 

anticipated tax audit issues based on estimates of whether additional taxes will 

become due. Where the final tax outcome of these matters is different from the 

amounts that were initially recorded, such differences will impact the income tax 

and deferred tax provisions in the period in which such determination is made. 

Deferred tax assets, including those on tax loss carryforwards and expected tax 

credits, are only recognised if it is probable that they can be used by future taxable 

profits. The assessment of the recoverability of those deferred tax assets is 

therefore based on estimates, which could differ from actual results and consequently 

lead to valuation allowances. As of 31 December 2011, the carrying 

amount of deferred tax assets totalled CHF 24.1 million. For further information 

on income taxes, see notes 45 and 51.

AFG 


2011 



C Explanation to certain positions 

of the consolidated financial statements 

127 

31 Segment information 

AFG is organised into five main business divisions or operating segments, namely 

Heating Technology and Sanitary Equipment, Kitchens and Refrigeration, 

Windows and Doors, Steel Technology as well as Surface Technology. Corporate 

Services have not been allocated to an operating segment and are therefore included 

in “Others and eliminations”. 

For the monitoring and assessment of the financial performance, EBIT is a 

pivotal key measure. However, Group Management and the Board of Directors 

also are provided with financial data down to the line item “result after income 

tax” by operating segment. The segments apply the same accounting policies as 

the Group. Purchases, sales and services between segments are entered into 

under normal commercial terms and conditions that would also be available to 

unrelated third parties. Income and expenses between segments are eliminated 

on consolidation and disclosed in “Others and eliminations”. 

Segment assets and liabilities include all assets, liabilities and intercompany 

transactions. Goodwill has been allocated to the respective segments. 

Heating Technology and Sanitary Equipment Division 

The Heating Technology and Sanitary Equipment Division is the leading European 

manufacturer of radiators, surface heating systems and shower stalls, with plants 

in Germany, Switzerland, the Czech Republic and the UK. Outside its domestic 

markets of Germany and Switzerland, it is represented by distribution companies 

in France, the UK, Austria, Poland and the Czech Republic. The division offers a 

comprehensive range of heating technology products and shower stalls under the 

brand names Kermi, Arbonia, Prolux and Aqualux. 

Kitchens and Refrigeration Division 

The Kitchens and Refrigeration Division unifies brand names such as Forster 

Kitchens, Forster Refrigeration, Warendorf and Piatti under one roof. Piatti and 

Forster Kitchens are together the leading manufacturers and suppliers of kitchens 

in the country. Warendorf is represented in approximately 20 countries worldwide. 

Despite operating in different market segments, the brands complement 

each other in terms of materials and design. Warendorf and Piatti offer kitchens 

with a broad range of materials whereas Forster is concentrating on steel kitchens. 

Windows and Doors Division 

The Windows and Doors Division with the brands EgoKiefer, RWD Schlatter and 

Slovaktual is Switzerland's and Slovakia's leading provider of windows and doors. 

The division develops, produces, assembles and sells a full range of windows and 

doors. Its products, made of materials such as wood, synthetics, aluminium or 

steel, are used in a variety of areas, including thermal insulation, soundproofing, 

security and fire protection. 

Steel Technology Division 

The Steel Technology Division operates in two business units: Forster precision 

steel tubing and Forster profile systems. The precision steel tubing unit offers a 

broad range of products to a variety of industries for the production of heating 

technology, furniture, automotive parts, machines, etc. The slightly smaller profile 

systems unit supplies the construction industry with a range of semi-finished 

products used in fire/smoke protection and security applications in public, commercial 

and industrial buildings. Both units develop and produce all their products 

in Switzerland.

AFG 


2011 



128 

Surface Technology Division 

The Surface Technology Division has modern facilities for high-technology 

galvanic, chemical and mechanical surface treatment. For the sectors ranging 

from paper, printing, film, sheeting, textiles, food, automobiles and aviation to 

engines, marine propulsion, general industry and defence technology, the division 

chromes, coats and refines printing and processing cylinders and treats the surfaces 

of work pieces in a wide range of dimensions with the highest precision 

down to nano measurements. In the markets where the division is active, it holds 

the technology and market leadership. 

Corporate Services 

Corporate Services consist of service, finance and investment companies as well 

as a logistic company, and provide their services to Group companies and third 

parties. The results and balances of the Corporate Services are included in the 

column “Others and eliminations”.

AFG 


2011 

2011 

in 1000 CHF 



Heating 

& Sanitary 

Kitchens 

& Refrigeration 

Windows 

& Doors 

Steel 

Technology 

Surface 

Technology 

Others 

and eliminations 

129 

Total 

Group 

Sales with third parties 481 595 257 570 406 390 131 702 63 558 6 570 1 347 385 

Sales with other segments 738 12 6 8 768 1 − 9 525 

Net revenues 482 333 257 582 406 396 140 470 63 559 − 2 955 1 347 385 

EBITDA 50 657 − 2 262 53 373 8 317 − 1 275 − 8 644 100 166 

in % of net revenues 10.5 − 0.9 13.1 5.9 − 2.0 7.4 

Depreciation and 

amortisation 

Impairment property, 

plant and equipment/ 

− 16 623 − 6 688 − 13 136 − 7 630 − 10 071 − 7 386 − 61 534 

intangible assets 

− 6 205 − 487 

− 6 504 − 55 569 − 2 706 − 71 471 

Impairment goodwill − 1 501 − 1 501 

Segment results (EBIT) 26 328 − 9 437 40 237 − 5 817 − 66 915 − 18 736 − 34 340 

in % of net revenues 5.5 − 3.7 9.9 − 4.1 − 105.3 − 2.5 

Interest income 299 108 119 52 58 982 1 618 

Interest expenses 

Minority share from 

− 4 891 − 1 530 − 231 − 1 047 − 4 356 − 7 392 − 19 447 

associated companies 

8 

8 

Other financial result 

Result before 

− 4 383 − 1 181 − 4 564 − 1 007 − 362 5 985 − 5 512 

income tax 

17 353 − 12 032 35 561 − 7 819 − 71 575 − 19 161 − 57 673 

Income tax expense − 8 587 1 336 − 6 728 1 316 − 408 527 − 12 544 

Result after income tax 8 766 − 10 696 28 833 − 6 503 − 71 983 − 18 634 − 70 217 

Average number 

of employees 

2 664 

843 

1 453 

338 

512 

190 

6 000 

Total assets 305 990 151 001 372 468 93 888 133 843 213 788 1 270 978 

thereof associated 

companies 

312 

312 

Total liabilities 

Purchases of property, 

plant and equipment, 

206 500 111 380 141 952 45 143 186 939 83 537 775 451 

investment properties 

and intangible assets 1 

1 without acquisition of subsidiaries 

24 181 

8 664 

14 569 

2 410 

17 716 

2 324 

69 863 

The Heating and Sanitary Division includes in the position impairment property, 

plant and equipment/intangible assets an impairment of CHF 6.2 million (see note 

39). Furthermore a goodwill impairment charge on the CGU underfloor convectors 

is included in the division (see note 39). The Steel Technology Division includes 

in the position impairment property, plant and equipment/intangible assets 

an impairment of CHF 6.5 million on plant and machinery (see note 37). The 

Surface Technology Division includes in the position impairment property, plant 

and equipment/intangible assets an impairment charge of CHF 38.3 million on 

property, plant and equipment as well as an impairment of CHF 17.3 million on 

intangible assets (see note 37/39). The column “Others and eliminations” includes 

in the position impairment property, plant and equipment/intangible assets impairments 

of CHF 2.7 million on two properties and vehicles (see note 36/37).

AFG 


2011 

2010 

in 1000 CHF 



Heating 

& Sanitary 

Kitchens 

& Refrigeration 

Windows 

& Doors 

Steel 

Technology 

Surface 

Technology 

Others 

and eliminations 

130 

Total 

Group 

Sales with third parties 544 117 266 876 405 148 128 184 59 439 9 776 1 413 540 

Sales with other segments 376 183 23 11 221 4 − 11 807 

Net revenues 544 493 267 059 405 171 139 405 59 443 − 2 031 1 413 540 

EBITDA before 

restructuring 

69 877 1 795 52 405 16 991 1 505 − 2 934 139 639 

in % of net revenues 12.8 0.7 12.9 12.2 2.5 9.9 

Restructuring costs 

EBITDA after 

− 12 880 − 5 659 − 18 539 

restructuring 

56 997 − 3 864 52 405 16 991 1 505 − 2 934 121 100 

in % of net revenues 10.5 − 1.4 12.9 12.2 2.5 8.6 

Depreciation and 

amortisation 

Impairment property, 

plant and equipment/ 

− 17 952 − 7 623 − 13 544 − 7 135 − 10 268 − 7 602 − 64 124 


− 5 117 − 1 780 

− 200 

− 7 097 

Impairment goodwill − 980 − 1 402 − 2 382 

Segment results (EBIT) 32 948 − 14 669 38 861 9 856 − 8 963 − 10 536 47 497 

in % of net revenues 6.1 − 5.5 9.6 7.1 − 15.1 3.4 

Interest income 211 57 92 12 14 226 612 

Interest expenses 

Minority share from 

− 5 459 − 1 485 − 304 − 1 142 − 3 885 − 7 157 − 19 432 

associated companies 

13 

13 

Other financial result 

Result before 

− 5 133 − 251 − 2 408 − 4 573 − 2 924 12 052 − 3 237 

income tax 

22 567 − 16 335 36 241 4 153 − 15 758 − 5 415 25 453 

Income tax expense − 8 690 4 558 − 8 972 − 722 6 698 − 4 169 − 11 297 

Result after income tax 13 877 − 11 777 27 269 3 431 − 9 060 − 9 584 14 156 

Average number 

of employees 

2 594 

847 

1 371 

311 

454 

214 

5 791 

Total assets 

thereof associated 

347 314 153 071 356 110 114 924 187 240 229 525 1 388 184 

companies 

304 

304 

Total liabilities 

Purchases of property, 

plant and equipment, 

investment properties 

236 746 116 432 129 069 57 328 169 191 98 793 807 559 

and intangible assets 11 901 6 056 9 218 2 049 9 732 1 900 40 856 

The restructuring costs in the Heating and Sanitary Division as well as Kitchens 

and Refrigeration Division include mainly the costs for the redundancy programme 

in connection with the reorganisation announced on 8 October 2010 for 

the heating and kitchen business. The Heating and Sanitary Division includes in 

the position impairment property, plant and equipment/intangible assets an 

impairment of CHF 3.7 million for the colour machine resulting from the reorganisation 

of the production site in DE-Riesa. Furthermore the position includes

AFG 


2011 



131 

an impairment of CHF 1.4 million on intangible assets relating to the goodwill 

impairment test of Aqualux. The goodwill impairment relates to the Aqualux 

goodwill (see note 39). Impairments in the Kitchens and Refrigeration Division 

relate to the goodwill impairment test of the CGU Warendorfer entities (see note 

39). The Surface Technology Division contains an impairment charge of CHF 0.2 

million for an idle plant, which was sold in 2010. 

Information about geographical areas 

2011 Switzerland Germany Other Countries Total Group 

in 1000 CHF 

Net revenues 

Property, plant and 

equipment, investment 

properties, intangible 

676 599 384 058 286 728 1 347 385 

assets and goodwill 

420 058 

103 303 

124 218 

647 579 

2010 Switzerland Germany Other Countries Total Group 

in 1000 CHF 

Net revenues 

Property, plant and 

equipment, investment 

properties, intangible 

672 052 414 314 327 174 1 413 540 

assets and goodwill 

526 302 

107 275 

103 008 

736 585 

Major customers 

AFG has no customer who generates more than 10 % of the Group's net revenues 

(see also paragraph credit default risk in note 52). 

32 Cash and cash equivalents 

Cash and cash equivalents are denominated in the following currencies: 

in 1000 CHF 

31 / 12 / 2011 31 / 12 / 2010 

CHF 186 739 204 056 

EUR 52 397 53 911 

USD 2 739 1 303 

GBP 5 006 1 201 

PLN 509 1 034 

CZK 554 1 096 

Other currencies 1 657 717 

Total 249 601 263 318 

The effective interest on bank deposits is between 0.13 % and 0.5 % (2010: between 

0.13 % and 0.5 %).

AFG 


2011 



33 Accounts receivables 

in 1000 CHF 

132 

31 / 12 / 2011 31 / 12 / 2010 

Accounts receivable 121 234 134 706 

Allowance for accounts receivable − 11 297 − 11 552 

Total 109 937 123 154 

The ageing analysis is as follows: 

in 1000 CHF 

Gross amount 

of accounts 

receivable 

31 / 12 / 2011 31 / 12 / 2010 

thereof not 

impaired 

Gross amount 

of accounts 

receivable 

thereof not 

impaired 

Not yet due 81 020 76 652 96 244 91 450 

Overdue up to 30 days 19 616 19 194 18 758 18 737 

Overdue more than 30, less than 60 days 6 070 5 892 6 535 6 458 




Overdue more than 360 days 6 268 1 015 5 148 39 

Total 121 234 109 937 134 706 123 154 

With respect to accounts receivable that are not impaired, there are no indications 

as of the balance sheet date that the respective debtors will not meet their payment 

obligations. Outstanding accounts receivable amounting to CHF 16.0 million 

(2010: CHF 20.9 million) were secured.

AFG 


2011 



133 

Activity in the allowance for doubtful debts account, which is disclosed in the 

income statement under sales deductions before net revenues, is as follows: 

in 1000 CHF 

2011 2010 

Balance at 01/01 − 11 552 − 11 475 

Foreign exchange differences 183 1 152 

Acquisition of subsidiaries − 45 

Additional allowances − 5 827 − 6 762 

Used during year 5 846 5 503 

Unused amounts reversed 98 30 

Balance at 31/12 − 11 297 − 11 552 

In the allowance for doubtful debts, specific allowances in the amount of CHF 6.5 

million (2010: CHF 6.4 million) are included. 

Since February 2010 AFG sells receivables under a factoring agreement. Because 

AFG neither transfers nor retains substantially all the risks and rewards of 

ownership and still retains control, the receivables have to be recorded in the 

balance sheet to the extent of the so-called continuing involvement as stipulated 

under the provision of IAS 39. In particular the late payment risk is completely 

retained by AFG up until a certain point in time. As of 31 December 2011 the book 

value of the transferred receivables amounted to CHF 11.0 million (2010: CHF 11.3 

million). Thereof AFG already received from the factor CHF 9.9 million (2010: CHF 

10.1 million) of cash and the remaining CHF 1.1 million (2010: CHF 1.2 million) 

are disclosed as other current assets against the factor. In addition, in other 

current assets an amount of CHF 0.3 million (2010: CHF 0.5 million) and in other 

liabilities an amount of CHF 0.4 million (2010: CHF 0.6 million) are recorded for 

the consideration of the continuing involvement. 

34 Inventories 

in 1000 CHF 

31 / 12 / 2011 31 / 12 / 2010 

Raw material and supplies 61 481 63 185 

Semi-finished and finished goods 109 300 108 563 

Goods purchased for resale 10 792 12 398 

Prepayments 74 418 

Total 181 647 184 564 

A provision of CHF 27.3 million (2010: CHF 26.1 million) has been provided for 

obsolete and slow-moving items and is deducted from inventories. Inventories 

written down to net realisable value were CHF 17.6 million (2010: CHF 8.0 million). 

In 2011 the write-down to net realisable value amounted to CHF 2.5 million 

(2010: CHF 0.2 million).

AFG 


2011 



35 Financial assets 

in 1000 CHF 

134 

31 / 12 / 2011 31 / 12 / 2010 

Available-for-sale financial assets 1 020 22 

Investments in associates > 20 % < 50 % 312 354 

Other financial assets 317 329 

Loans 839 814 

Total 2 488 1 519 

thereof disclosed as current assets 710 618 

The ageing analysis for loans is as follows: 

in 1000 CHF 

Gross amount 

loans 

31 / 12 / 2011 31 / 12 / 2010 

thereof not 

impaired 

Gross amount 

loans 

thereof not 

impaired 

Not yet due 1 678 777 751 751 

Overdue more than 31, less than 60 days 1 1 

Overdue more than 180, less than 360 days 715 61 615 63 

Overdue more than 360 days 700 700 

Total 3 094 839 2 066 814 

With respect to loans that are not impaired, there are no indications as of the 

balance sheet date that the respective borrowers will not meet their payment 

obligations. As of the balance sheet date, AFG has no secured loans (2010: CHF 

0.4 million).

AFG 


2011 



135 

Activity in the impairment of loans account, which is disclosed in the income 

statement under financial results, is as follows: 

in 1000 CHF 

2011 2010 

Balance at 01/01 − 1 252 − 1 357 

Foreign exchange differences − 53 105 

Additional allowances − 950 

Balance at 31/12 − 2 255 − 1 252 

In the impairment of loans, specific impairments in the amount of CHF 2.26 million 

(2010: CHF 1.25 million) are included. 

36 Non-current assets held for sale 

The property in the centre of CH-Arbon with a carrying amount of CHF 0.7 million 

which was reported in 2010 under non-current assets held for sale was sold in 

2011 for CHF 1.4 million. In 2011 several properties in CH-Steinach with a book 

value of CHF 11.4 million were reclassified from property, plant and equipment 

and investment properties into non-current assets held for sale. During 2011 

certain of these reclassified properties with a book value of CHF 8.7 million were 

sold. The remaining reclassified properties with a book value of CHF 2.7 million 

are expected to be disposed of within one year. Furthermore several vehicles from 

Asta AG relating to the Swiss activities and having a book value of CHF 1.2 million 

were reclassified during 2011 from property, plant and equipment into this position, 

since the closing of the transaction occurred on 31 January 2012.

AFG 


2011 

Net book value 

at 01/01/2010 

in 1000 CHF 



37 Property, plant and equipment 

Land and 

buildings 

357 172 

Plant and 

machinery 

207 873 

Other 

equipment 

30 140 

Prepayments and 

assets under 

construction 

42 129 

136 

Total 

637 314 

Cost 

Balance at 01/01/2010 

Foreign exchange 

570 187 613 390 95 458 42 288 1 321 323 

differences 

− 30 266 − 39 584 − 7 663 − 1 424 − 78 937 

Additions 1 352 6 681 3 067 28 074 39 174 

Disposals − 140 − 15 430 − 2 479 − 452 − 18 501 

Reclassifications 1 320 38 010 694 − 42 726 − 2 702 



542 453 603 067 89 077 25 760 1 260 357 

differences 

− 6 072 − 7 569 − 1 186 

478 − 14 349 

Acquisition of subsidiaries 47 299 64 410 

Additions 10 362 13 165 4 230 40 858 68 615 

Disposals − 2 607 − 17 490 − 11 790 − 1 759 − 33 646 

Reclassifications 6 465 24 389 − 819 − 37 182 − 7 147 

Balance at 31/12/2011 550 648 615 861 79 576 28 155 1 274 240 

Accumulated 

depreciation 



213 015 405 517 65 318 159 684 009 

differences 

− 12 545 − 30 657 − 5 946 

− 11 − 49 159 

Depreciation 13 993 31 005 7 708 52 706 

Impairment 3 670 3 670 

Disposals − 63 − 15 311 − 2 318 − 97 − 17 789 

Reclassifications − 690 − 17 − 707 



213 710 394 207 64 762 51 672 730 

differences 

− 2 296 − 6 370 − 1 004 

− 9 670 

Depreciation 12 953 31 573 7 387 51 913 

Impairment 27 073 20 529 1 169 48 771 

Disposals − 1 420 − 17 002 − 8 844 − 27 266 

Reclassifications − 184 − 25 − 1 891 − 2 100 

Balance at 31/12/2011 249 836 422 912 61 579 51 734 378 


at 31/12/2010 


at 31/12/2011 

Value of contained 

leased assets 

328 743 

300 812 

208 860 

192 949 

3 455 

24 315 

17 997 

2 413 

25 709 

28 104 

587 627 

539 862 

5 868 

Previous year 9 179 

In 2011, plant and machinery as well as other equipment in the amount of CHF 

1.5 million (2010: CHF 0.7 million) was acquired via finance lease.

AFG 


2011 



137 

Impairments 2011 

During the second half of 2011, the Surface Technology Division's medium term 

plan prepared in early summer required updating. The revision can be attributed 

mainly to developments in the print-machinery industry in addition to the volatile 

currency situation. The original underlying assumptions became obsolete as a 

result of the changed outlook affecting mainly the revenue side. A new medium 

term plan providing for the latest development and findings was therefore prepared. 

The value in use calculation came up with an impairment of CHF 55.6 

million for the entire division. The applied discount rate was 9.4 %. The impairment 

charge was allocated with an amount of CHF 38.3 million to property, plant 

and equipment and the remaining CHF 17.3 million to intangible assets. 

Due to unsatisfactory capacity utilisation as a consequence of the strong 

Swiss franc, an impairment test was undertaken for the tube drawing facility of 

the Steel Technology Division. The value in use calculation resulted in an impairment 

of CHF 6.5 million, which was completely allocated to property, plant and 

equipment. The applied discount rate was 9.8 %. 

Several additional and smaller impairments within property, plant and equipment 

totalling CHF 4.0 million related mainly to properties, for which new valuations 

had been prepared and the calculated value in use fell below the carrying 

amount. 

Future aggregate minimum lease payments 

AFG has the following future minimum lease payments under non-cancellable 

leases: 

31 / 12 / 2011 Operating 

leases 

in 1000 CHF 

Finance 

leases 

within 1 year 16 354 1 688 18 042 

between 1 and 5 years 19 207 1 834 21 041 

after 5 years 440 440 

Total 36 001 3 522 39 523 

Interest charge − 304 

Present value of finance leases 3 218 

31 / 12 / 2010 Operating 

leases 

in 1000 CHF 

Finance 

leases 

within 1 year 15 612 2 844 18 456 

between 1 and 5 years 21 258 2 717 23 975 

after 5 years 1 555 1 555 

Total 38 425 5 561 43 986 

Interest charge − 296 

Present value of finance leases 5 265 

The income statement contains expenses for operating leases of CHF 19.8 million 

(2010: CHF 19.4 million). 

Total 

Total

AFG 


2011 



138 

As of the balance sheet date, AFG had entered into the following capital commitments 

for the purchase of property, pant and equipment and intangible assets: 

in 1000 CHF 

31 / 12 / 2011 31 / 12 / 2010 

Property, plant and equipment 20 003 18 724 

Intangible assets 1 668 403 

Total 21 671 19 127 

The fire insurance value of property, plant and equipment and investment property 

is as follows: 

in 1000 CHF 

31 / 12 / 2011 31 / 12 / 2010 

Buildings 684 348 676 629 

Plant and machinery 953 324 912 620 

Total 1 637 672 1 589 249 

Land and buildings amounting to CHF 13.2 million (2010: CHF 11.0 million) are 

pledged to secure mortgages.

AFG 


2011 



38 Investment property 

in 1000 CHF 

Investment 

property – 

land 

Investment 

property – 

buildings 

139 

Net book value at 01/01/2010 23 481 1 760 25 241 

Cost 

Balance at 01/01/2010 27 417 15 769 43 186 

Disposals − 4 569 − 4 569 

Reclassifications − 1 141 − 885 − 2 026 

Balance at 31/12/2010 21 707 14 884 36 591 

Additions 39 39 

Disposals − 239 − 239 

Reclassifications − 9 456 − 9 976 − 19 432 

Balance at 31/12/2011 12 012 4 947 16 959 

Accumulated depreciation 

Balance at 01/01/2010 3 936 14 009 17 945 

Depreciation 360 360 

Disposals 138 138 

Reclassifications − 886 − 886 

Balance at 31/12/2010 4 074 13 483 17 557 

Depreciation 181 181 

Disposals − 56 − 56 

Reclassifications − 607 − 9 976 − 10 583 

Balance at 31/12/2011 3 411 3 688 7 099 



Fair values of investment properties at 31/12/2010 24 062 

Fair values of investment properties at 31/12/2011 13 362 

Rental income from investment properties amounted to CHF 0.5 million (2010: 

CHF 0.9 million) and is included in other operating income. Related direct operating 

expenses were CHF 0.2 million (2010: CHF 0.2 million) and are included in 

other operating expenses. 

Total

AFG 


2011 



39 Intangible assets 

in 1000 CHF 

Other 


140 

Goodwill Total 


Cost 

Balance at 01/01/2010 153 136 99 136 252 272 

Foreign exchange differences − 8 019 − 4 482 − 12 501 

Additions 1 682 1 682 

Disposals − 1 066 − 1 066 

Reclassifications 1 130 1 130 

Balance at 31/12/2010 146 863 94 654 241 517 

Foreign exchange differences − 903 − 509 − 1 412 

Acquisition of subsidiaries 234 234 

Additions 1 208 1 208 

Disposals − 5 738 − 5 738 

Reclassifications 1 043 1 043 

Balance at 31/12/2011 142 707 94 145 236 852 

Accumulated amortisation 

Balance at 01/01/2010 67 235 34 112 101 347 

Foreign exchange differences − 4 124 − 1 235 − 5 359 

Amortisation 11 049 11 049 

Impairment 3 227 2 382 5 609 

Disposals − 1 066 − 1 066 

Reclassifications 13 13 

Balance at 31/12/2010 76 334 35 259 111 593 

Foreign exchange differences − 431 − 69 − 500 

Amortisation 9 439 9 439 

Impairment 22 700 1 501 24 201 

Disposals − 5 738 − 5 738 

Balance at 31/12/2011 102 304 36 691 138 995 



Expenses for research and development in the amount of CHF 19.4 million (2010: 

CHF 20.2 million) have been charged to the income statement, since they did not 

fulfil the capitalisation criteria. In 2011, no capitalised development costs (2010: 

CHF 0.7 million) are included in other intangible assets under additions. All other 

additions under other intangible assets have been purchased or acquired.

AFG 


2011 

in 1000 CHF 



141 

Impairments 2011 on other intangible assets 

As a result of a review towards the end of 2011 of the business plan at a foreign 

subsidiary an impairment of CHF 5.4 million had to be recorded on other intangible 

assets. Another impairment of CHF 17.3 million relates to the Surface Technology 

Division (see note 37). 

As of 31 December 2011 goodwill from business combinations is allocated to 

the Group's three cash-generating units (CGUs) Slovaktual, RWD Schlatter and 

EgoKiefer. 

The carrying amounts of goodwill per CGU are presented below: 

Slovaktual RWD Schlatter Underfloor 

convectors 

EgoKiefer Total 

At 31/12/2010 16 636 8 100 1 501 33 158 59 395 

At 31/12/2011 16 196 8 100 33 158 57 454 

Goodwill impairment tests 2011 

The recoverability of goodwill is normally assessed annually towards the year-end. 

The recoverable amount of the CGUs is determined based on value in use calculations. 

These calculations use cash flow projections covering a five-year period. 

Cash flows beyond the five-year period are extrapolated using estimated growth 

rates. The underlying financial data consisting of one budget year and four plan 

years form part of the Group's medium term plan approved by management in 

early summer and were used for the impairment tests. 

For the CGU underfloor convectors a phasing-out of sales was assumed for 

the original ASCO Schmidlin underfloor convector, since this convector will be 

completely new designed and thus only slightly based on the original model. This 

resulted in an impairment requirement of CHF 1.5 million, so that goodwill had 

to be completely written off. The value in use calculation assumed a budgeted 

gross margin of 46.0 %, an average EBITDA margin of 12.1 %, phasing-out revenues 

until 2016 and a discount rate of 9.8 %. 

The value in use calculation for the annual 2011 impairment tests assumed the 

following key assumptions: 

in % 

Slovaktual RWD Schlatter EgoKiefer 

Budgeted gross margin 29.4 59.1 64.0 

Growth rate 2.0 1.0 1.0 

Discount rate 10.0 8.0 8.0 

Budgeted gross margins were determined based on past performance, expectations 

for the market development and initiated optimisation measures. The 

growth rates used were consistent with the forecasts included in industry reports. 

The discount rates used were pre-tax and reflected specific risks relating to the 

relevant CGUs. 

Based on a reasonably possible change in the key assumptions, sensitivity 

analyses were calculated in 2011 on higher discount rates, lower than actually 

expected EBITDAs, lower gross margins and lower growth rates. None of these 

changes led to impairments.

AFG 


2011 



142 

Goodwill impairment tests 2010 

Since the preparation of the medium term plan in early summer 2010, the operating 

performance at the CGU Aqualux did not significantly improve during the 3rd 

quarter of 2010 and as such a revision and alignment to the prevailing conditions 

towards the year-end became necessary. As a result an impairment of CHF 2.4 

million resulted at Aqualux so that the entire goodwill in the amount of CHF 1.0 

million had to be written off. The remaining impairment of CHF 1.4 million was 

recorded against the intangible asset client relationships from the Aqualux acquisition 

since revenues with certain customers continue to not develop as anticipated. 

The value in use calculation assumed a budgeted gross margin of 39.4 %, 

a growth rate of 1.5 % and a discount rate of 11.2 %. 

On 8 October 2010, AFG announced a comprehensive reorganisation for the 

Warendorfer Küchen GmbH forming part of the Kitchens and Refrigeration Division, 

in order to adjust capacities to the unsatisfactory workload situation that 

has existed for some time. Therefore an impairment test for the CGU Warendorfer 

entities became necessary. As a result of the test an impairment of CHF 3.2 

million was identified so that the entire goodwill of CHF 1.4 million had to be 

written-off. The remaining CHF 1.8 million was offset against the intangible asset 

client relationships from the acquisition since revenues with most of the customers 

continue to not develop as expected. The value in use calculation assumed a 

budgeted gross margin of 66.9 %, a growth rate of 1.0 % and a discount rate of 

13.3 %. 

The value in use calculation for the annual 2010 impairment tests assumed the 

following key assumptions: 

in % 

Slovaktual RWD 

Schlatter 

Underfloor 

convectors 

EgoKiefer 

Budgeted gross margin 30.2 56.7 47.5 64.6 

Growth rate 2.0 1.0 1.0 1.0 

Discount rate 9.7 8.2 10.0 8.2 

Budgeted gross margins were determined based on past performance and expectations 

for the market development. The growth rates used are consistent with 

the forecasts included in industry reports. The discount rates used are pre-tax and 

reflect specific risks relating to the relevant CGUs. 

Based on a reasonably possible change in the key assumptions, sensitivity 

analyses were calculated in 2010 on higher discount rates, lower than actually 

expected EBITDAs, lower gross margins and lower growth rates. None of these 

changes led to an impairment on the remaining CGUs.

AFG 


2011 



40 Business combinations 

143 

In April 2011 AFG acquired 100 % of the shares of Avia Peintures Sàrl. The following 

fair values of assets and liabilities have arisen from this acquisition: 

in 1000 CHF 

Fair value 

Assets 

Cash and cash equivalents 470 

Accounts receivable 620 

Other current assets 24 

Inventories 122 

Deferred expenses 9 

Property, plant and equipment 410 

Financial assets 26 

Intangible assets 234 

Total assets 1 915 

Liabilities 

Accounts payable 258 

Other liabilities 255 

Financial debt 138 

Accruals and deferred income 21 

Provisions 49 

Deferred income tax liabilities 119 

Employee benefit obligations 97 

Total liabilities 937 

Net assets acquired / purchase consideration 978 

Net cash outflow was as follows: 

Purchase price 978 

Cash and cash equivalents in subsidiary acquired − 470 

Net cash outflow on acquisition 508 

As of the controlling date of 14 April 2011, AFG acquired 100 % of the shares in 

the French Avia Peintures Sàrl with its registered seat in FR-Pau. The purchase 

price was CHF 0.98 million. The company is specialised in the application of specific 

surfaces in the aviation industry and is allocated to the Surface Technology 

Division. The acquired company contributed, from the controlling date, CHF 1.8 

million in net revenues and CHF 0.3 million in loss to the Group. Had the acquisition 

taken place on 1 January 2011, net revenues for the reporting period would 

have been CHF 2.8 million and a loss of CHF 0.3 million. The gross book value of 

the accounts receivable amounted to CHF 0.66 million, of which CHF 0.04 million 

was expected to be uncollectible. The acquisition-related costs amounted to CHF 

0.04 million and are included in other operating expenses.

AFG 


2011 



41 Financial debts 

144 

On 3 June 2010, AFG redeemed to holders of the 3.375 %, 2004 – 2010, CHF 150 

million bond, due on 3 June 2010, the outstanding bonds with a nominal value 

of CHF 102.4 million. 

On 14 April 2010, AFG issued a bond of CHF 200 million at 3.375 % with a 

duration of 6 years and maturing on 12 May 2016. Since 30 April 2010, the bond 

is listed on the SIX Swiss Exchange. 

On 26 November 2007, AFG entered into a syndicated loan for CHF 275 

million. This loan arranged with a consortium of banks has a term extending 

until 30 December 2013. 

On 2 December 2004, AFG completed a private placement with a group of 

US investors worth USD 160 million, of which 125 million were paid out in US 

dollars and 27.6 million in euros. The placement, which is largely hedged against 

interest and currency risk, is divided into various US dollar and euro tranches with 

terms of between seven and ten years. Since 2008, partial repayments of EUR 3.9 

million of the euro tranche become due each year. 

The financial debts are comprised of the following: 

in 1000 CHF 

31 / 12 / 2011 31 / 12 / 2010 

Bond 197 748 197 280 

US private placement 128 692 136 414 

Swap USD 21 326 20 727 

Swap EUR 653 1 404 

Syndicated loan 49 579 49 372 

Bank loans 16 500 18 758 

Bank borrowings 349 2 136 

Mortgage 2 300 4 500 

Loans 199 217 

Total 417 346 430 808 

The US private placement and the syndicated loan include covenants covering key 

ratios such as minimum net worth, interest coverage ratio and leverage ratio. In 

the event of non-compliance, the note holders and banks respectively may at any 

time at their option, declare the amounts then outstanding to be immediately due 

and payable. AFG was in compliance with the covenants in 2011 and 2010. 

The maturities of the financial debts are as follows: 

in 1000 CHF 

31 / 12 / 2011 31 / 12 / 2010 

within 1 year 19 911 14 434 

between 1 and 5 years 395 935 210 094 

after 5 years 1 500 206 280 

Total 417 346 430 808

AFG 


2011 



145 

The effective interest rates for the financial debts at the balance sheet date were 

as follows: 

in % 

CHF EUR USD 

Financial debt 31/12/2011 3.8 5.1 5.9 1 

Financial debt 31/12/2010 3.8 5.1 5.9 1 

1 Interest paid is significantly lower due to the cross currency swaps. 

The breakdown for the financial debts by currency was as follows: 

in 1000 CHF 

31 / 12 / 2011 31 / 12 / 2010 

CHF 287 454 290 381 

EUR 15 553 21 690 

USD 114 339 116 370 

GBP 2 367 

Total 417 346 430 808

AFG 


2011 



42 Financial liabilities 

31 / 12 / 2011 Book value Contractual 

cash flows 

in 1000 CHF 

146 

The contractually agreed undiscounted interest payments and repayments of the 

non-derivative financial liabilities and the derivatives with a cash outflow are as 

follows: 

up to 

6 months 

7 to 

12 months 

between 1 

and 2 years 

between 2 

and 5 years 

after 

5 years 

Non-derivative 

financial instruments 

Accounts payable 

Other liabilities 

97 234 97 234 97 210 24 

(without derivatives) 22 745 22 745 22 602 29 114 

Finance lease liabilities 3 218 3 506 937 735 905 929 

Financial debts 395 367 457 585 16 310 20 323 74 265 345 179 1 508 

Derivative 


Cross currency swaps 21 979 

Cash outflow 142 478 2 740 2 740 5 481 131 517 

Cash inflow − 123 606 − 3 071 − 3 071 − 6 142 − 111 322 

Interest rate swaps 1 033 

Cash outflow 974 341 341 292 

Cash inflow 

Total 541 576 600 916 137 069 21 121 74 915 366 303 1 508 

Amounts in foreign currency were each translated at the respective year-end rate. 

Variable interest payments arising from financial instruments were calculated using 

the conditions prevailing at the balance sheet date. Financial liabilities which 

can be repaid at any time are always assigned to the earliest possible time period.

AFG 


2011 

31 / 12 / 2010 Book value Contractual 

cash flows 

in 1000 CHF 



up to 

6 months 

7 to 

12 months 

between 1 

and 2 years 

between 2 

and 5 years 

147 

after 

5 years 

Non-derivative 


Accounts payable 

Other liabilities 

93 278 93 278 93 265 13 

(without derivatives) 21 149 21 149 20 846 222 54 27 

Finance lease liabilities 5 265 5 561 1 513 1 331 1 850 867 

Financial debts 408 677 490 360 17 525 14 122 33 315 208 901 216 497 

Derivative 


Cross currency swaps 22 131 

Cash outflow 149 129 2 766 2 766 5 532 138 065 

Cash inflow − 129 403 − 3 063 − 3 063 − 6 126 − 117 151 

Interest rate swaps 1 472 

Cash outflow 

Cash inflow 

Forward foreign 

1 740 824 641 275 

exchange contracts 

12 

Cash outflow 9 179 5 807 3 372 

Cash inflow − 9 128 − 5 836 − 3 292 

Total 551 984 631 865 132 823 16 295 35 266 230 984 216 497

AFG 


2011 

31 / 12 / 2011 

in 1000 CHF 



43 Additional disclosures on financial instruments 

148 

The relation between the relevant balance sheet items and the measurement 

categories in accordance with IAS 39 and the disclosure of fair values of financial 

instruments is as follows: 

FA 

FVTPL 

trading 

FA 

FVTPL 

designated 

AFS 

L & AR 

FL 

FVTPL 

trading 

FL 

AC 

Book 

value at 

31/12/2011 

Fair value 

at 

31/12/2011 

Cash and cash equivalents 249 601 249 601 249 601 

Securities 2 697 2 697 2 697 

Accounts receivable 109 937 109 937 109 937 

Other current assets 163 17 359 17 522 17 522 

Investment (

AFG 


2011 

31 / 12 / 2010 

in 1000 CHF 



FA 

FVTPL 

trading 

FA 

FVTPL 

designated 

AFS 

L & AR 

FL 

FVTPL 

trading 

FL 

AC 

Book 

value at 

31/12/2010 

149 

Fair value 

at 

31/12/2010 

Cash and cash equivalents 263 318 263 318 263 318 

Securities 2 541 2 541 2 541 


Other current assets 68 19 928 19 996 19 996 

Investment ( < 20 %) 22 22 22 

Other financial assets 329 329 329 

Loans 814 814 814 

Assets 68 2 541 22 407 543 410 174 410 174 

Accounts payable 93 278 93 278 93 278 

Other liabilities 1 501 21 068 22 569 22 569 

Finance lease liabilities 5 265 5 265 5 309 

Bank borrowings 2 136 2 136 2 136 

Loans 68 347 68 347 71 091 

Mortgage 4 500 4 500 4 624 

Bond 197 280 197 280 201 200 

US private placement 158 545 158 545 170 230 

Liabilities 1 501 550 419 551 920 570 437 

IFRS 7 “Financial instruments; disclosures” – improving disclosures about financial 

instruments, requires for financial instruments measured at fair value the disclosure 

and allocation to the pre-defined following three hierarchy levels: 

Level 1 – Quoted prices in active markets for identical assets or liabilities. 

Level 2 – Inputs other than quoted prices included within level 1 that are 

observable for the asset or liability, either directly or indirectly (derived 

from prices). 

Level 3 – Unobservable market data.

AFG 


2011 

in 1000 CHF 



150 

Financial instruments measured at fair value are allocated to the three hierarchy 

levels as follows: 

Level 1 

Level 2 

Level 3 

Fair value 

at 

31/12/2011 

Level 1 

Level 2 

Level 3 

Fair value 

at 

31/12/2010 

Assets 

Financial assets at 

fair value through profit 

or loss – trading 

(FA FVTPL trading) 

Financial assets at fair 

value through profit 

or loss – designated 

163 

163 

68 

68 

(FA FVTPL designated) 838 1 859 

2 697 877 1 664 

2 541 

Available-for-sale (AFS) 1 020 1 020 22 22 

Liabilities 

Financial liabilities at 

fair value through profit 

or loss – trading 

(FL FVTPL trading) 

Cross currency swaps 

(cash flow hedges) 

1 033 

21 979 

1 033 

21 979 

1 501 

22 131 

In 2011 and 2010, no reclassifications occurred between the levels 1 and 2. 

1 501 

22 131 

The movement in the fair value changes of the level 3 available-for-sale financial 

instruments is as follows: 

in 1000 CHF 

2011 2010 

Balance at 01/01 22 22 

Purchase 1 118 

Sale − 120 

Balance at 31/12 1 020 22

AFG 


2011 

in 1000 CHF 



44 Provisions 

151 

Warranty Personnel Restructuring Other provisions Total 



13 457 13 723 471 3 482 31 133 

differences 

− 1 195 − 2 031 − 1 753 

− 88 − 5 067 

Additional provisions 9 079 3 475 18 539 1 275 32 368 

Used during the year − 8 025 − 3 248 − 438 − 1 787 − 13 498 

Unused amounts reversed − 2 − 1 182 − 1 350 − 2 534 



13 314 10 737 16 819 1 532 42 402 

differences 

− 177 − 257 − 243 

− 8 − 685 

Acquisition of subsidiaries 49 49 

Additional provisions 10 097 1 676 386 871 13 030 

Used during the year − 8 818 − 2 549 − 14 210 − 319 − 25 896 

Unused amounts reversed − 1 111 − 710 − 589 − 204 − 2 614 

Balance at 31/12/2011 13 305 8 897 2 163 1 921 26 286 

thereof current 

at 31/12/2010 

thereof current 

at 31/12/2011 

in 1000 CHF 

9 669 

9 334 

3 066 

2 582 

16 443 

1 968 

1 162 

1 501 

30 340 

15 385 

The current provision is expected to be fully utilised during 2012. The non-current 

provision is expected to be utilised as follows: 

Warranty Personnel Restructuring Other provisions Total 

between 1 and 5 years 3 927 6 232 195 272 10 626 

after 5 years 44 83 148 275 

Warranty 

Warranty provisions are assessed for each order individually. In case of a high 

volume of orders, such an individual assessment might be impractical and standard 

rates are applied based on past experience. 

Personnel 

Personnel provisions comprise mainly a provision for partial retirement. 

Restructuring 

As of 31 December 2010, a restructuring provision was included for redundancy 

payments in connection with the announced reorganisation of the heating and 

kitchen businesses on 8 October 2010. Incurred expenses to date of CHF 14.2 

million were recorded against this provision. Based on updated knowledge CHF 

0.6 million of the initial booked provision was released to the income statement. 

The remaining provision of CHF 2.2 million is considered to be sufficiently high. 

It is expected that the reorganisation of the heating business will be completed 

by early 2012 and that of the kitchen business by the 1 st quarter of 2013.

AFG 


2011 



152 

Other provisions 

Other provisions include amongst others costs for legal claims, environmental 

risks and various risks that could arise in the normal course of business. 

45 Deferred income taxes 

Deferred tax assets and liabilities arise due to differences between the group 

valuation and tax valuation in the following balance sheet items: 

in 1000 CHF 

Deferred tax 

assets 

31 / 12 / 2011 31 / 12 / 2010 

Deferred tax 

liabilities 

Deferred tax 

assets 

Deferred tax 

liabilities 

Assets 

Securities 3 7 


Inventories 398 7 278 457 6 893 

Financial assets 2 109 18 703 1 838 12 283 

Non-current assets held for sale 247 119 

Property, plant and equipment 1 012 29 398 831 29 618 

Investment property 144 96 212 

Intangible assets 1 287 7 637 599 13 342 

Liabilities 

Current liabilities 376 103 351 65 

Non-current liabilities 470 27 325 25 

Current and non-current provisions 1 082 2 581 1 405 2 591 

Employee benefit obligations 3 513 4 141 

Deferred taxes from timing differences 10 500 70 096 10 469 66 836 

Deferred tax assets derived from tax loss carryforwards 43 170 27 108 

Valuation allowance − 29 583 − 13 704 

Net deferred taxes from timing differences 24 087 70 096 23 873 66 836 

Offset of deferred tax assets and liabilities − 15 774 − 15 774 − 13 175 − 13 175 

Total deferred taxes 8 313 54 322 10 698 53 661 

From non-current liabilities, CHF 0.1 million (2010: CHF 0.1 million) of deferred 

taxes were directly recorded in comprehensive income. All other changes of assets 

and liabilities were recorded through the income statement. 

Deferred income tax assets are recognised as tax loss carryforwards and 

temporary differences to the extent that the realisation of the related tax benefit 

through future taxable profits is probable. 

There are temporary differences in the amount of CHF 72.1 million (2010: 

CHF 67.9 million) in conjunction with investments in subsidiaries for which AFG 

has not recorded deferred tax liabilities based on the exemption provisions of 

IAS 12.

AFG 


2011 



Activity in the deferred income tax account on a net basis is as follows: 

in 1000 CHF 

153 

2011 2010 

Balance at 01/01 42 963 44 497 

Acquisition of subsidiaries 119 

Changes to shareholders' equity − 77 120 

Changes to the income statement 3 034 − 1 359 

Foreign exchange differences − 30 − 295 

Balance at 31/12 46 009 42 963 

Unrecognised tax loss carryforwards 

in 1000 CHF 

31 / 12 / 2011 31 / 12 / 2010 

Tax loss carryforwards 276 892 132 400 

thereof recognised as deferred taxes − 125 383 − 77 475 

Unrecognised tax loss carryforwards 151 509 54 925 

Portion expiring: 

within 1 year 151 518 

between 1 and 5 years 31 427 6 976 

after 5 years 119 931 47 431 

Total 151 509 54 925 

Tax effect on unrecognised tax loss carryforwards 29 583 13 704 

thereof pertaining to tax rates between 15 % and 20 % 17 740 2 992 

thereof pertaining to tax rates between 21 % and 25 % 6 120 480 

thereof pertaining to tax rates between 26 % and 30 % 4 626 9 110 

thereof pertaining to tax rates between 31 % and 35 % 1 097 1 122

AFG 


2011 



46 Employee benefit obligations 

The following amounts are included in the consolidated financial statements: 

in 1000 CHF 

154 

31 / 12 / 2011 31 / 12 / 2010 

Present value of funded obligations 474 431 431 996 

Fair value of plan assets 441 175 444 799 

Under- / Overfunding 33 256 − 12 803 

Present value of unfunded obligations 43 837 42 260 

Unrecognised actuarial losses − 92 685 − 44 749 

Pension surplus not capitalised based on IAS 19.58 b 27 870 28 466 

Liability (net) recognised in the balance sheet 12 278 13 174 

thereof recorded as employee benefit obligations 44 580 47 949 

thereof recorded as capitalised pension surplus − 32 302 − 34 775 

The movement in the defined benefit obligation over the year is as follows: 

in 1000 CHF 

2011 2010 

Balance at 01/01 474 256 429 808 

Acquisition of subsidiaries 97 

Current service cost 14 842 11 955 

Interest cost 14 094 14 849 

Contributions by plan participants 10 431 11 362 

Past service cost 1 739 − 154 

Benefits paid − 15 121 − 10 108 

Actuarial losses 19 937 25 695 

Curtailments and settlements − 800 − 1 943 

Foreign exchange differences − 1 207 − 7 208 

Balance at 31/12 518 268 474 256

AFG 


2011 



The movement in the fair value of plan assets over the year is as follows: 

in 1000 CHF 

155 

2011 2010 

Balance at 01/01 444 799 414 911 

Expected return on plan assets 18 616 16 083 

Contributions by the employer 14 298 14 945 

Contributions by plan participants 10 431 11 362 

Benefits paid − 15 121 − 10 108 

Actuarial losses − 31 053 − 2 394 

Curtailments and settlements − 795 

Balance at 31/12 441 175 444 799 

The amounts recognised in the income statement under personnel expenses are 

as follows: 

in 1000 CHF 

2011 2010 

Current service cost 14 842 11 955 

Interest cost 14 094 14 849 

Expected return on plan assets − 18 616 − 16 083 

Past service cost 1 739 − 154 

Actuarial losses 2 957 4 362 

Pension surplus not capitalised − 595 − 593 

Curtailments and settlements − 6 − 2 286 

Net charges for defined benefit plans 14 415 12 050 

in 1000 CHF 

2011 2010 

Actual return on plan assets − 12 437 13 689 

The principal actuarial assumptions used were as follows: 

2011 2010 

Weighted average 

Discount rate at 31/12 2.6 % 3.0 % 

Expected return on plan assets 4.2 % 3.9 % 

Future salary increases 1.1 % 1.6 % 

Future pension increases 0.4 % 0.4 % 

Expected employment in years 10.7 10.0

AFG 


2011 



Plan assets at fair value consist of: 

in 1000 CHF 

156 

31 / 12 / 2011 31 / 12 / 2010 

Equity instruments 68 590 28 972 

Debt instruments 116 945 57 540 

Debt instruments – own company 279 

Properties 107 310 92 064 

Others 148 330 265 944 

Total plan assets at fair value 441 175 444 799 

in 1000 CHF 

The expected return on plan assets is determined on the basis of the plan asset 

break down at the beginning of the year and the expected long-term returns 

available on the respective asset class. 

Plan assets invested in Swiss multi-employer plans are allocated to the category 

“Others”. 

Expected contributions to pension plans for the year ending 31 December 

2012 amount to CHF 24.4 million (2011: CHF 23.7 million), of which CHF 13.9 

million (2011: CHF 14.0 million) are attributable to the employer. 

Experience adjustments as stipulated by IAS 19.120A lit. p were as follows: 

2011 2010 2009 2008 2007 

Present value of defined 

benefit obligation 

518 268 474 256 429 808 417 792 425 745 

Fair value of plan assets 441 175 444 799 414 911 397 522 418 800 

Underfunding 

Experience adjustments 

on plan liabilities (losses) / 

77 093 29 457 14 897 20 270 6 945 

gains 

Experience adjustments on 

3 101 13 831 3 133 4 095 − 15 226 

plan assets (losses) /gains − 31 053 − 2 394 1 615 − 23 211 − 7 543

AFG 


2011 



47 Share capital 

Category Outstanding 

shares 

The capital structure is as follows: 

Par value 

in CHF 

157 

31 / 12 / 2011 31 / 12 / 2010 

Share capital 

in CHF 

Outstanding 

shares 

Par value 

in CHF 

Share capital 

in CHF 

Registered shares 18 225 603 4.20 76 547 533 18 225 603 4.20 76 547 533 

On 29 April 2011, the Annual General Meeting approved a withholding tax free 

distribution of CHF 0.50 per registered share. No distribution for treasury shares 

occurred at the time of payment. The payment totalling CHF 8.8 million occurred 

on 9 May 2011. 

On 16 April 2010, the Annual General Meeting of AFG Arbonia-Forster- 

Holding AG approved amongst others the following resolutions: 

To convert the old bearer shares with a nominal value of CHF 4.20 each at 

a ratio of 1:1 into new registered shares with the same nominal value and to 

convert the old registered shares with a nominal value of CHF 0.84 each at a ratio 

of 5:1 into new registered shares with a nominal value of CHF 4.20 each. After 

the conversion the share capital of AFG Arbonia-Forster-Holding AG of CHF 

76 547 532.60 consists of 18 225 603 new registered shares with a nominal value 

of CHF 4.20 each. 

To authorise the Board of Directors to create additional share capital by a 

maximum amount of CHF 15 309 504 through the issue of maximal 3 645 120 

fully paid registered shares with a nominal value of CHF 4.20 each until 16 April 

2012 (authorised capital). 

To increase the share capital by a maximum amount of CHF 15 309 504 

through the issue of maximal 3 645 120 fully paid registered shares with a nominal 

value of CHF 4.20 each (conditional capital). 

The authorised and conditional capital together are limited to a total of additional 

share capital of CHF 15 309 504. 

Earnings per share 

2011 2010 

Group earnings for the year (in 1000 CHF) − 70 239 14 136 

Outstanding shares (average) 18 225 603 18 225 603 

Less treasury shares (average) 

Average number of shares outstanding 

− 570 933 − 570 933 

for the calculation 

17 654 670 

17 654 670 

Undiluted earnings per share in CHF − 3.98 0.80 

There were no dilutive effects impacting the calculation.

AFG 


2011 

Bearer shares 

nom. CHF 4.20 

(until 19/4/2010) 

Registered shares 

nom. CHF 4.20 

(from 19/4/2010) 



48 Treasury shares 

Trans- Ø market 

action value 

in CHF 

Number 

of shares 

158 

2011 2010 

Amount Trans- Ø market 

action value 

in 

1000 CHF 

in CHF 

Number 

of shares 

Amount 

in 

1000 CHF 

Balance at 01/01 43 570 933 24 574 53 192 807 10 233 

Exchange 1 38 378 126 14 341 

Balance at 31/12 43 570 933 24 574 43 570 933 24 574 

Registered shares 

nom. CHF 0.84 

Balance at 01/01 8 1 890 630 14 341 

Exchange 1 8 − 1 890 630 − 14 341 

Balance at 31/12 

The balance of treasury shares has remained unchanged since 31 December 

2010. Due to the introduction of a single share class at the Annual General Meeting 

on 16 April 2010, the former 192 807 bearer shares were converted at a ratio 

of 1:1 into new registered shares and the former 1 890 630 registered shares were 

converted at a ratio of 5:1 into new registered shares.

AFG 


2011 



49 Other reserves 

in 1000 CHF 


and hedging 

reserves 

Currency 

translation 

159 

Balance at 01/01/2010 − 5 519 − 27 013 − 32 532 

Foreign exchange differences of US PP 10 667 10 667 

Changes in fair value of CCS − 2 713 − 2 713 

Transactions recorded in income statement − 6 412 − 6 412 

Deferred taxes − 120 − 120 


Balance at 31/12/2010 − 4 097 − 54 960 − 59 057 

Foreign exchange differences of US PP − 282 − 282 

Changes in fair value of CCS 23 23 

Transactions recorded in income statement − 726 − 726 

Deferred taxes 77 77 


Balance at 31/12/2011 − 5 005 − 60 100 − 65 105 

The interest and currency risk of the US private placement totalling USD 112 million 

was hedged by way of cross currency swaps (CCS). These cross currency 

swaps are identical with the underlying transactions in terms of amount, currency, 

interest payment date and duration. They are considered to be highly effective 

in offsetting changes in cash flows of the underlying hedged transactions 

and consequently AFG is applying hedge accounting. The inception date of the 

underlying transactions and the cross currency swaps was 2 December 2004 and 

the maturity date will be on 30 November 2014. 

Total

AFG 


2011 



50 Financial results 

in 1000 CHF 

160 

2011 2010 

Financial income 

Bank and other interests 1 618 612 

Total interest income 1 618 612 

Income from securities designated 

at fair value through profit or loss 

134 

443 

Held for trading derivative financial instruments 3 114 731 

Other financial income 59 52 

Total other financial income 3 307 1 226 

Total financial income 4 925 1 838 

Financial expenses 

Bank and other interests 2 610 2 758 

Interests on finance leases 218 262 

Interests on non-current financial debts 

Amortisation charges on bond, US PP 

15 850 15 799 

and syndicated loan 

769 

613 

Total interest expenses 19 447 19 432 

Impact of exchange rate fluctuations 

Expenses from securities designated 

3 404 1 425 

at fair value through profit or loss 

233 

5 

Held for trading derivative financial instruments 2 551 1 023 

Impairment of loans 950 

Bank charges and other financial expenses 1 673 1 997 

Total other financial expenses 8 811 4 450 

Total financial expenses 28 258 23 882 

Total net financial results − 23 333 − 22 044

AFG 


2011 



51 Income taxes 

in 1000 CHF 

161 

2011 2010 

Current income taxes 9 510 12 656 

Changes in deferred income taxes 3 034 − 1 359 

Total 12 544 11 297 

The tax on Group earnings before tax differs from the theoretical amount that 

would arise using the weighted average tax rate applicable to earnings before tax 

of the consolidated companies as follows: 

in 1000 CHF 

2011 2010 

Earnings before income tax − 57 673 25 453 

Weighted average tax rate in % 15.9 18.7 

Expected tax charge − 9 147 4 772 

Income tax reconciliation 

Effect of utilisation of previously unrecognised tax losses − 185 − 506 

Effect of not capitalised losses for the year 

Effect of non-tax-deductible expenses 

12 398 2 837 

and non-taxable income 

4 417 

3 032 

Effect of income and expenses taxed at special rates 264 525 

Effect of tax charges related to prior years 407 2 454 

Effect of tax rate changes 8 1 846 

Change in unrecognised deferred tax assets 4 128 − 3 641 

Other items 254 − 22 

Effective tax charge 12 544 11 297 

Effective tax rate in % n /a 44.4 

The Group's applicable tax rate represents the weighted average of the statutory 

corporate tax rates, prevailing in the tax jurisdictions in which the Group companies 

operate. 

The expected weighted average tax rate decreased compared to previous year. 

This decrease results mainly from the substantially increased share of earnings 

from Swiss companies with lower tax rates, particularly in light of the impairment 

in the Surface Technology Division. There were no significant changes in local tax 

rates from the previous year.

AFG 


2011 



52 Financial risk management 

162 

Risk management principles 

AFG has a centralised risk management system. The risk management process is 

carried out as stated in the internal guidelines. Any potential and material risks 

have been identified and quantified according to the likelihood and impact. Overall, 

no potential risks have been identified in the business year, which could lead 

to material adjustments of net assets, the financial position and results of operations 

of the consolidated financial statements of AFG. 

Due to its international business activities, the Group is subject to various 

financial risks, such as credit, liquidity and other market risks. The principal goal 

of risk management activities is to minimise financial risks to the continued existence 

(liquidity and default risks) and profitability (currency, interest rate fluctuation, 

price risks) while ensuring adequate solvency at any time. Risk minimisation 

does not mean to completely eliminate but rather to control financial risks in an 

economically useful manner within an identified framework. Depending on their 

assessment, the Group uses derivative and non-derivative financial instruments to 

hedge certain risks. To minimise financial default risks, derivative financial instruments 

are only entered into with banks for which an internal limit has been approved 

on the basis of a credit rating. 

There are financial management guidelines and principles within the Group 

that regulate the handling of currency, interest rate fluctuation and credit risks, 

the use of derivative and non-derivative financial instruments as well as the management 

of liquid funds not required for operations. The risk management guidelines 

adopted by the Board of Directors are implemented centrally by group treasury 

but in close cooperation with Group companies. 

The Group's financial resources are not used for speculation purposes. 

Credit default risk 

Credit risks arise from the possibility that the counterparty of a transaction might 

not be able or willing to meet its obligations. 

The credit risk, on the one hand, relates to trade accounts receivable but 

also to cash and cash equivalents, fixed-term deposits and derivative financial 

instruments having a positive market value. 

The credit or default risk in relation to receivables is controlled by the individual 

subsidiaries on a decentralised basis and limited through the assignment 

of credit limits on the basis of systematic and regular credit ratings. Corresponding 

guidelines are in place within the Group aiming at an ongoing control and 

value adjustment of open positions. Due to the broad diversification of the customer 

portfolio into various business segments and geographic regions but also 

the possibility to create construction tradesman's liens or the use of credit insurance, 

the credit risk is limited. The 10 largest debtors of AFG as of the balance 

sheet date accounted for a share of 21.0 % (2010: 22.4 %) of existing trade receivables. 

The 10 largest customers generated 23.2 % (2010: 22.9 %) of the 

Group's net revenues in the year under review. 

To minimise financial default risks, cash and cash equivalents, fixed-term 

deposits and derivative financial instruments are only deposited or entered into 

with banks for which an internal limit has been approved on the basis of a credit 

rating. The three largest banks accounted for 45 % / 35 % / 13 % of total liquid 

funds as of the balance sheet date (2010: 39 % / 38 % / 11 %). 

The maximum credit risk corresponds to the book values or fair values reported 

in note 43 for the financial asset categories “Financial instruments held for 

trading purposes” and “Loans and receivables”. These include derivative financial 

instruments having a positive market value.

AFG 


2011 



163 

Liquidity risk 

The liquidity risk arises from the fact that the Group might not be in a position to 

obtain the funds required to meet the obligations assumed in connection with 

financial instruments on the relevant due dates. 

The cash, investments, financing and redemptions are managed and controlled 

on an ongoing basis by group treasury. The standard policy involves financial 

structures with matching maturities and currencies for each individual subsidiary. 

Scheduled cash requirements for the planning horizon must be secured 

under facility agreements or internal funding within the Group and/or via banks. 

By means of rolling monthly cash flow forecasts over a planning horizon of 12 

months, the future cash development is forecasted in order to take measures in 

due time in the event of an excess coverage or shortfall. AFG monitors its liquidity 

risk with the aid of a consolidated liquidity plan, taking into account additional 

funding sources, e.g. undrawn credit limits. As individual divisions of AFG 

are subject to seasonal fluctuations, cash decreases early in the year but normally 

rises again in the second half of the year. 

The available liquidity as of the balance sheet date is shown below: 

in 1000 CHF 

31 / 12 / 2011 31 / 12 / 2010 

Cash and cash equivalents and securities 252 298 265 859 

+ undrawn credit facilities 257 694 260 341 

Total available liquidity 509 992 526 200 

The US private placement and the syndicated loan include covenants. If such 

covenants are not complied with, the note holders and banks respectively may 

demand immediate redemption of their share. In 2011 and 2010, AFG complied 

with all covenants. Due to restrictions on the leverage ratio, undrawn credit facilities 

cannot be fully utilised. 

The contractually agreed maturities of financial liabilities within the meaning 

of IFRS 7 are set forth in note 42. 

Market risk 

(a) Currency risk 

Due to the Group's international focus, there are currency risks based on exchange 

rate fluctuations of various currencies. In the case of AFG, these mainly 

relate to the EUR and USD. 

A currency risk arises from transactions settled in foreign currencies and paid 

in the Group company's functional currency. The standard policy is that subsidiaries 

must hedge 100 % of the relevant net risk position for the risk horizon period 

through hedging transactions via group treasury. AFG's risk position equals the 

sum of the subsidiaries' net risk positions. The standard policy to hedge at least 

1 /3 to maximum 2 /3 of operational risk positions in the relevant currency by means 

of currency forward transactions with external counterparties via group treasury 

applies to the Group. 

Translation differences also arise from the consolidation in CHF of the financial 

statements of foreign subsidiaries prepared in foreign currencies. Translation 

affects the amount of earnings and comprehensive income. The major risk to the 

Group in connection with translation differences relates to the EUR. The effects 

of such exchange rate fluctuations on significant net investments in this currency 

are partially hedged by raising loans in the same currency.

AFG 


2011 



164 

For the description of market risks, IFRS 7 requires sensitivity analyses showing 

the effects of realistic currency fluctuations on Group earnings and shareholders' 

equity. These effects are calculated on the basis of financial instruments existing 

as of the balance sheet date. In this context, it is assumed that all other variables 

remain unchanged. Currency fluctuations relating to financial instruments (cross 

currency swaps) designated as cash flow hedges to secure future cash flows for 

the US private placement have an immediate effect on the income statement as 

the underlying transaction is also reported in the income statement in the same 

period. 

A 10 % increase (decrease) of the EUR against the CHF (2010: 10 %) or a 10 % 

increase (decrease) of the USD against the CHF (2010: 10 %) would have the following 

effects on AFG's Group earnings as of the balance sheet date: 

in 1000 CHF 

31 / 12 / 2011 31 / 12 / 2010 

EUR/CHF USD/CHF EUR/CHF USD/CHF 

Reasonably possible change 10.0 % 10.0 % 10.0 % 10.0 % 

Impact of an increase on group earnings 3 325 − 772 1 505 − 1 054 

Impact of a decrease on group earnings − 3 325 772 − 1 505 1 054 

(b) Interest rate risk 

Interest rate risks arise from interest rate fluctuations which may have a negative 

effect on the Group's asset and earnings position. Interest rate fluctuations result 

in changes in interest income and expenses relating to interest-bearing assets and 

liabilities. In addition, they may also affect the market value of certain financial 

assets, liabilities and financial instruments, as set forth below under “Market 

risks”. 

Group companies are exclusively funded via group treasury on terms in line 

with the market and on a decentralised basis only in exceptional cases and upon 

prior approval. Excess cash is also invested via group treasury. The standard policy 

for the Group as well as for subsidiaries is that interest-bearing financial transactions 

in terms of capital commitment and fixed interest rates must always meet 

the underlying requirements. Derivative financial instruments, such as interest 

rate swaps or interest rate options, are used on a case-by-case basis and only 

upon consultation with or according to the instruction of group treasury. 

For the description of interest fluctuation risks, IFRS 7 requires sensitivity 

analyses showing the effects of realistic fluctuations in market interest rates on 

Group earnings and shareholders' equity. These effects are calculated on the 

basis of financial instruments existing as of the balance sheet date. In this context, 

it is assumed that all other variables remain unchanged and that the balance of 

financial instruments as of the balance sheet date is representative of the entire 

year. Fixed-rate financial instruments valued at amortised cost are not subject to 

interest rate fluctuation risks within the meaning of IFRS 7. However, market interest 

rate fluctuations of financial instruments (cross currency swaps) designated 

as cash flow hedges to secure future cash flows for the US private placement 

affect shareholders' equity.

AFG 


2011 



165 

An increase (decrease) in the market interest level as of the balance sheet date by 

50 basis points for CHF (2010: 50 basis points), by 50 basis points for EUR interest 

rates (2010: 50 basis points) or by 50 basis points for USD interest rates (2010: 

50 basis points) would have the effects set forth below on Group earnings and 

the shareholders' equity of AFG: 

in 1000 CHF 

CHF 

interest 

rate 

EUR 

interest 

rate 

31 / 12 / 2011 31 / 12 / 2010 

USD 

interest 

rate 

CHF 

interest 

rate 

EUR 

interest 

rate 

USD 

interest 

rate 

Reasonably possible change in basis points 50 50 50 50 50 50 

Variable interest-bearing financial instruments 

Impact of an increase on group earnings 861 240 941 249 

Impact of a decrease on group earnings − 861 − 240 − 941 − 249 

Interest rate swaps 

Impact of an increase on group earnings − 188 − 293 

Impact of a decrease on group earnings 188 293 

Cross currency swaps 

Impact of an increase on shareholders' equity 1 268 466 − 1 225 1 678 663 − 2 047 

Impact of a decrease on shareholders' equity − 1 268 − 466 1 225 − 1 678 − 663 2 047 

(c) Other market risks 

Market value risk 

Changes in market values of financial assets, liabilities or financial instruments 

may affect the Group's asset and earnings position. 

For the description of market risks, IFRS 7 requires sensitivity analyses showing 

the effects of a reasonable potential change in risk variables, such as market 

prices, indices, etc., on prices of financial instruments, on the Group's earnings 

and shareholders' equity. 

As of the balance sheet date, AFG reported no significant equity instruments 

under investments or securities classified as available-for-sale. 

Equity management 

The objective of AFG is a strong equity base to secure the Group's future development. 

In the medium term a sustainable equity ratio of 50 % is the goal. The 

shareholders' equity attributable to equity holders of AFG Arbonia-Forster-Holding 

AG as reported in the consolidated balance sheet is deemed AFG's relevant 

equity and corresponds to an equity ratio of 38.9 % as of the balance sheet date 

(2010: 41.8 %). The decrease compared to the previous year is mainly attributable 

to the high negative Group result. On the other hand the decrease was also impacted 

by the distribution to the shareholders as well as by the unfavourable 

foreign exchange impact when translating the Group companies' functional currencies 

into the presentation currency of the Swiss franc. 

On 16 April 2010, the Annual General Meeting of AFG Arbonia-Forster- 

Holding AG approved the introduction of a single class of shares and also voted 

for authorised and conditional capital (see note 47). 

The US private placement and the syndicated loan include covenants. One of 

these covenants prescribes a minimum net worth, which is increased on a yearly 

basis by a pre-defined percentage of Group profit. In the event of non-compliance, 

the note holders and banks respectively may at any time at their option, declare 

the amounts then outstanding to be immediately due and payable. 

AFG is not governed by any regulatory authorities with respect to minimum 

capital requirements.

AFG 


2011 



53 Derivative financial instruments 

31 / 12 / 2011 Contractual 

cash flows 

in 1000 CHF 

166 

Hedge accounting – cash flow hedges 

The interest and currency risk of the US private placement totalling USD 112 million 

was hedged on 2 December 2004 by way of cross currency swaps and designated 

as cash flow hedges. 

The following table shows the contractual maturities of payments (interest payments 

and repayments), i.e. when the underlying transactions affect the income 

statement: 

up to 

6 months 

7 to 

12 months 

between 1 

and 2 years 

between 2 

and 5 years 

US private placement 

Cash outflow 142 478 2 740 2 740 5 481 131 517 

Cash inflow − 123 606 − 3 071 − 3 071 − 6 142 − 111 322 

31 / 12 / 2010 Contractual 

cash flows 

in 1000 CHF 

up to 

6 months 

7 to 

12 months 

between 1 

and 2 years 

between 2 

and 5 years 

US private placement 

Cash outflow 149 129 2 766 2 766 5 532 138 065 

Cash inflow − 129 403 − 3 063 − 3 063 − 6 126 − 117 151 

Derivative financial instruments 

The following table shows the fair values of the various derivative financial instruments 

recognised in the balance sheet as of the balance sheet date: 

in 1000 CHF 

31 / 12 / 2011 31 / 12 / 2010 

Assets 

Interest rate swaps without hedges 17 

Forward foreign exchange contracts without hedges 163 51 

Liabilities 

Interest rate swaps without hedges 1 033 1 490 

Forward foreign exchange contracts without hedges 

Combination of interest rate swaps and forward 

11 

foreign exchange contracts with cash flow hedges 

21 979 

22 131

AFG 


2011 



167 

Interest rate swaps (forward collar) are entered into for the partial protection 

against the interest rate risk, i.e. the interest rate protection with a floor and cap. 

Forward foreign exchange contracts are entered into to minimise the exposure 

to foreign currency fluctuations and are designated for future anticipated 

cash flows. Anticipated cash flows are only partially covered by such contracts. 

As of the balance sheet date, the following currencies were hedged: USD against 

GBP (2010: CZK and PLN against EUR and USD against GBP). 

The combined instruments of interest rate/forward foreign exchange contracts 

(cross currency swaps) are identical with the underlying US private placement 

transactions in terms of amount, currency, interest payment date and duration. 

They are considered to be highly effective in offsetting changes in cash flows 

of the underlying hedged transactions. Consequently hedge accounting has been 

applied and the fair value of these derivatives are recognised in comprehensive 

income (see note 49). 

54 Share-based payment plan 

On 14 July 2010, the Board of Directors approved the introduction of a sharebased 

payment plan, effective from 1 January 2011 for Group Management and 

certain other employees. As part of this plan, Group Management members receive 

one third and the other employees one fourth of their bonus in shares. This 

equity-settled variable remuneration is measured at fair value and recognised as 

an increase in equity. The determination of the fair value is the volume weighted 

average share price of the last 20 trading days preceding the grant date, less a 

20 % discount. These shares granted have a restriction period of four years. The 

allocation will occur for the first time in 2012 for the financial year 2011. 

In 2007, the Board of Directors approved the implementation of a sharebased 

payment plan for the now former Chairman and CEO Dr. Edgar Oehler. The 

number of allocated shares to this plan amounted to 45 400 registered shares of 

AFG Arbonia-Forster-Holding AG. The fair value of a registered share on the day 

of grant (22 November 2007), after a 29 % deduction for illiquidity on registered 

shares and the extended endorsement retention period, totalled CHF 49.35. The 

allocation of registered shares occurred over three years. The registered shares 

feature an endorsement retention period of 9 years. The pro-rata personnel expenses 

charged to the income statement in 2010 equal to the difference between 

the fair value and the pre-determined purchase price amounted to CHF 0.35 

million. The plan expired on 21 November 2010. 

55 Related party transactions 

Members of the Board of Directors and Group Management were compensated 

as follows: 

in 1000 CHF 

2011 2010 

Salaries and other short-term employee benefits 6 264 7 084 

Share-based payments 351 

Termination benefits 354 354 

Pension contributions 465 524 

Total 7 083 8 313 

The detailed disclosures regarding executive remuneration required by Swiss law 

are included in the financial statements of AFG Arbonia-Forster-Holding AG on 

pages 180 to 182.

AFG 


2011 

in 1000 CHF 



168 

The following transactions were carried out with related parties and the following 

balances were outstanding as of the balance sheet date respectively: 

Sale of 

services 

Purchase of 

services 

Sale of 

goods 

Purchase Sale of 

of goods other assets 

2011 31 / 12 / 2011 

Balance on 

receivables 

Balance on 

liabilities 

Key management 

personnel 

186 

763 11 102 

Other related parties 1 638 322 51 960 39 37 

Associates 1 2 112 86 2 

Total 1 639 2 620 51 1 723 136 141 

in 1000 CHF 

Sale of 

services 

Purchase of 

services 

Sale of 

goods 

Purchase 

of goods 

Sale of 

other assets 

2010 31 / 12 / 2010 

Balance on 

receivables 

Balance on 

liabilities 

Key management 

personnel 

34 

58 

Other related parties 1 821 105 7 29 109 

Associates 2 230 2 

Total 1 821 2 369 9 87 109 

The law firm Bratschi Wiederkehr & Buob, of which Christian Stambach (nonexecutive 

member of the Board of Directors) a partner is, charged in 2011 for 

legal advice and representation TCHF 368 (2010: TCHF 498) to AFG and its Group 

companies. These expenses are included in the purchased services and were at 

arm's length. Another TCHF 154 (2010: TCHF 187) of this position relate to salaries 

of the three children of the former Chairman of the Board of Directors and 

CEO Dr. Edgar Oehler, who are or were employed by Group companies. Another 

substantial share of this position includes ferry boat transports utilised by our 

logistic company. The sale of other assets relates to the agreement between AFG 

and Dr. Edgar Oehler made on 21 February 2011, under which he committed 

himself to purchase certain shared-use assets of AFG (interior fittings/furnishings 

of a show apartment, vehicles and financial assets). The purchases were made at 

economic book value terms and euro tax values respectively. In addition, Dr. Edgar 

Oehler contributed a payment of TCHF 1343 as private share for various expenses 

of the past years, which in contrast is not included in the above table. In 

reference to the share-based payment plan for 2010, see note 54. There were no 

guarantees granted as of the balance sheet date. Furthermore no provisions were 

required for receivables.

AFG 


2011 



169 

Piatti Küchenforum AG in Luzern with a voting interest of 40 % is classified as an 

associate. The financial data of this company are as follows: 

in 1000 CHF 

2011 2010 

Assets 938 968 

Liabilities 187 210 

Net revenues 3 922 4 516 

Result for the year 32 32 

Since final numbers are not available as of the date of preparation of this report, 

financial data of the previous year are disclosed in the actual reporting period. 

56 Contingencies 

Promissory notes in the amount of CHF 0.6 million (2010: CHF 0.8 million) are 

outstanding. 

57 Events after the balance sheet date 

The closing of the sale of several vehicles from Asta AG relating to the Swiss activities 

occurred as agreed on 31 January 2012 (see note 36). 

No other events occurred between the balance sheet date and the date of this 

report which could have a significant influence on the 2011 consolidated financial 

statements.

AFG 


2011 

Company 



58 Material subsidiaries 

Head Office 

Share Capital 

in million 

Interest in Capital 

Heaters / Radiators 

Shower Stalls 

Heating and Sanitary 

Arbonia AG Arbon, CH 4.000 CHF 100 % 

Heizkörper Prolux AG Arbon, CH 1.000 CHF 100 % 

Kermi s.r.o. Strˇíbro, CZ 195.000 CZK 100 % 

AFG Arbonia-Forster-Riesa GmbH Riesa, DE 0.614 EUR 100 % 

Kermi GmbH Plattling, DE 15.339 EUR 100 % 

Arbonia France Sàrl Walheim, FR 0.600 EUR 100 % 

Aqualux Products Ltd. Wednesbury, GB 0.000 GBP 100 % 

Kermi (UK) Ltd. Corby, GB 0.150 GBP 100 % 

Kermi Sp.z o.o. Wroclaw, PL 0.900 PLN 100 % 

Kitchens 

Refrigeration 

Kitchens and Refrigeration 

AFG Küchen AG Arbon, CH 2.000 CHF 100 % 

Bruno Piatti AG Arbon, CH 3.000 CHF 100 % 

Forster Küchen- & 

Kühltechnik AG 

AFG Warendorfer 

Arbon, CH 

2.000 CHF 100 % 

 

Immobilien GmbH 

Münster, DE 

0.100 EUR 100 % 

Warendorfer Küchen GmbH Münster, DE 1.000 EUR 100 % 

AFG Kitchens UK Ltd. West Hagbourne, GB 0.000 GBP 100 % 

Windows and Doors 

Steel Technology 

Surface Technology 

Logistics 

170 


EgoKiefer AG Altstätten, CH 8.000 CHF 100 % 

Usines Ego SA Villeneuve, CH 0.700 CHF 100 % 

RWD Schlatter AG Roggwil, CH 2.000 CHF 100 % 

Slovaktual s.r.o. Pravenec, SK 0.500 EUR 100 % 


Forster Rohr- & Profiltechnik AG Arbon, CH 4.000 CHF 100 % 

Production / Sales 

Trade 

Services / Finances 

Services / Finance

AFG 


2011 

Company 



58 Material subsidiaries (continued) 

Head Office 

Share Capital 

in million 

Interest in Capital 

Heaters / Radiators 

Shower Stalls 

Kitchens 

Refrigeration 




Logistics 


Surface Technologies 

International Holding AG Steinach, CH 

5.500 CHF 100 % 

Hartchrom AG 

STI Precision Machining 

Steinach, CH 2.000 CHF 100 % 

(Changshu) Co. Ltd. 

Changshu, CN 10.500 EUR 100 % 

 

Hartchrom Schoch GmbH 

Hartchrom Teikuro 

Sternenfels, DE 0.205 EUR 100 % 

Automotive GmbH 

STI Immobilien 

Sternenfels, DE 0.025 EUR 100 % 

 

(Deutschland) GmbH 

Sternenfels, DE 0.025 EUR 100 % 

Chromage Pyrénéen SA Oloron-Escout, FR 0.080 EUR 100 % 

Hydrométal SA Arudy, FR 0.069 EUR 100 % 

Avia Peintures Sàrl Arudy, FR 0.030 EUR 100 % 

Hartchrom Inc. Watervliet, US 0.200 USD 100 % 

171 

Corporate Services 

AFG Arbonia-Forster-Holding AG Arbon, CH 76.548 CHF 

AFG International AG Arbon, CH 1.000 CHF 100 % 

AFG Management AG Arbon, CH 0.250 CHF 100 % 

AFG Schweiz AG Arbon, CH 1.000 CHF 100 % 

AFG Services AG Arbon, CH 0.250 CHF 100 % 

AFG Immobilien AG Arbon, CH 12.000 CHF 100 % 

Asta AG 

AFG Shanghai 

Arbon, CH 0.120 CHF 100 % 

Management Co. Ltd. 

AFG Arbonia-Forster- 

Shanghai, CN 2.000 USD 100 % 

 

Deutschland GmbH 

Plattling, DE 

0.511 EUR 100 % 

 

Aqualux Products Holdings Ltd. Wednesbury, GB 0.016 GBP 100 % 

Production / Sales 

Trade 

Services / Finances 

Services / Finance

AFG 


2011 


Report of the Statutory Auditors 

on the Consolidated Financial Statements 

To the General Meeting of 

AFG Arbonia-Forster-Holding AG, Arbon 

St. Gallen, 16 February 2012 

172 

As statutory auditors, we have audited the consolidated financial statements 

of AFG Arbonia-Forster-Holding AG, which comprise the income 

statement, statement of comprehensive income, balance sheet, cash 

flow statement, statement of changes in equity and notes (pages 108 to 

171), for the year ended 31 December 2011. 

Board of Directors' Responsibility 

The Board of Directors is responsible for the preparation and fair presentation 

of the consolidated financial statements in accordance with the 

International Financial Reporting Standards (IFRS) 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. 

Auditors' 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 as well as the International 

Standards on Auditing. 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.

AFG 


2011 


Report of the Statutory Auditors on the Consolidated Financial Statements 

173 

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. 

Opinion 

In our opinion, the consolidated financial statements for the year ended 

31 December 2011 give a true and fair view of the financial position, the 

results of operations and the cash flows in accordance with the International 

Financial Reporting Standards (IFRS) 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 AG 

Lorenz Lipp Martin Knöpfel 

Audit expert Audit expert 

Auditor in charge

AFG 


2011 

175 


AFG 

Arbonia-Forster- 

Holding AG

AFG 


2011 

Income Statement 

Financial Statements AFG Arbonia-Forster-Holding AG 

176 

2011 2010 

in 1000 CHF in % in 1000 CHF in % 

Financial income 75 821 82 496 

Other income 444 1 

Total revenues 76 265 100.0 82 497 100.0 

Financial expenses − 57 634 − 75.6 − 53 353 − 64.6 

Personnel expenses − 656 − 0.9 − 886 − 1.1 

Other expenses − 5 373 − 7.0 − 4 913 − 6.0 

Depreciation − 10 

Taxes − 79 − 0.1 − 406 − 0.5 

Total expenses − 63 742 − 83.6 − 59 568 − 72.2 

Net profit for the year 12 523 16.4 22 929 27.8

AFG 


2011 

Balance Sheet 


177 

31 / 12 / 2011 31 / 12 / 2010 

in 1000 CHF in % in 1000 CHF in % 

Assets 

Cash and cash equivalents 181 364 195 183 

Securities 11 935 15 108 

Accounts receivable from third parties 281 519 

Accounts receivable from group companies 380 049 369 981 

Deferred expenses 32 

Current assets 573 661 57.4 580 791 57.6 

Investments 381 524 381 524 

Loans to group companies 43 952 45 147 

Other financial assets 257 378 

Non-current assets 425 733 42.6 427 049 42.4 

Total assets 999 394 100.0 1 007 840 100.0 

Liabilities and shareholders' equity 

Liabilities to third parties 1 109 1 635 

Liabilities to group companies 64 999 66 231 

Bank loans 5 000 2 000 

US private placement notes 14 185 7 734 

Accruals and deferred income 5 185 5 267 

Income tax liabilities 503 416 

Current liabilities 90 981 9.1 83 283 8.3 

Bond 2010 – 2016 197 748 197 280 

Bank loans 61 079 65 873 

US private placement notes 135 624 151 138 

Non-current liabilities 394 451 39.5 414 291 41.1 

Total liabilities 485 432 48.6 497 574 49.4 

Share capital 76 548 76 548 

Legal reserves 

General reserve 42 812 184 424 

Capital contribution reserve 132 785 

Reserve for treasury shares 29 011 29 011 

Other reserves 10 252 10 252 

Retained earnings 222 554 210 031 

Shareholders' equity 513 962 51.4 510 266 50.6 

Total liabilities and shareholders' equity 999 394 100.0 1 007 840 100.0

AFG 


2011 


Notes to the Financial Statements 

1 Guarantees, warranty obligations and 

collateral in favour of third parties 

The following guarantees were issued for the companies listed below: 

178 

31 / 12 / 2011 31 / 12 / 2010 

Deutsche Bank AG 

in favour of Kermi GmbH in 1000 EUR 5 000 

UBS AG 

in favour of Hartchrom AG in 1000 CHF 2 000 2 000 

St. Galler Kantonalbank 

in favour of EgoKiefer AG in 1000 CHF 2 000 2 000 

HypoVereinsbank 

in favour of Kermi GmbH in 1000 EUR 3 000 2 400 

in favour of Kermi s.r.o. in 1000 EUR 1 000 1 000 

in favour of Warendorfer Küchen GmbH in 1000 EUR 2 000 2 000 

in favour of Asta AG in 1000 EUR 4 000 2 900 

Commerzbank 

in favour of Hartchrom Schoch GmbH in 1000 EUR 1 000 1 000 

Bank für Tirol und Vorarlberg 

in favour of Asta AG in 1000 CHF 1 765 

2 Bonds /Notes 

Refer to note 41 in the notes to the consolidated financial statements.

AFG 


2011 



3 Material investments 

Gesellschaft Share capital 

in 1000 CHF 

179 

31 / 12 / 2011 31 / 12 / 2010 

Interest in 

capital in % 

Share capital 

in 1000 CHF 

Interest in 

capital in % 

AFG Schweiz AG 1 000 100 1 000 100 

AFG International AG 1 000 100 1 000 100 

AFG Services AG 250 100 250 100 

AFG Management AG 250 100 250 100 

4 Treasury shares 

Refer to note 48 in the notes to the consolidated financial statements. 

5 Major shareholders 

31 / 12 / 2011 31 / 12 / 2010 

Voting and capital interest Voting and capital interest 

Edgar Oehler 18.39 % 18.39 % 

6 Share capital 

Refer to note 47 in the notes to the consolidated financial statements.

AFG 


2011 

in 1000 CHF 



7 Off balance sheet items 

Contract 

amount 

180 

31 / 12 / 2011 31 / 12 / 2010 

Fair value Contract 

Fair value 

positive negative amount positive negative 

Combination of interest 

rate swaps and 

forward foreign 

exchange contracts 

126 037 

− 22 050 127 001 

− 22 130 

Interest rate swaps 

Total derivative 

40 000 − 1 033 50 000 17 − 1 490 

instruments 

166 037 

− 23 083 177 001 17 − 23 620 

The combination of interest rate swaps and forward foreign exchange contracts 

transactions are used solely for hedging interest and currency risks for long-term 

loans. The negative fair value results from the market valuation of interest and 

currency risks. The negative fair value has not been recorded because the interest 

as well as the currency risks are hedged over the entire term of the loan. The 

negative fair value of interest rate swaps resulted from the market valuation but 

have not been recorded. 

8 Risk assessment 

Refer to note 52 in the notes to the consolidated financial statements. 

9 Disclosure of remuneration and shareholding 

Remuneration to members of the Board of Directors 

in 1000 CHF 

2011 2010 

Executive member of the Board of Directors 

Edgar Oehler (until 29/04/2011) 67 235 

Non-executive members of the Board of Directors 

Paul Witschi 170 70 

Christian Stambach 73 60 

Arthur Loepfe 80 60 

Edgar Oehler (from 30/04/2011) 48 

Andreas Gühring 96 67 

Georg Früh (from 16/04/2010) 

Total non-executive members 

80 43 

of the Board of Directors 

547 

300 

Total remuneration to members 

of the Board of Directors 

614 

535

AFG 


2011 



Remuneration to Group Management 

in 1000 CHF 

Group 

Management 

2011 

thereof 

to Edgar 

Oehler 

2011 

Group 

Management 

2010 

181 

thereof 

to Edgar 

Oehler 

2010 

Annual salary 3 333 1 177 4 312 2 084 

Bonus 1 474 364 2 136 1 278 

Fees 185 115 305 235 

Share-based payments 351 351 

Termination benefits 354 354 

Pension contributions 465 106 524 161 

Other employee benefits 773 509 31 

Total 6 584 2 271 8 013 4 109 

Number of Group Management members 8 9 

Remuneration to Group Management 2011 includes for the first time Daniel 

Frutig (since 01/06/2011) and Dr. Hannes Schmüser (since 01/07/2011). Remuneration 

to Group Management 2010 included for the first time Dr. Christian 

Mayer (since 01/09/2010). The termination benefit of TCHF 354 relates to a remuneration 

to one divisional head as part of a takeover to retain his services for 

the company for the long term. This remuneration will be paid out in three equal 

instalments in 2010, 2011 and 2012. The former Chairman and CEO Dr. Edgar 

Oehler was the member of the Board of Directors and the Group Management 

with the highest total remuneration. The annual salary 2011 of Dr. Edgar Oehler 

includes a compensation of TCHF 573 for the project management from May to 

December 2011 of the site under construction in CN-Changshu. The fee of Dr. 

Edgar Oehler as Chairman of the Board of Directors until 29 April 2011 and thereafter 

as member of the Board of Directors of TCHF 115 (2010: TCHF 235) is also 

included in the remuneration to Group Management under line item fees. Modalities 

to the share-based payments 2010 are explained in more detail in note 

54 to the consolidated financial statements. 

Thomas Reifler as former Group Management member received in 2011 a remuneration 

of TCHF 183 for his temporary role as Head of Division until the position 

was filled with Dr. Hannes Schmüser. No other remuneration has been paid to 

former members of the Board of Directors and Group Management.

AFG 


2011 



182 

Loans and credits 

As of 31 December 2010 the at that time Chairman and CEO Dr. Edgar Oehler had 

a current account credit, which was completely reimbursed during 2011. Apart 

from that no loans or credits have been granted to other members of the Board 

of Directors and Group Management in 2011 or 2010 nor were outstanding as of 

31 December 2011 and 31 December 2010 respectively. 

Shareholdings 

The following members of the Board of Directors and the Group Management 

(including related parties) held the following number of shares of AFG Arbonia- 

Forster-Holding AG: 

31/12/2011 

Number of 

registered shares 

31/12/2010 

Number of 

registered shares 

Paul Witschi (Chairman of the BoD) 1 215 1 215 

Arthur Loepfe (Member of the BoD) 1 080 1 080 

Edgar Oehler (Member of the BoD) 3 351 782 3 350 782 

Georg Früh (Member of the BoD) 1 750 1 750 

Daniel Frutig (Group Management) 8 950 

Felix Bodmer (Group Management) 10 000 10 000 

Christoph Schönenberger (Group Management) 5 000 2 000 

Knut Bartsch (Group Management) 2 500 

Thomas Gerosa (Group Management) 5 000 5 000 

Christian Mayer (Group Management) 1 700 400 

Felix Aepli (extended Group Management) 702 

Total 3 388 977 3 372 929

AFG 


2011 


Proposal of the Board of Directors 

183 

The Board of Directors will propose at the Annual General Meeting of the shareholders 

on 20 April 2012 the following: 

Appropriation of Retained Earnings 

in 1000 CHF 

2011 2010 

Retained earnings carried forward from previous year 210 031 187 102 

Net profit for the year 12 523 22 929 

Retained earnings 222 554 210 031 

Retained earnings carried forward 222 554 210 031 

Total 222 554 210 031

AFG 


2011 


Report of the Statutory Auditors 

on the Financial Statements 

To the General Meeting of 

AFG Arbonia-Forster-Holding AG, Arbon 

St. Gallen, 16 February 2012 

184 

As statutory auditors, we have audited the financial statements of AFG 

Arbonia-Forster-Holding AG, which comprise the balance sheet, income 

statement and notes (pages 176 to 183), for the year ended 31 December 

2011. 

Board of Directors' Responsibility 

The Board of Directors is responsible for the preparation of the financial 

statements in accordance with the requirements of Swiss law and the 

company's articles of incorporation. This responsibility includes designing, 

implementing and maintaining an internal control system relevant 

to the preparation of 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. 

Auditors' Responsibility 

Our responsibility is to express an opinion on these 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 financial 

statements are free from material misstatement. 

An audit involves performing procedures to obtain audit evidence about 

the amounts and disclosures in the financial statements. The procedures 

selected depend on the auditor's judgment, including the assessment of 

the risks of material misstatement of the financial statements, whether 

due to fraud or error.

AFG 


2011 


Report of the Statutory Auditors on the Financial Statements 

185 

In making those risk assessments, the auditor considers the internal control 

system relevant to the entity's preparation of the 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 financial statements. We believe 

that the audit evidence we have obtained is sufficient and appropriate 

to provide a basis for our audit opinion. 

Opinion 

In our opinion, the financial statements for the year ended 31 December 

2011 comply with Swiss law and the company's articles of incorporation. 

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 financial statements 

according to the instructions of the Board of Directors. 

We further confirm that the proposed appropriation of available earnings 

complies with Swiss law and the company's articles of incorporation. 

We recommend that the financial statements submitted to you be 

approved. 

PricewaterhouseCoopers AG 

Lorenz Lipp Martin Knöpfel 

Audit expert Audit expert 

Auditor in charge

AFG 


2011 

Supplementary Information for Investors 1 

186 

2011 2010 2009 2008 2007 

Number of shares 

Registered par value 

CHF 4.20 

18 225 603 18 225 603 

Bearer par value CHF 4.20 

Registered par value 

14 580 603 1 417 567 1 417 567 

CHF 0.84 

18 225 000 3 037 500 3 037 500 

Stock market prices 

in CHF 

Highest 38.0 30.0 27.4 73.8 125.1 

Lowest 14.4 20.8 12.6 22.1 65.2 

31/12 17.6 29.0 24.6 24.5 75.1 

Stock market 

capitalisation 

in CHF million (31/12) 

320.8 

528.5 

448.3 

261.2 

799.9 

Per share data 2 

Gross dividend in CHF 3 Pay-out ratio (in % 

0.0 0.5 0.0 0.0 1.9 

of Group earnings) 

0.0 

64.4 

0.0 

0.0 

6.9 

Group earnings in CHF 

Cash flow from operating 

− 4.0 0.8 − 1.8 4.6 5.5 

activities in CHF 

3.7 

4.6 

9.7 

9.0 

6.8 

Shareholders' equity in CHF 

Price /earnings ratio 

27.1 31.8 32.5 48.7 48.9 

(highest) 


− 9.9 

38.6 − 22.2 

16.4 

24.0 

(lowest) 


− 3.7 

26.8 − 10.2 

4.9 

12.5 

(31/12) 

Price /cash flow ratio 

− 4.6 

37.3 − 19.9 

5.4 

14.4 

(highest) 


10.3 

6.5 

2.8 

8.2 

18.5 

(lowest) 


3.9 

4.5 

1.3 

2.4 

9.6 

(31/12) 

4.8 

6.3 

2.5 

2.7 

11.1 

1 Adjusted for previous capital increases 

2 Figures for 2007 to 2009 relate to the quoted bearer shares with a par value of CHF 4.20 

3 2011 proposal to the Annual General Meeting 

2011 share price development 

40 

35 

30 

25 

20 

15 

10 

AFG SPI 

Jan. Feb. March April May June July Aug. Sept. Oct. Nov. Dec.

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