The Geberit Group is a leading supplier of sanitary plumbing systems for the residential and commercial new construction and renovation markets. The product range of the Group consists of the product area “sanitary systems” with the product lines installation systems, cisterns & mechanisms, faucets & flushing systems and waste fittings and traps and the product area “piping systems” with the product lines building drainage systems and supply systems. Worldwide, all products are sold through the wholesale channel. Geberit sells its products in more than 100 countries. The Group is present in 41 countries with its own sales employees.

The consolidated financial statements include Geberit AG and the companies under its control (“the Group” or “Geberit”). The Group eliminates all intra-group transactions as part of the Group consolidation process. Companies are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date on which control ceases.

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

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

Other than required by IAS 1, in the past the consolidated income statements not only contained “Revenue from sales” but also “Sales” (see → Note 3 and → Note 28). The correction of this presentation error was done in accordance with IAS 8 and does not affect net income.

As a consequence of the introduction of IAS 19R (see → Note 17), the previous year figures were restated for comparability reasons. As of December 31, 2012, the negative effect on the net income amounted to MCHF 4.8 (personnel expenses MCHF +5.8, taxes MCHF -1.0). The negative effect on earnings per share was CHF 0.13, on the diluted earnings per share CHF 0.12. In the balance sheet, the restatement for the year 2011 was done with a reclassification within equity of MCHF 5.1 from “Reserves” to “Pension plans” (see → consolidated statements of changes in equity). As a result of reviewing the accounting of defined benefit plans in connection with the introduction of IAS 19R, it became clear that the reinsurance policies were not presented correctly in the Notes. They were reported as a part of the plan assets, instead of being reported separately as reimbursement rights. These presentation errors were corrected in accordance with IAS 8 and do not affect net income.

Due to the change of the consolidation system, a presentation error occurred in the assets register in connection with the data transfer to the new system (see → Notes 10 and → 12). The reported historical cost and accumulated depreciation were too low. This error did not, however, have any impact on the net book values and the balance sheet. The gross values both were corrected accordingly. This presentation error was corrected in accordance with IAS 8 and does not affect net income.

Critical accounting estimates

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

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

• Impairment tests for goodwill and intangible assets with an indefinite useful life (see → Note 12)
• Capitalization of development costs (see → Note 3)
• Assumptions for the recognition of defined benefit pension plans (see → Note 17)
• Future development of tax rates (see → Note 3)