Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements (1) General information The Hilti Group (the Group) comprises the Hilti Corporation and its domestic and foreign maintains a cash and cash equivalents position of CHF 1,333 million as per December 31, 2020. subsidiaries. The Group supplies the worldwide construction industry with technologically The Group has a committed credit facility of CHF 200 million from the shareholder providing a leading products, systems and services that provide construction professionals with innovative further source of liquidity if needed. During 2020 CHF 100 million of it was drawn over a period solutions and superior added value. Its product range includes equipment and systems covering of six months and is now repaid. In addition, a bond of CHF 150 million was emitted in 2020. drilling and demolition, direct fastening, diamond and anchoring, firestop and foam, installation, The Group is well positioned to meet its ongoing financial obligations and has enough liquidity measuring, screw fastening, and cutting and sanding. to support business activities. The Hilti Corporation is a limited by shares company incorporated and domiciled in the Impairment testing As a consequence of the potential impacts of COVID-19, the goodwill impairment test was Principality of Liechtenstein. The Group’s headquarters and the address of its registered office reviewed during 2020 and revisited as of December 2020. A number of different scenarios for are at Feldkircherstrasse 100, 9494 Schaan, Liechtenstein. The Group’s principal production the recovery have been considered based on external data such as forecasted oil price, which and research and development location is Liechtenstein with further production and research closely reflects the demand in the offshore business. Overall, the review resulted in no and development locations worldwide. The Group operates in over 120 countries and has impairment charge. The impairment tests performed for property, plant and equipment and roughly 30,000 employees worldwide. intangible assets were prepared and reviewed in accordance with prior year and resulted in no These consolidated financial statements were approved for issue by the Board of Directors on material impairment charge. March 16, 2021. Inventories The Group has reviewed its inventories in light of the COVID-19 situation and has not identified material impairment losses on inventories in the reporting period as the Group believes it will (2) Summary of significant The principal accounting policies applied in the preparation of these consolidated financial consume its inventories on a short-term basis. accounting policies statements are set out below. These policies have been consistently applied to both years presented, unless otherwise stated. CCrreeddiitt lloossss ooff ttrraaddee rreecceeiivvaabblleess The Group has considered the impact of COVID-19 pandemic on the expected credit loss of trade receivables with and without significant financing components. The amount and timing of (2.1) Basis of preparation These consolidated financial statements have been prepared in accordance with International the expected credit losses, as well as the probability assigned there to, has been based on the Financial Reporting Standards (IFRS) and comply with the requirements of Liechtenstein’s available information at the end of December 2020. As a result of this review, no material impact corporations law, the ‘Personen- und Gesellschaftsrecht (PGR)’. of the pandemic on credit losses were identified. Credit losses were substantially in line with prior year. The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of certain financial assets and financial liabilities (including Government grants for short In response to the COVID-19 pandemic Governments announced measures to assist entities. derivative financial instruments) at fair value through profit or loss. time work and wage These measures include temporary salary subsidies, additional tax deductions and credits, The preparation of financial statements in conformity with IFRS requires the use of certain subsidies rental reductions or deferrals and below-market rate loans. The Governments' measures critical accounting estimates. It also requires management to exercise its judgment in the primarily affecting the Group are temporary salary subsidies. The Group analyzed all facts and process of applying the Group’s accounting policies. The accounting estimates and judgments circumstances in relation to these schemes and accordingly applied the relevant accounting reflected in the 2020 consolidated financial statements that are critical in the context of the standards. In 2020 the group received CHF 19.4 million government grants for salary subsidies Group’s financial position and financial performance are explained in note (3). netted in the personnel expense. (2.2) COVID-19 implications Through the challenging period of the COVID-19 pandemic, the Group has focused on (2.3) Changes in accounting The group has assessed the following standards and amendments for the first time for their employees and customers safety, continued customer support and has been managing the policies and estimates annual reporting period commencing 1 January 2020: business with a strong finance discipline. Regional sales developments were directly related to the intensity of the lockdown. The construction industry in the Mediterranean region or in some • Definition of Material – amendments to IAS 1 and IAS 8 Asian markets, such as India and Singapore, was confronted with massive restrictions. On the • Definition of a Business – amendments to IFRS 3 other hand sales in North Asia, North America and the rest of Europe fell less abruptly as • Interest Rate Benchmark Reform – amendments to IFRS 9, IAS 39 and IFRS 7 construction activity in these regions saw no interruption. The Group has remained agile, • COVID-19-Related Rent Concessions – amendments to IFRS 16 adapting its operations to local guidelines and requirements, travel restrictions within and across countries and micro- and macro-economic changes. The impact of those changes to The amendments to IFRS 3 Business Combinations clarifies that to be considered a business, the financial statements are summarized as follows: an integrated set of activities and assets must include, at a minimum, an input and a substantive process that, together, significantly contribute to the ability to create output. Furthermore, it Risk management While risks and uncertainties that may have a significant impact as described in the Financial clarifies that a business can exist without including all the inputs and processes needed to Report remain valid, the COVID-19 pandemic may present new challenges to the Groups create outputs. These amendments had no impact on the consolidated financial statements of business. Those challenges are volatile and significantly different from country to country. While the Group but may impact future periods should the Group enter any business combinations. the construction sector and construction sites are generally more resilient than other sectors, Hilti Group has experienced smooth transition to virtualize many of its operations. The Group early adopts the amendments to IFRS 16 COVID-19 Related Rent Concessions for the financial report 2020. The amendments provide relief to lessees from applying IFRS 16 Group liquidity The Group continuously tracks its liquidity positions and assets/liabilities profile. The Group has guidance on lease modification accounting for rent concessions arising as a direct consequence not experienced liquidity or cash flow disruptions during 2020 due to COVID-19 pandemic and of the COVID-19 pandemic. As a practical expedient, the Group elected not to assess whether 2020 Financial Report | 18 2020 Financial Report | 19