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2.1 Significant accounting policies 

2.1.1 Principles

The consolidated financial statements of the Züblin Group have been prepared in accordance with International Financial Reporting Standards (IFRS). The consolidated financial statements comply with Swiss statutory regulations as well as with the SIX Swiss Exchange Directive on Financial Reporting. The consolidated financial statements have been prepared on the basis of historical costs, except for investment properties and derivative financial instruments, which are measured at fair value. In the previous reporting periode administration expenses were shown in the income statement in one line item and are now split up into personnel expenses and administration expenses to provide a more detailed view. 

The consolidated financial statements have been prepared in Swiss francs (CHF), the Züblin Groupʼs reporting currency. All amounts are given in thousands of Swiss francs unless otherwise stated. The individual financial statements of the companies included in the consolidated financial statements apply the same accounting and valuation principles and have the same balance sheet date.

The consolidated financial statements of the Züblin Group for the financial year ending 31 March 2018 were approved by the Board of Directors on 16 May 2018. The Annual General Meeting, which in accordance with the Swiss Code of Obligations is responsible for approving the consolidated financial statements, will be held on 21 June 2018.

2.2 Amendments to accounting principles

2.2.1 Amendments implemented in the current financial year

With the exception of standards and interpretations newly applied in the financial year, the consolidated financial statements are based on the same accounting and valuation principles used in the previous year. The following Standards and Interpretations have been introduced since 1 April 2017:




– IAS 12 (rev.): Recognition of Deferred Tax Assets for Unrealised Losses


from 1.1.2017

– IAS 7 (rev.): Disclosure Initiative


from 1.1.2017

The above amendments, interpretations and improvements had no material impact on the consolidated financial statements

2.2.2 Future amendments to accounting policies

The following new or revised standards and interpretations are to be applied at the earliest for financial years beginning on 1 April 2018:




– IFRS 9: Financial Instruments


from 1.1.2018

– IFRS 15: Revenue from Contracts with Customers


from 1.1.2018

– IFRS 16: Leases


from 1.1.2019

– IFRS 10/IAS 28 (rev.): Sale or Contribution of Assets between an Investor and its Associate or Joint Venture


to be determined

– Clarifications to IFRS 15: Revenue from Contracts with Customers


from 1.1.2018

– IFRS 2 (rev.): Classification and Measurement of Share-based Payment Transactions


from 1.1.2018

– IFRS 4 (rev.): Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts


from 1.1.2018

– Improvements to IFRS Cycle 2014-2016


from 1.1.2018

– IAS 40 (rev.): Transfers of Investment Property


from 1.1.2018

– IFRIC Interpretation 22: Foreign Currency Transactions and Advance Consideration


from 1.1.2018

– IFRIC Interpretation 23: Uncertainty over Income Tax Treatments


from 1.1.2019

None of the new or revised standards and interpretations were adopted early in the preparation of the financial statements of the Züblin Group. Although a systematic analysis has not been performed, it is not anticipated that the new or amended standards and interpretations above will have any material impact on the financial reporting of the Züblin Group.

The new accounting standard IFRS 16 Leases will not have a material accounting effect for the lessor, however, lessors are expected to be affected due to the changed needs and behaviours from customers which impacts their business model and lease products.

As the Züblin Groupʼs portfolio does not include any development real estate held for sale and Züblin generates its operating income only with the letting of commercial real estate, the new IFRS 15 standard has no significant impact on the revenue and profit realization of Züblin.

IFRS 9 regulates the recognition and measurement of financial assets and liabilities as well as the accounting for hedging relationships and supersedes the previous IAS 39 standard. The reduction of the number of categories of financial instruments, the change from an incurred loss model to an expected credit loss model as well as the revision of the rules for the hedging relationships are the central points of the changes. Züblin estimates the effect of applying the new impairment model required by IFRS 9 to be low due to the good credit quality and the negligible amount of outstanding receivables. At present, the Züblin Group has no hedges and, if at all, minor effects from changes in the designations and presentation of financial instruments are expected in the annual report

2.3 Critical accounting estimates and judgements 

The preparation of consolidated financial statements requires the use of estimates and judgment by the Companyʼs management. These estimates and judgments affect the way in which assets, liabilities, income and expenses are reported and their valuation, as well as the disclosure of contingent liabilities and other disclosures in the financial statements. The actual outcome may differ from assumptions and estimates that have been used. In the event that they subsequently differ from the actual outturn, the initial estimates and assumptions are revised to reflect the changed circumstances during the financial year in which these changes occur. The primary discretionary estimates and judgements impacting the financial statements of the Company relate to the following instances:

2.3.1 Valuation and reporting of investment properties

Fair value is determined twice a year by independent external valuers. The valuations are performed in accordance with national and international standards and guidelines as set out in the International Valuation Standards (IVSC) and the standards of the Royal Chartered Surveyors (Red Book). “Fair value” is defined as the price that would be received to sell or purchase an asset or paid to transfer a liability in an armʼs length transaction between market participants at the measurement date.

The discounted cash flow (DCF) method is used to determine fair value on the valuation date. Under this method the fair value of a property is determined by the sum of projected future net earnings discounted to the valuation date plus the discounted exit value. A detailed cash flow forecast is produced for the first ten years, with a residual value (exit value) being determined on basis of a perpetual annuity of the exit cash flow for the rest of the term. The projected gross rental income is determined on the basis of existing tenancies and assumptions on reletting at current market rents, with allowance made for the relevant marketing periods and the probability of current leases being renewed. The net rental income is defined as the gross rental income less property-specific costs that cannot be passed on to tenants plus maintenance and any renovation required for new rentals. The discount calculation is carried out separately for each property, taking account of its property-specific risks and opportunities, in line with market conditions and on a risk-adjusted basis.

The independent valuer inspects the properties when they are bought, or after a minimum of three years or if substantial renovations are carried out. In order to determine the cash flows Züblin supplies the valuer with rent rolls, property cost statements and investment budgets. The valuation assumptions and results are plausibility checked by Group Management and discussed with the expert.

The chart below shows a sensitivity analysis of the two main parameters with an impact on the valuation of the investment properties, the discount rate and the market rent.

The graph shows the changes in the valuation of the investment portfolio in the continuing business area. The color refers to the change in the basic points/percentage change in market rents. In the left figure the average discount rate changes in steps of ± 10 basic points. Züblin has explained the effecets on the market value up to a maximum change of ± 40 basic points. The right figure shows the effects of changed market rents on the valuation of the investment properties. The market rent was adjusted in increments of 2%.

If the average discount rate is increased by 20 basis points, this would result in a decrease in the portfolio value of 5.4%. The impact of the adjusted discount rates on the valuations is within the range of +13.2% to –10.3%. The impact of adjusted market rents on valuations is within the range of +7.1% to –7.1%. The valuation method and the valuation assumptions used are shown in the property valuation report.

2.3.2 Income taxes

Estimates are necessary for the determination of current as well as deferred taxes. These assumptions relate to the following:

Current taxes

The Züblin Group is subject to taxation in Switzerland as well as in the countries were its subsidiaries operate. The determination of the provision for current taxes in these jurisdictions requires significant judgment by Group Management, as the final tax position of many transactions and calculations is unclear.

Deferred taxes

Capital gains tax is included in the calculation of deferred taxes on investment properties in Switzerland. These taxes are dependent upon the holding period of the assets, which is determined as follows: for properties that are held for sale, the actual holding period plus one year has been used. For all other properties, either a period of fifteen years, or the actual holding period if greater than fifteen years, has been assumed. Assumptions are also necessary for deferred tax assets from tax loss carry-forwards. These losses are only capitalized when the use of the losses in the future is probable. The determination as to whether such losses can be offset in the future is based on estimates of the future cash flows deriving from the property, together with estimates by Group Management on the likelihood of utilization of these loss carry-forwards in future periods. Based upon these factors, a probability is assigned to each potential asset and subsequently valued and recorded.

2.3.3 Discontinued operations

As of 31.3.2017 the business segment Germany was classified as a disposal group held for sale. This reclassification reflected the ongoing negotiations with an investor as well as the assessment of the Board of Directors and Management concerning the implementation probability of the planned transaction within the next twelve months.

During the first six months of the financial year 2017/2018 the Group has successfully sold its German portfolio consisting of twelve properties with an underlying gross asset value of EUR 152 million. The transaction between Züblin Immobilien Holding AG and the UK listed and domiciled property investment company CLS Holdings plc has been closed on 21. August 2017. Eleven properties were sold in a share deal (ZIAG Immobilien AG and Mittlerer Pfad 2–4 GmbH) and one property was sold in an asset deal (Weilimmo AG). With the successful completion of the transaction the German business segment was deconsolidated. See also note 6.1 for further details. 

Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as result from discontinued operations in the consolidated income statement. 

2.4 Consolidation principles

2.4.1 Method of consolidation

The consolidated financial statements comprise the financial statements of Züblin Immobilien Holding AG and its subsidiaries for the financial year ending on 31 March. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies.

Subsidiaries are consolidated from the date of acquisition, i. e. from the date on which the Group obtains control of the subsidiary.

Business combinations are accounted for using the acquisition method. The cost of an acquired business is equal to the total consideration transferred measured at fair value at the date of acquisition plus non-controlling equity interests. The acquirer measures the non-controlling equity interests either at fair value or as the proportionate share of the identifiable net assets of the acquired company. The costs incurred in the course of the business combination are recognized as an expense. Capital is consolidated using the acquisition method. Assets and liabilities are therefore included in the consolidated financial statements at their fair values on the date of acquisition. 

2.4.2 Scope of consolidation

The closing of the sale of the German portfolio lead to a change in the scope of consolidation in the current financial year. As of 21 August 2017 ZIAG Immobilien AG and Mittlerer Pfad 2-4 Immobilien GmbH were deconsolidated. The composition of the group of consolidated entities is set out in note 1.2 List of group companies. 

2.4.3 Translation of foreign currencies

Foreign currency transactions

All transactions are converted using the exchange rate prevailing on the date of the transaction. Monetary items denominated in foreign currencies are recognized at the rate prevailing on the balance sheet date. Non-monetary items valued at historical cost are converted using the rate prevailing on the transaction date, and non-monetary items measured at fair value are converted using the rate applicable as of the date of the calculation of fair value. Differences arising from conversion to closing rates are recognized in the income statement.

Foreign subsidiaries

The conversion of the financial statements of consolidated Züblin Group companies that are prepared in foreign currencies is performed on the basis of the functional currency concept using the Modified Closing Rate Method. As of the balance sheet date, the financial statements of the consolidated Züblin Group companies are translated from the functional currency into the reporting currency. The financial statements of foreign subsidiaries are converted as follows: the balance sheet, with the exception of equity, is converted at the year-end rates, while income and expenses are converted at the average exchange rates for the reporting year. Equity ist converted at historical rates. The effects of these conversions are recorded directly in the consolidated statement of comprehensive income in the position “Currency translation adjustment”. Conversion differences relating to Züblin Group internal loans, where repayment is not anticipated in the foreseeable future, or is unlikely, and which are consequently qualified as net investments in a foreign company, are also recognized directly in the consolidated statement of comprehensive income in the position “Currency translation adjustments”.

If the Company were to cease operating activities in one of these countries the relevant portion of the currency translation adjustments would be derecognized through profit or loss.

in CHF


Balance sheet rate

Balance sheet rate


Average rate

Average rate






1.4.2017 to 31.3.2018

1.4.2016 to 31.3.2017















2.5 Accounting and valuation principles

2.5.1 Income statement

Rental income

Income reported from real estate operations is comprised exclusively of rental income after consideration of vacancies. Rental income is recorded on an accrual basis as of the date at which the rent is due. Income and expenses related service charges for instance payments for heating, lighting and other services are not included.

Real estate expense

Real estate expenses include costs directly associated with the individual properties, and include costs for administration, bad debts, insurance, facility management, legal costs, taxes and other fees.

Maintenance and repairs

Maintenance and repairs includes the cost of maintenance and repairs of investment properties incurred during the financial year and is charged to the income statement. Expenditures that result in an increase in value are capitalized and reflected in the valuations.

Personnel expenses

Personnel expenses includes salaries and social epenses as well as the compensation of the Board of Directors.

Administrative expense

All expenses that cannot be allocated directly to individual investment properties are recorded as administrative expenses. Additionally, administrative costs include fees for legal, tax and other advisory services, appraisal and audit services, other taxes (e. g. capital taxes) as well as other expenses of an overhead nature. These costs are recorded on an accrual basis.

Result from the sale of investment properties

The result from the sale of investment properties represents the difference between net sales proceeds and the latest reported market value of the individual property, including investments up to the date of the sale. The result is realized at the time of the transfer of risks and rewards, which is usually the date on which the contract is signed in the presence of the notary or the date of registration in the land register.

Change in market value of investment properties

Changes in the market value of investment properties are recorded in the income statement in accordance with IAS 40.

Financial expense

Financial expenses primarily include interest expense on debt financing, including the interest impact from derivative financial instruments. All financial expenses are accrued and recognized in the income statement on the basis of the effective interest method. Financial expenses also include losses on currency translation.

Income taxes

Income taxes are comprised of current and deferred taxes. Income taxes are recorded directly in the income statement unless they are incurred as part of a transaction related to the consolidated statement of comprehensive income. In such cases, the income taxes are recorded directly in the consolidated statement of comprehensive income in a manner consistent with the underlying transaction. Current taxes are comprised of taxes due on the taxable earnings of the Company calculated using the tax rate in effect as of the balance sheet date, together with capital gains tax on the sales of assets and adjustments to tax liabilities or receivables from previous periods. Deferred taxes are the sum of all changes in deferred tax assets and liabilities, with the exception of those amounts recorded directly into the consolidated statement of comprehensive income.

2.5.2 Balance sheet

Fair value hierarchy

The valuation of the investment properties and the financial instruments is based upon the the three-level fair value hierarchy, which is as follows:

  1. Level 1 – Valuation based upon market prices for specific financial instruments.
  2. Level 2 – Valuation based upon market prices for similar instruments or using valuation models which are based upon input parameters observable on the market.
  3. Level 3 – Valuation based upon models with significant input parameters which have a material impact on fair value and are not observable on the market.
Investment properties

In accordance with revised IAS 40 / IFRS 13 investment properties are reported at market value.

Fair value is determined twice a year by independent external valuers. The valuations are performed in accordance with national and international standards and guidelines as set out in the International Valuation Standards (IVSC) and the standards of the Royal Chartered Surveyors (Red Book). See also “Critical accounting estimates and judgements” in note 2.3.

Purchases are recorded at cost. Expenses incurred after the purchase of the property are capitalized if it is likely that future economic benefits will accrue to the Company. All other maintenance and repair costs are recognized in the income statement. The change in market value or the difference from the cost of acquisition on the first valuation date and the resultant deferred taxes are recognized through the income statement.

Investment properties are derecognized if they are sold or are no longer available for permanent use. Profits or losses on the disposal of investment properties are recognized in the income statement in the year of disposal.

There were no changes in valuation criteria or processes relating to IFRS 13 during the reporting period and there were no re-classifications within the fair value hierarchy. The investment properties recognized at fair value as at 31 March 2017 continue to qualify as level 3 of the fair value hierarchy as at 31 March 2018.

Investment properties held for sale

In accordance with IFRS 5, investment properties held for sale are reported in the balance sheet under current assets as a separate item “Investment properties held for sale”. A property is reclassified under this item if the following criteria are met:

  1. The Board of Directors has formally resolved to dispose of the property
  2. There is an intention to sell the property in the short term and it is being actively marketed
  3. A judgment from Group Management that there is a high probability of the conclusion of the transaction within the next twelve months.

After reclassification the properties continue to be valued in accordance with the valuation procedures of investment properties described above.


Furnishings, fixtures and equipment are stated at cost less accumulated depreciation. Office refurbishments and office furnishings are subject to straight-line depreciation over ten years and five years respectively, and IT equipment over three years. An evaluation is performed at every balance sheet date in order to determine whether there are indications that an impairment of the recorded value of furnishings and equipment might be necessary. If evidence exists that the book value is no longer realizable, the difference between the book value of the asset and the realizable value is written off.

Deferred tax assets and liabilities

Deferred taxes are calculated using the Balance Sheet Liability Method and reflect temporary differences as of the balance sheet date between the book value of assets and liabilities in the consolidated financial statements and the underlying tax accounts. The calculation of deferred tax assets and liabilities is based upon local tax rates and regulations substantially enacted as of the balance sheet date. Additionally, in Switzerland a holding period of a minimum of fifteen years applies in the calculation of deferred taxes. Deferred tax assets from tax loss carry-forwards are only recorded to the extent that it is probable that there will be sufficient taxable income in the future to offset the tax loss carry-forwards and related tax assets. There are no deferred tax liabilities for temporary differences related to undistributed earnings of subsidiaries, since the Züblin Group can manage the reversal of the temporary difference, and it is likely that these differences will not reverse in the foreseeable future. Deferred tax assets and liabilities are netted when there is legal justification for such treatment and when the deferred taxes relate to companies from a single entity for tax purposes and to the same tax authority.

Financial instruments

Financial instruments include both financial assets and financial liabilities and are classified under the following primary categories:

  1. Financial instruments valued at fair value through the income statement
  2. Loans and receivables at amortized cost
  3. Financial investments held to maturity
  4. Financial investments held for sale
  5. Financial liabilities at amortized cost
  6. Derivative financial instruments which are designated as effective hedging instruments

The group did not hold any derivative financial instruments as at 31 March 2018. As of 31 March 2017 there was solely one interest rate swap, which fell into the level 2 fair value category.

Recognition: Financial assets are recognized in the consolidated balance sheet when the Züblin Group has a contractual right to receive cash or other financial assets from another party. Financial liabilities are recorded when there is a contractual obligation for a cash payment or the delivery of a financial asset.

Derecognition: Financial assets are derecognized if the contractual rights to payments arising from the financial assets expire or if the financial assets are transferred along with all material risks and rewards. Furthermore, financial liabilities are derecognized when the liability is settled via payment or assignment of a financial asset.

Valuation: The first-time valuation of all financial instruments which are relevant for the Züblin Group is at fair value plus directly attributable transaction costs, except for financial instruments measured at fair value through profit or loss. The subsequent valuation is based upon one of the categories used by the Company, as listed above.

The valuation of financial instruments is based upon the three-level fair value hierarchy, which is described above.

Loans and receivables at amortized cost

Loans and receivables are non-derivative financial instruments with fixed or determinable payments that are not traded in an active market. Loans and receivables are measured at amortized cost. Interest from items in this category is calculated using the effective interest rate method. The following assets are allocated to this measurement category:

Trade receivables
Trade receivables are comprised of receivables arising from the leasing activities of investment properties.

Other current receivables
Other receivables are those which do not arise from leasing activities of investment properties, particularly those from service charges passed on to tenants and cash and cash equivalents which cannot be drawn within three months.

Trade receivables as well as other current receivables are continually reviewed for potential impairment of their value. The determination that an impairment exists is based on individual analysis of the asset in conjunction with any related security. The book value of the receivable is reduced by the amount of the impairment.

Cash and cash equivalents
Cash and cash equivalents are comprised of cash on hand, cash balances in postal and bank accounts, as well as short-term securities with a duration of less than three months.

Financial liabilities at amortized cost

Financial liabilities at amortized cost are non-derivative financial instruments with fixed or determinable payments. The subsequent valuation is at amortized cost under the effective interest method, whereby gains and losses on these positions are recorded in the income statement when they are derecognized or when interest is applied. The following liabilities in the consolidated financial statements are classified under this measurement category: 

Mortgages represent loans concluded in order to purchase real estate and are secured by liens on the real estate. The mortgage loan portfolio of the Züblin Immobilien Group may include both variable and fixed rates of interest. A differentiation is made between non-current and current mortgages based on future repayments. Repayments due within twelve months or amounts that are callable within the next twelve months are classified as current, and the rest as non-current. In the case of investment properties held for sale, the property is classified as a current asset. The corresponding mortgage is also reclassified to current liabilities as mortgages held for sale. Mortgages are concluded in the same currency as the underlying investments.

Accounts payable
Accounts payable consist of obligations that arise in connection with the investment properties, for example with leasing activities or renovation of a property, or in connection with overhead costs.

All other short- and long-term liabilities
These include all other liabilities of the Company, lease payments received in advance, tenant deposits, VAT liabilities as well as sundry accruals.

Derivative financial instruments

Derivative financial instruments designated as effective hedging instruments: The Züblin Group used derivative financial instruments, exclusively interest rate forward contracts and swaps, as part of its active management of the earnings spread between net rental income and refinancing costs. The swaps were treated as cash flow hedges and were recorded at fair value. The Züblin Group applied hedge accounting in accordance with IAS 39. For a financial instrument to be accounted for as a hedging transaction, the hedging instrument and the underlying transaction must have satisfied particular requirements in terms of documentation, event probability, effectiveness, and reliability of measurement. As far as these requirements were met, the changes in fair value of underlying hedging instrument were recorded through consolidated statement of comprehensive income. Any remaining ineffective portion would have been recorded in the income statement as financial income or expense.


Provisions are recorded if a legal or constructive obligation exists based on past events that will result in a probable outflow of funds, and where this outflow can be reliably estimated. Provisions are regularly reviewed and, if required, adjusted. They correspond to the current best estimate of liabilities.


Equity is comprised of share capital, capital reserves, retained earnings, treasury shares, reserve for cash flow hedges and foreign currency translation. Share capital includes the nominal value of the Companyʼs shares, which are issued and fully paid up. Par value reductions are ordinarily recorded in share capital. All earnings in the income statement are recorded in retained earnings. Other changes in equity are recorded as changes in capital reserves.

Treasury shares

Treasury shares are recorded at acquisition cost in the account “treasury shares” and deducted from equity. Upon sale, the same amount is credited to “treasury shares”, with any resultant gain or loss recorded in retained earnings.

Employee benefits – pension obligations

The Züblin Group has different pension schemes throughout the countries in which it operates. The schemes are generally funded through payments to insurance companies. The Züblin Group has a defined benefit plan in Switzerland and had a defined contribution plan in Germany. A defined contribution plan is a pension plan under which the Züblin Group pays fixed contributions into a separate entity. The Züblin Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and previous periods. A defined benefit plan is a pension plan that is not a defined contribution plan. Typically, defined benefit plans define 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.

In the balance sheet, the long-term obligation in respect of the defined benefit pension plan 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 unrecognized past-service costs and actuarial gains and losses. Changes in the obligation are recorded directly in comprehensive income (OCI approach). The defined benefit obligation is calculated annually by independent actuaries using the Projected Unit Credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability. For defined contribution plans, Züblin Group companies pay contributions to privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The Züblin Group has no further payment obligations once the contributions have been paid. The contributions are recognized as employee benefit expenses when they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in the future payments is available.

Discontinued operations held for sale

The Group classifies disposal groups as held for sale if their carrying amounts will be recovered principally through a sale or distribution rather than through continuing use. Such disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell or to distribute.

The criteria for held for sale classification is regarded as met only when the sale is highly probable and the disposal group is available for immediate sale in its present condition. Group Management must be committed to the sale expected within one year from the date of the classification.

Assets directly associated with the disposal group as well as liabilities are presented separately in the consolidated balance sheet. A disposal group qualifies as discontinued operation if it:

  1. represents a group component which is a cash-generating unit or a group of cash-generating units,
  2. classifies as held for sale or has been disposed of in this manner or
  3. represents a major line of business or major geographical area.

Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as result from discontinued operations in the consolidated income statement. The prior-year figures of the income statement items are adjusted accordingly.

2.5.3 Segment reporting (IFRS 8)

Segment reporting is based upon the “management approach”. The internal decision makers of the Züblin Group are aligned with the segments which are based on the geographic location of the investment properties.