5. DETAILED INFORMATION ON STATEMENT OF FINANCIAL POSITION ITEMS
5.1 Investment properties
The change in value of the investment properties from CHF 198.5 million to CHF 200.1 million reflects the positive letting development during the past twelve months as well as the positive transaction market in some of the relevant micro markets. Weighted average lease term (WALT) remained stable at 5.2 years as of 31 March 2018.
The principles and assumptions applied in the valuation of the investment properties are set out in the detailed valuation report.
A complete list of all investment properties along with all information in accordance with the Directive on Financial Reporting of the SIX Swiss Exchange can be found in the portfolio section of this annual report. This additional information is an integral part of the notes to the consolidated financial statements.
5.2 Deferred tax assets and liabilities
5.3 Trade accounts receivable
5.4 Cash and cash equivalents
As of the balance sheet date, the Company had cash and cash equivalents of CHF 4.5 million (previous year CHF 1.1 million).
As in the previous year, no transactions with treasury shares took place in the current financial year.
5.6 Future contractual maturities
Based on the financial liabilities as of 31 March 2018 the following future contractual payment obligations exist (undiscounted amounts):
Future contractual maturities changed significantly since 31 March 2017. This change mainly reflects the refinancing of the Swiss portfolio and the repayment of the swap. In the current reporting period the mortgage of CHF 108.2 million was repaid and a new credit agreement in the amount of CHF 118.0 million was signed, of which CHF 66.0 million was drawn as of reporting date.
Trade accounts payable and the other short-term liabilities are incurred in the course of the Groupʼs operating activities and are covered by the short-term assets.
5.7 Financial instruments - Fair Value Hierarchie
The table belows shows the fair value of the financial instruments according IFRS 13. Since the book values of the categories “Loans and receivables at amortized cost” and “Liabilities at amortized cost” reflect their markte value, the financial instruments of these categories are not listed below.
The above listed items fell in the Fair Value categorie Level 2. The fair values of mortgages are calculated at the present values of the payment flows using the relevant yield curve.
5.8 Financial instruments by category
The reported value of financial assets reflects the maximum default risk disregarding any collateral, in the event that the contractual partners fail to meet their payment obligations. No concentration of default risks arising from business relations with individual debtors or groups of debtors has been identified.
5.9 Derivative financial instruments
Cash Flow Hedges
The Züblin Group used interest rate swaps to reduce the cash flow risks arising from its exposure to movements in interest rates. The fair value of derivative financial instruments were calculated as the present value of future cash flows. The fair value was based on counterpartiesʼ valuations and reviewed by Züblin.
In the previous year there was one interest rate swap with a contract volume of CHF 80 million. Due to the negative interest environment its effectiveness according to IAS 39 as of 31 March 2017 could no longer be confirmed. The interest rate swap was fully repaid in September 2017.
As of 31 March 2018 Züblin Groupʼs real estate portfolio is financed entirely by one variable-rate loan. The amounts shown as mortgages in the balance sheet include closing fees of CHF 0.3 million (previous year CHF 0.0 million). These closing fees are also reflected in the calculation of the average effective interest rate.
The mortgage includes financial covenants which specify, among other things, adherence to certain financial indicators (loan-to-value ratio and equity ratio). The financial covenants are summarized in the table below:
Züblin monitors compliance with these covenants on a quarterly basis. The breach of a covenant may have a variety of consequences and can result among other consequences in a higher interest rate or a (partiall) repayment of the loan. If the LTV rises above 60%, the company has the opportunity to restore compliance with this financial covenant. The mortgage agreement also contains a “change of control” clause which stipulates the repayment of the entire loan if Züblin Immobilien Holding AG holds less than 50.1% of the voting rights or shares in the borrowing subsidiary.
As of balance sheet date, the Company was in compliance with all of its covenants.
The table below summarizes the value of investment properties pledged as security for mortgages:
Insurance policies for investment properties have been pledged as security over and above the mortgage lines.
5.11 Employee retirement benefit plan
The Züblin Group has different pension schemes throughout the countries in which it operates. These schemes vary according to local laws and employment regulations. In all countries outside of Switzerland, the plans are defined contribution plans. In the past twelve months, expenditures totalling CHF 0.1 million (previous year CHF 0.2 million) for all defined contribution plans were recorded. In Switzerland, the pension plan of Züblin Immobilien Management AG has been designated as a defined benefit plan under IAS 19.
Swiss pension schemes are governed by the Swiss Federal Law on Occupational Retirement, Survivorsʼ and Disability Pension Plans (BVG). The pension plan is financed by contributions from both employer and employees. The BVG requires pension schemes to be run as legally independent institutions. The pension scheme is headed by a board of trustees composed of an equal number of employer and employee representatives. It is responsible for determining and implementing the investment strategy.
The following amounts are based upon the Project Unit Credit Method:
The above amount has been recorded under “Other non-current liabilities”.
The pension liabilities and assets changed as follows in the Züblin Groupʼs consolidated balance sheet:
The following table details the cover of the defined benefit pension plan and the impact of adjustments in the expected or actual values of the pension liabilities and assets:
The remeasurement of the net pension obligation reported in other comprehensive income breaks down as follows:
The calculation of the Groupʼs pension liabilities is based on the following assumptions:
A sensitivity analysis was carried out using constant assumptions for the most important assumptions used to calculate the pension liabilities.
Asset allocation: 100% of the assets are managed and invested by a reinsurance company. Furthermore, the Company has insured a minimum return on its pension assets. Therefore, a detailed asset allocation is not presented.
5.12 Liabilities from long-term rental contracts
Züblin has entered into fixed rental commitments until 30 June 2020 in a total amount of CHF 0.4 million (previous year CHF 0.6 million). For the reporting period the rental payments recorded in the income statement amounted to CHF 0.2 million (previous year CHF 0.2 million).
5.13 Related parties
In accordance with IAS 24, related parties for the reporting financial year included:
- The Board of Directors
- Members of Züblin Group Management
- Lamesa Holding SA, Panama
Transactions with related parties and significant shareholders
Loan to shareholder
As of 31 March 2017 the Group had granted a loan to Lamesa Holding SA, Panama in the amount of CHF 13 million. The loan bore an interest rate of 3% p.a. and was fully repaid in the first quarter of the financial year 2017/18.
There were no other transactions with related parties or significant shareholders in financial year 2017/18. Nor were any advisory fees paid to related parties or significant shareholders over and above the remuneration disclosed in Note 5.14. The Board of Directors and Group Management continually monitors potential conflicts of interest.
Loans to members of governing bodies
No loans have been granted to members of the Board of Directors or the Züblin Group Management.