5. DETAILED INFORMATION ON STATEMENT OF FINANCIAL POSITION ITEMS
5.1 Investment properties
In the 2019/20 financial year, the value of the investment properties increased by CHF 17.0 million. This was mainly due to the acquisition of the property in Zurich-Oerlikon (CHF 15.6 million) and value-enhancing investments of CHF 1.2 million.
Against the background of the events in connection with the Corona crisis, the changes in market value of the portfolio as at 31 March 2020 give a different picture. Züblin traditionally invests in office properties and is currently invested exclusively in Switzerland. An analysis of the potential impact of the health crisis on the direct sector affiliation of our tenants shows that only a small percentage of 8% of the tenants are severely affected by officially ordered closures. The vast majority of tenants are active in low-risk sectors. The properties in Zurich – Holbeinstrasse, Zurich – Hofwiesenstrasse and Zurich – Hardtumstrasse recorded a positive change in market value totalling CHF 2.1 million in the financial year. The properties at Bern – Morgenstrasse, Baden – Rütistrasse and in Egg have recorded a total write-down of CHF 1.9 million.
The weighted average lease term (WALT) as of 31 March 2020 is 3.8 years (previous year 4.3 years).
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.
5.3 Deferred tax assets and liabilities
5.4 Trade accounts receivable
5.5 Cash and cash equivalents
As of the balance sheet date, the Company had cash and cash equivalents of CHF 5.1 million (previous year CHF 6.1 million).
The company holds a total of 2,380 treasury shares as of 31 March 2020. In the 2019/2020 financial year, 11,217 shares were purchased at prices between CHF 25.40 and CHF 27.00 and 8,837 shares were sold at prices between CHF 25.50 and CHF 27.20 in the period July 2019 to December 2019 under a market making mandate delegated to a Swiss investment bank. Treasury shares are reported as a negative item in equity at cost. As of 31 March 2020, this item amounted to kCHF 63.
No transactions with treasury shares took place in the previous financial year.
Distribution from capital contribution reserves
The Annual General Meeting of Züblin Immobilien Holding AG on 18 June 2019 approved a distribution of CHF 1.00 per registered share from the capital contribution reserves. This corresponds to a total amount of kCHF 3ʼ318. On 24 June 2019, a distribution of kCHF 1ʼ936 was made in favour of the shareholders. As in the previous year the dividends attributable to Lamesa Holding SA were carried as a liability in the balancs sheet item “liabilities to participants".
5.7 Future contractual maturities
Based on the financial liabilities as of 31 March 2020 the following future contractual payment obligations exist (undiscounted amounts):
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.
5.8 Financial instruments by category
The table below shows the book values and fair values in accordance with IFRS 13 of all financial instruments carried in the balance sheet. Since the book values of the financial assets at amortized cost and financial liabilities at amortized cost reflect in most cases a reasonable approximation of their fair value, the fair values are only separately listed below, if there are deviations from the book value.
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.
As of 31 March 2020 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 0.2 million (previous year CHF 0.2 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.
5.10 Pension liabilities
The Züblin Group has a defined benefit plan according to IAS 19 in Switzerland. In the past twelve months, expenditures totalling CHF 0.1 million (previous year CHF 0.1 million) for the defined benefit plan were recorded.
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 pension liabilities and assets changed as follows in the Züblin Groupʼs consolidated balance sheet:
The following table provides a break down of pension expenses:
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.
5.11 Liabilities from long-term rental contracts
Züblin has entered into fixed rental commitments until 30 June 2020 in a total amount of CHF 0.0 million (previous year CHF 0.2 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).
5.12 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
Unpaid Dividend to shareholder
As of 31 March 2020 the Züblin Group has open payables to Lamesa Holding SA resulting from unpaid dividends in the amount of CHF 2.8 Mio (see note 5.5). The payable shown in the balance sheet line “liabilities to participants” does not bare any interest.
There were no other transactions with related parties or significant shareholders in financial year 2019/20. Nor were any advisory fees paid to related parties or significant shareholders over and above the remuneration disclosed in note 5.13. 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.