4. Detailed information on statement of profit and loss and OCI items
4.1 Rental income
Rental income decreased by kCHF 708 compared to the previous year. This is due to the departure of a major tenant in the Holbeinstrasse property in Zurich as early as January 2021. As a result, the vacancy rate increased in the reporting period on the one hand and the potential rental income decreased on the other hand as a result of the re-letting as shell space (discontinuation of a contractually agreed amortization component for the tenant fit-out). During the financial year, Holbeinstrasse was successfully re-let. As a result, the contractually expected rental income at the balance sheet date increased from CHF 8.3 million to CHF 9.1 million.
The following overview illustrates the five largest tenants, generating 47.7% of rental income in the current year.
The future rental income from non-cancellable rental agreements as at the balance sheet date is categorised as follows:
The leases are generally indexed leases with a duration of 5 to 10 years. Some rental agreements contain early-break options, which were taken into account in the above categorisation. In addition, there are unlimited rental contracts amounting to kCHF 567 (previous year kCHF 559), which typically contain a notice period of 3 to 6 months.
4.2 Real estate expenses
Total property expenses decreased by kCHF 266 compared to the previous year. The reduction is mainly due to the insourcing of property management. Since 1 January 2021, the properties are managed by the company itself and with its own staff. The remaining kCHF 22 in the position external management result from the condominium management (STWEG) of the property Hofwiesenstrasse.
4.3 Personnel expenses
Personnel expenses increased by kCHF 503 compared to the previous year. This is mainly due to a one-off effect of immediately realised costs as a result of personnel changes as well as the extension of the Board of Directors by one member. While performance-related compensation was largely dispensed with in the previous year due to the pandemic, it was possible to decide on performance-related compensation for the year under review due to the good letting results and the reduction in the vacancy rate.
Other personnel expenses include expenses for lump-sum expenses of employees and members of the Board of Directors. This item also includes the fee for Directorsʼ & Officersʼ Liability Insurance, costs for recruitment, and expenses for further education and training of existing staff.
4.4 Administrative expense
Administrative expenses increased by kCHF 41 or 4.7%. In the financial year, one-off effects in corporate communications led to an increase in the position investor relations of kCHF 44.
Other income
Other income of kCHF 143 (previous year kCHF 0) mainly relates to the payment receipt of an insolvency claim written off in the company Züblin Real Estate Holding NV as well as a subsequently realised purchase price adjustment in relation to the sale of the German portfolio in 2017.
4.5 Financial expense and income
The financial expenses primarily relate to interests on the mortgage loan. These have increased by kCHF 21 compared to the previous year. The increase results from the refinancing of the portfolio as of 31 March 2022. In this context, the accrued expenses up to the original expiry of the loan agreement in September 2022 have been written off. The deferred termination fees of kCHF 31, which were accrued until the original expiry of the loan agreement in September 2022, were released prematurely.
4.6 Income taxes
Income tax
No current income taxes were incurred in the financial year 2021/22. In the previous year, the current tax expense related to a back tax payment for the 2017/18 financial year.
Expenses for deferred income taxes amount to kCHF 3,268 (previous year kCHF 1,247). The reason for the increase is due to the addition of kCHF 1,464 to the deferred tax liabilities in connection with the valuation gains on investment properties as well as an addition of kCHF 804 for deferred taxes on temporary differences in connection with shares in subsidiary companies.
Overall, income tax expense in the financial year 2021/22 amounted to kCHF 3,268 (previous year kCHF 1,257).
The following table provides a reconciliation of income taxes at the reference tax rate to the income tax reported in the income statement:
Income tax reconciliation
Estimates are necessary for the determination of current as well as deferred taxes. These assumptions relate to the following:
Current tax
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 tax
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.
4.7 Earnings per share
Züblin Immobilien Holding AG has no equity instruments which would lead to a dilution. The average number of dividend-bearing shares is calculated under consideration of the 2,380 treasury shares.
