Annual Report 2014-2015

Other notes

1. Rental income

1. Rental income
in CHF thousandSwitzerlandGermanyNetherlandsTotal
     
Financial year 2013/2014    
Rental income in presentation currency8 92916 3297 48732 745
Rental income in local currency8 92913 2796 089 
     
Financial year 2014/2015    
Rental income in presentation currency7 59812 0521 91721 567
Rental income in local currency7 59810 2361 628 
Change to previous year in local currency–1 331–3 043–4 461 
arising from:    
– Purchases000 
– Disposals–1 700–2 036–4 473 
– Vacancy and indexation369–1 00712 

The reduction in rental income by CHF 11.2 million (previous year decrease of CHF 12.8 million) resulted mainly from the sales of investment properties and the loss of rent due to the bankruptcy of the DIY chain “Praktiker” in Germany.

2. Result from the sale of investment properties

2. Result from the sale of
investment properties
in CHF thousand1.4.2014 to 31.3.20151.4.2013 to 31.3.2014
Investment properties strategic  
Sales proceeds–388156 728
Market value as of the last valuation0–149 523
Result from the sale of investment properties strategic–3887 205
   
Investment properties non-strategic  
Sales proceeds19 82763 902
Market value as of the last valuation–21 578–76 330
Result from the sale of investment properties non-strategic–1 750–12 428

3. Real estate expenses

Six non-strategic investment properties (one in Germany, five in the Netherlands) were sold in the last financial year. Three properties were sold at book value, while three properties were sold at a loss. Follow-up costs were recorded in connection with the prior years sale of a strategic investment property. Net of selling costs there was an overall loss of CHF 2.1 million on the sale of investment properties.

in CHF thousand1.4.2014 to 31.3.20151.4.2013 to 31.3.2014
   
Property taxes–74–257
Legal fees–65–88
Bad debts–42–164
External property management fees–497–356
Non recoverable service charges–773–1 775
Other property-related expense–234–1 040
Total real estate expense–1 685–3 680

The decline in real estate expenses is in line with the reduction in the size of the investment property portfolio.

4. Administrative expenses

4. Administrative expenses
in CHF thousand1.4.2014 to 31.3.20151.4.2013 to 31.3.2014
   
Salaries and Board of Directors' fees–3 192–3 603
Valuation–231–126
Audit–340–344
Legal and tax advisory–247–191
Other taxes–100–270
Depreciation–61–76
Bookkeeping and IT–324–549
Other advisory and investor relations–1 076–641
Other administrative expense–203–366
Total administrative expense–5 774–6 166

Administrative expenses were influenced positively due to the decline in Salaries and Board of Directors' fees and one-off subsidies.

With advisory and valuation fees increased, administrative expenses reduced overall by CHF 0.4 million.

5. Financial expense and income

5. Financial expense and income
in CHF thousand1.4.2014 to 31.3.20151.4.2013 to 31.3.2014
   
Financial expense  
Mortgage 1 and swaps interest expense 2–9 011–18 958
Interest expense shareholder loan–1 4990
Interest expense and other financial charges 1–67–90
Interest expense 4% bond Züblin Immobilien Holding AG 1–2 192–3 027
Interest expense mandatory convertible securities Züblin France 100
Currency translation adjustments–29 928–52
Total financial expense–42 697–22 127
   
Changes in market value and derecognition of Swaps–14 227–14 339
   
Financial income  
Interest income 31840
Fair value changes currency put options 43110
Total financial income32940
Net financial expense–56 595–36 426

1The respective liabilities belong to the category "Financial liabilities at amortized cost".

2The liabilities from interest swaps belong to the category "Financial liabilities at fair value".

3The assets to which this income relates belong to the category "Loans and receivables at amortized cost".

4The assets to which this income relates belong to the category "XXXXX".

Financial expense

Total financial expenses increased by CHF 20.6 million to CHF 42.7 million (previous year CHF 22.1 million). Mortgage interest fell by CHF 9.9 million due to the sale of investment properties and the low level of interest rates. However, this was counteracted by an increase of CHF 29.9 million in currency translation losses during the financial year. These mainly derived from the realization of currency translation losses in connection with the cessation of operations in the Netherlands (CHF 12.1 million) and currency translation adjustments on loans to subsidiaries (CHF 17.7 million).

Changes in market value and derecognition of swaps

The revaluations of derecognized swaps led to a charge of CHF 14.2 million through the income statement.

Financial income

The Züblin Group recorded financial income of CHF 0.3 million (previous year CHF 0.0 million). The financial income resulted mainly from gains on euro currency options (see note 19).

6. Income taxes

6. Income taxes
in CHF thousandSwitzerlandGermanyNetherlandsHolding 1Total
      
Financial year 2014/2015     
Income taxes in profit and loss     
Current taxes281–60–12263
Current taxes from previous year–5 844000–5 844
Total current taxes–5 563–60–12–5 581
      
Changes in tax loss carry forwards954–29300661
Changes in valuation10758400691
Changes in other positions–242–2000–53–495
Total deferred taxes819910–53857
Total income taxes in profit and loss–4 744850–65–4 724
      
Income taxes in comprehensive income statement     
Current taxes–291000–291
Deferred taxes in equity0–1 45700–1 457
Total income taxes in comprehensive income statement–291–1 45700–1 748
      
Financial year 2013/2014     
Income taxes in profit and loss     
Current taxes–12 47700–51–12 528
Current taxes from previous year283000283
Total current taxes–12 19400–51–12 245
      
Changes in tax loss carry forwards0–3800–38
Changes in valuation10 040–370010 003
Changes in other positions1 379–900–491 240
Total deferred taxes11 419–1650–4911 205
Total income taxes in profit and loss–775–1650–100–1 040
      
Income taxes in comprehensive income statement     
Current taxes–4 253000–4 253
Deferred taxes in equity0–50900–509
Total income taxes in comprehensive income statement–4 253–50900–4 762

1Related to all non-property companies.

Income tax reconciliation

in CHF thousandSwitzerlandGermanyNetherlandsHolding 1ConsolidatonTotal
       
Financial year 2014/2015      
Profit before tax–10 335–29 674–2 813–36 6410–79 463
Reference rate 221.17%31.23%25.00%10.58%7.83%20.18%
Income taxes at reference rate2 1889 2667033 877016 034
Income taxes recogized in Profit & Loss–4 744850–650–4 724
Difference–6 932–9 181–703–3 9420–20 758
Adjustments:      
– Non tax-deductible expenses000–3 8180–3 818
– Non-taxable income000000
– Changes in tax rates on deferred tax positions1 38900001 389
– Items taxed at other than reference rate–1120000–112
– Changes in loss carry forwards not recognized–2 243–9 181–703–1240–12 251
– Income taxes from previous periods–5 8440000–5 844
– Others–1230000–123
       
Financial year 2013/2014      
Profit before tax–4 065–16 681–22 275-5 5640–48 585
Reference rate 221.17%31.23%25.00%8.69%7.83%24.95%
Income taxes at reference rate8615 2095 569485012 123
Income taxes recogized in Profit & Loss–775–1650–1000–1 040
Difference–1 636–5 374–5 569–5850–13 163
Adjustments:      
– Non tax-deductible expenses000-5850-585
– Non-taxable income0000 0
– Changes in tax rates on deferred tax positions–1 1260000–1 126
– Items taxed at other than reference rate–7930000–793
– Changes in loss carry forwards not recognized0–5 374–5 56900–10 943
– Income taxes from previous periods2830000283
– Others000000

1Related to all non-property companies.

2The reference tax rate for the Group is calculated at 20.18% (previous year 24.95% - adjusted due to discontinued operation adjustements). The calculation was made using absolute numbers.

Income taxes

In the past financial year the Züblin Group incurred an income tax expense of CHF 4.7 million, compared with an expense of CHF 1.0 million in the previous year. The most important changes in each of our operating countries are set out below. The increase in the weighted average tax rate from 27.56% to 20.23% was primarily due to changes in the share of individual country results in the total.

Switzerland

In Switzerland there was tax expense of CHF 4.7 million (previous year: expense of CHF 0.8 million) during the financial year. This consisted of an expense of CHF 5.5 million (previous year: expense of CHF 12.2 million) from current income taxes and income of CHF 0.8 million (previous year: income of CHF 11.4 million) from deferred taxes. The deferred tax income comprises income of CHF 0.9 million from the capitalization of tax loss forwards, an income of CHF 0.1 million from valuation differences and an expense of CHF 0.2 million from other items. The current income tax expense includes prior-year taxes of CHF 5.8 million. These are a consequence of recent legal judgements relating to the offsetting of profits between cantons in Switzerland.

France

Due to the company's SIIC status, the Company is not liable for income taxes in France. Accordingly, there was no tax expense in

the reporting financial year. Under the current SIIC regime, if the French entity disposes of any property within the first five years after

acquisition, it is liable for a one-off payment of 25% of the initial purchase price.

Germany

There was tax income of CHF 0.1 million (previous year expense of CHF 0.2 million) in Germany deriving from deferred taxes.

Netherlands

7. Discontinued operations

There was no impact from income taxes in the Netherlands either in the reporting year nor in the previous year.As of balance sheet date , the business segment “France“ – consisting of the shareholding of 59.16 % of the share capital of the French subsidiary ( Züblin Immobilière France – hereafter ZIF) or 46.49 % on a diluted basis – has been classified as a disposal group held for sale. This reclassification reflects the ongoing negotiations with a potential investor as well as the assessment of the Board of Directors and Management concerning the implementation probability within the next twelve months.

The results of ZIF for the year are presented below:

in CHF thousand1.4.2014 to 31.3.20151.4.2013 to 31.3.2014
   
Rental income7 5939 399
Total operating income7 5939 399
Real estate expense–2 970–4 146
Maintenance and repairs–293–441
Net operating income4 3304 812
   
Administrative expense–2 363–2 300
Result from the sale of investment properties strategic1 3373 429
Change in market value of investment properties strategic–119 620–7 626
   
Earnings before interest and taxes (EBIT)–116 316–1 685
Financial expense–9 914–10 471
Changes in market value and derecognition of swaps–1 974–2 009
Financial income17917
Earnings from discontinued operations–128 025–14 148
of which attributable to:  
– Shareholders of Züblin Immobilien Holding AG–86 475–2 979
– Non-controlling interests–41 550–11 169
   
Earnings per share from discontinued operations–1.46–0.05

The discontinued operations in France recorded a loss of CHF 128 million in financial year 2014/2015, compared with a loss of CHF 14 million in the previous year. This loss derived mainly from negative market value adjustments of CHF 120 million. These resulted firstly from changes in the assumptions regarding the letting of the vacant properties and secondly from the ongoing negotiations with a strategic investor. In addtion the operating loss of CHF 8 million explains the loss of the business segement. Net Assets of ZIF as at 31 March 2015 are, as follows:

in CHF thousandNotes31.3.201531.3.2014
    
Assets   
Investment properties9209 2600
Furnishing10930
Trade accounts receivable121 3880
Derivative financial instruments 1580
Other receivables 7 4100
Cash and cash equivalents 1 2090
Assets directly associated with disposal group 219 5180
    
Liabilities   
Mortgages 151 8050
Mandatory Convertable Securities 2 0290
Derivative financial instruments 5 6050
Trade accounts payable 1 1790
Other liabilities 6 5870
Liabilities directly associated with disposal group 167 2050
    
Net Assets directly associated with disposal group 52 3130
    
Amounts included in accumulated other comprehensive income:   
Reserve for cash flow hedges –4 1580
Currency translation adjustments –10 9580
Reserve of discontinued operation –15 1160

The net cash flows incurred by ZIF are as follows:

in CHF thousand1.4.2014 to 31.3.20151.4.2013 to 31.3.2014
   
Operating activities–12 113–24 326
Investing activities27 05040 335
Financing activities–17 248–32 358
Net-Cashflow–2 311–16 349

8. Earnings per share

8. Earnings per share
in CHF thousand1.4.2014 to 31.3.20151.4.2013 to 31.3.2014
   
Average number of shares entitled to dividends59 044 60959 049 404
   
Earnings of shareholders of Züblin Immobilien Holding AG–170 662–52 604
therof  
from continuing operations–84 187–49 625
from discontinuing operations–86 475–2 979
   
Earnings per share–2.89–0.89
therof  
from continuing operations–1.43–0.84
from discontinuing operations–1.46–0.05

Züblin Immobilien Holding AG has no equity instruments which would lead to a dilution.

9. Investment properties

Financial year 2014/2015

in CHF thousandSwitzerlandFranceGermany strategicTotal strategicGermany non-strategicNetherlands non-strategicTotal non-strategicTotal
         
Balance as of 31.3.2014188 610395 951164 565749 12618 59522 80341 398790 524
Purchases00000000
Value-enhancing investments1 2278 3594 52714 11300014 113
Sales0–35 6240–35 624–1 619–19 959–21 578–57 202
Positive change in market value3 22202433 4650003 465
Negative change in market value–3 339–119 620–26 196–149 155–5 351–2 061–7 412–156 567
Currency translation adjustments0–39 806–20 973–60 779–1 863–783–2 646–63 425
Assets directly associated with disposal group0–209 2600–209 260000–209 260
Balance as of 31.3.2015189 7200122 166311 8869 76209 762321 648
– of which strategic189 7200122 166311 886000311 886
– of which non-strategic held for sale00009 76209 7629 762
Reconciliation of market value to book value 31.3.2015        
Valuation by external appraiser 1189 7200122 166311 8869 76209 762321 648
Balance as of 31.3.2015189 7200122 166311 8869 76209 762321 648

1The report of the independent appraiser (Jones Lange LaSalle AG) as of 31 March 2015 may be found on pages 151 to 155.

The principles and assumptions applied in valuing the investment properties are set out in the detailed valuation report on pages 151 to 155.

The reduction in the value of the investment properties from CHF 790.5 million to CHF 321.6 million stems from the following factors:

– The value of the portfolio was increased by investments of CHF 14.1 million (previous year CHF 53.2 million) which the Company made in the reporting period. Around 60% of these investments related to renovations in Paris, with the remainder accounted for by investment properties in Stuttgart and Berne.

– At the same time the Company sold investment properties for CHF 57.2 million (previous year CHF 292.8 million). The sales took place in France, Germany and the Netherlands. A contract of purchase subject to a suspensory condition has been agreed for a non-strategic property in Germany. The book value of this property is covered in full by the agreed purchase price.

– The net downward revaluation amounted to CHF 153.1 million across the portfolio as a whole (previous year CHF 35.8 million) and resulted from adjustments to previous estimates and assumptions. The adjustments were concentrated in properties which have had substantial vacancies for a lengthy period. The adjustments primarily related to the market rents underlying the valuations and the assumptions about the length of time it will take to relet the properties and/or their lettability. In addition to this valuation adjustments reflect the reclassifcations in connection with the discontinued operation (refer to note 7). The downward revaluations mainly involved investment properties in France (76%) and Germany (17%).

– Movements in the CHF/EUR exchange had a negative impact of CHF 63.4 million on the value of the investment properties (previous year positive impact of CHF 1.1 million).

– In connection with the discontinuation of the business segment “France”, the relating investment properties in the amount of 209.3 million were reclassified to the line item “Assets directly associated with disposal group“.

Based on the decision of the BOD not to sell the Swiss portfolio, the properties were reclassified from held for sale to strategic.

The fire insurance value of the investment properties including discontinued operations amounts to CHF 564.4 million (previous year CHF 622.6 million).

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 on pages 18 to 31. This additional information is integral part of the notes to the consolidated financial statements.

Financial year 2013/2014

in CHF thousandSwitzerlandFranceGermany strategicTotal strategicGermany non-strategicNetherlands non-strategicTotal non-strategicTotal
         
Balance as of 31.3.2013321 260436 557161 831919 64868 48676 658145 1441 064 792
Purchases00000000
Value-enhancing investments16 66033 6412 57652 87714115029153 168
Sales–149 524–66 9120–216 436–34 729–41 601–76 330–292 766
Positive change in market value2 82373 5296 35938903896 748
Negative change in market value–2 609–7 633–3 335–13 577–16 109–12 852–28 961–42 538
Currency translation adjustments0291–362554174488651 120
Balance as of 31.3.2014188 610395 951164 565749 12618 59522 80341 398790 524
– of which strategic0360 101164 565524 666000524 666
– of which strategic held for sale188 61035 8500224 460000224 460
– of which non-strategic held for sale000018 59522 80341 39841 398
Reconciliation of market value to book value 31.3.2014        
Valuation by external appraiser 1188 610395 951164 565749 12618 63335 21653 849802 975
Valuation adjustment property held for sale 20000–38–12 413–12 451–12 451
Balance as of 31.3.2014188 610395 951164 565749 12618 59522 80341 398790 524

1The report of the independent appraisers (Wüest & Partner [CH + GER], BNP Paribas [FR] and Troostwijk [NL] as of 31 March 2014 may be found in the annual report 2013/2014.

2In certain cases, the Company has made adjustments to the valuations from the external appraisers. These reflect results from ongoing sales negotiations.

10. Furnishing

10. Furnishing
in CHF thousandOffice furnishing and fittingsEDPTotal 2014/2015Total 2013/2014
     
Acquisition costs    
Balance as of 1.4.2 7651 7594 5244 500
Additions1001053
Disposals–60–6–29
Currency translation adjustments–96–29–1250
Assets directly associated with disposal group–2 297–1 636–3 9330
Balance as of 31.3.376944704 524
     
Accumulated depreciation    
Balance as of 1.4.2 4941 6344 1283 961
Additions4194135196
Disposals–50–5–29
Currency translation adjustments–61–23–840
Assets directly associated with disposal group–2 229–1 611–3 8400
Balance as of 31.3.240943344 128
     
Net book value as of 31.3.1360136396

11. Deferred tax assets and liabilities

11. Deferred tax assets and 
liabilities
in CHF thousandSwitzerlandGermanyNetherlandsHolding 1Total
      
Financial year 2014/2015     
Deferred tax assets arising from:     
– Tax loss carry-forwards957386001 343
– Negative valuations of investment properties00000
– Derivative financial instruments00000
– Other valuation differences0008787
Total deferred tax assets as of 31.3.20159573860871 430
      
Deferred tax liabilities arising from:     
– Positive valuations of investment properties8 833386009 219
– Derivative financial instruments00000
– Other valuation differences957000957
Total deferred tax liabilities as of 31.3.20159 7903860010 176
      
Net amounts as presented in balance sheet     
Presented deferred tax assets0008787
Presented deferred tax liabilities8 8330008 833
      
Net deferred tax liabilities     
Balance as of 31.3.2014–9 6521 4140140–8 098
Deferred taxes recognized in profit & loss819910–53857
Deferred taxes recognized in equity0–1 45700–1 457
Currency translation adjustments0–4800–48
Balance as of 31.3.2015–8 8330087–8 746

1Related to all non-property companies.

in CHF thousandSwitzerlandFranceGermanyNetherlandsHolding 1Total
       
Financial year 2013/2014      
Deferred tax assets arising from:      
– Tax loss carry-forwards0075300753
– Negative valuations of investment properties000000
– Derivative financial instruments001 727001 727
– Other valuation differences00–110140129
Total deferred tax assets as of 31.3.2014002 46901402 609
       
Deferred tax liabilities arising from:      
– Positive valuations of investment properties8 94001 055009 995
– Derivative financial instruments000000
– Other valuation differences7120000712
Total deferred tax liabilities as of 31.3.20149 65201 0550010 707
       
Net amounts as presented in balance sheet      
Presented deferred tax assets001 71601401 856
Presented deferred tax liabilities9 6520302009 953
       
Net deferred tax liabilities      
Balance as of 31.3.2013–21 07101 9670189–18 915
Deferred taxes recognized in profit & loss11 4190–1650–4911 205
Deferred taxes recognized in equity00–50900–509
Currency translation adjustments0012100121
Balance as of 31.3.2014–9 65201 4140140–8 098

1Related to all non-property companies.

in CHF thousandSwitzerlandFranceGermanyNetherlandsHolding 1Total
       
Tax loss carry-forwards      
As of 31.3.201515 11359 31990 11497 978613 248875 772
Maturity within      
1 to 12 months000000
1 to 3 years0002 078335 072337 150
3 to 5 years0004 77291 11295 884
more than 5 years15 1130091 128187 064293 305
without time limitation059 31990 11400149 433
Captialization:      
not capitalized10 59459 31987 67497 978613 248868 813
capitalized4 51902 440006 959
capitalized at reference tax rate9570386001 343
       
As of 31.3.2014055 15351 50186 601482 774676 029
Maturity within      
1 to 12 months000000
1 to 3 years0002 422277 302279 724
3 to 5 years0005 56274 66480 226
more than 5 years00078 617130 808209 425
without time limitation055 15351 50100106 654
Captialization:      
not capitalized055 15346 74186 601482 774671 269
capitalized004 760004 760
capitalized at reference tax rate0075300753

1Related to all non-property companies.

12. Trade accounts receivable

12. Trade accounts receivable
in CHF thousand 31.3.2015 31.3.2014
 Accounts receivableValue adjustmentAccounts receivableValue adjustment
     
Not yet due–003 3920
< 30 days past due19805320
30-60 days past due180400
61-90 days past due570500
91-180 days past due174–163–2
181-360 days past due189–11166–66
Total635–1124 143–68
     
Total accounts receivable523 4 075 

Value adjustment for doubtful receivables

in CHF thousand2014/20152013/2014
   
Balance 1.4–68 –953
Changes in value adjustment for doubtful receivables–86–34
Utilisation of value adjustment for doubtful receivables18893
Release of value adjustment for doubtful receivables1426
Currency translation adjustments100
Balance 31.3.–112 –68

13. Cash and cash equivalents

As of the balance sheet date, the Company had cash and cash equivalents of CHF 2.8 million (previous year CHF 21.7 million), of which CHF 1.5 million is tied up until 30 April 2015.

14. Equity

Share capital

 Number of sharesin CHF thousand
   
Issued shares at a nominal value CHF 1.00 as of 31.3.201359 724 48659 724
No changes in capital structure in financial year 2013/2014
Issued shares at a nominal value CHF 1.00 as of 31.3.201459 724 48659 724
No changes in capital structure in financial year 2014/2015
Issued shares at a nominal value CHF 1.00 as of 31.3.201559 724 48659 724

Trasury shares

 Number of sharesin CHF thousand
   
Balance as of 31.3.2013629 8772 134
Purchase of treasury shares50 000109
Balance as of 31.3.2014679 8772 243
Purchase of treasury shares00
Balance as of 31.3.2015679 8772 243

15. Non-controlling interests

The following non-controlling interests represent the part of Züblin Immobilière France SA which is not held by Züblin Immobilien Holding AG. In fiscal year 2014/2015 this buisness segment was classified as discontinued operations:

 31.3.201531.3.2014
   
Non-controlling interests in EUR thousand2 50236 868
Non-controlling interests in CHF thousand2 61844 957
Non-controlling interests in percentage53.51%53.51%

Share capital structure of Züblin Immobilière France SA (ZIF)

 31.3.201531.3.2014
   
Number of shares9 745 5519 745 551
Number of shares of conversion 2.0% mandatory convertible2 656 2502 656 250
Fully diluted number of shares 12 401 801 12 401 801
   
Part of Züblin Immobilien Holding AG  
In share capital of ZIF5 765 3755 765 375
In 2.0% mandatory convertible securities
   
Share of Züblin Immobilien Holding AG as a percentage  
In share capital of ZIF59.16%59.16%
In fully diluted share capital of ZIF46.49%46.49%

Züblin Immobilien Holding AG holds 59.16% of the shares of Züblin Immobilière France SA and 46.49% on a fully diluted basis. The difference in this ownership stake arises from the fact that the 10-year Mandatory Convertible Securities issued by Züblin Immobilière France SA in August 2007 for EUR 35.5 million are assumed to be fully converted for the purposes of the consolidated financial statements, reflecting the economic substance of the transaction. The 2.0% Mandatory Convertible Securities are held in their entirety by Lamesa Holding SA, Panama. At the current conversion price the securities can be converted into 2 656 250 shares. An analysis of this impact is shown in the table above.

Despite the fact that the ownership stake in Züblin Immobilière France SA is below 50%, the company is fully consolidated in the consolidated financial statements. As of the balance sheet date, Züblin Immobilien Holding AG continued to exercise control as it holds an absolute majority of voting shares with voting rights and appoints the majority of the members of the Board of Directors.

16. Future contractual maturities

16. Future contractual maturities
 Carrying value< 1 year1 to 3 years3 to 5 years> 5 years
in CHF thousand interestamortisationinterestamortisationinterestamortisationinterestamortisation
          
As of 31.3.2015         
Mortgages218 4112 58589 2762 089110 4587122 3023 06716 375
Bond35 2721 41235 272000000
Liabilities from shareholder loans49 5844 19549 584000000
Trade accounts payable7140714000000
Derivative financial instruments29 4816 11407 94605 76709 6540
Other short-term liabilities8 00407 75400000250
Total as of 31.3.2015341 46614 306182 60010 035110 4586 4792 30212 72116 625
          
As of 31.3.2014         
Mortgages485 06211 494272 28510 317212 777728000
Bond55 3132 21802 21855 4450000
Mandatory convertible security3 08186601 7320866000
Trade accounts payable6 71906 719000000
Derivative financial instruments33 09613 184011 55704 51901 9090
Other short-term liabilities14 225012 887000001 338
Total as of 31.3.2014597 49627 762291 89125 824268 2226 11301 9091 338

In the next twelve months CHF 182.6 million (previous year CHF 291.9 million including France) of the liabilities reported above are due to mature. Of this amount, CHF 89.3 million (previous year CHF 272.3 million including discontinued operation) relates to mortgages; CHF 13.8 million of these mortgages are held for sale. The remainder consists of normal loan repayments and a maturing mortgage in Germany. This is expected to be rolled over in the normal course of business. Trade accounts payable and the other short-term liabilities are incurred in the course of the Company's operating activities and are covered by the short-term assets.

17. Financial instruments – fair-value-hierarchie

17. Financial instruments – 
fair-value-hierarchie
in CHF thousandCarrying valueLevel 1Level 2Level 3
     
As of 31.3.2015    
Assets: Derivative financial instruments33403340
Liabilities: Derivative financial instruments29 481029 4810
     
As of 31.3.2014    
Assets: Derivative financial instruments330330
Liabilities: Derivative financial instruments33 096033 0960

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

Level 1 – Valuation based upon market prices for specific financial instruments.

Level 2 – Valuation based upon market prices for similar instruments or using valuation models which are based upon input parameters

observable on the market.

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.

18. Financial instruments by category

18. Financial instruments by 
category
  31.3.2015 31.3.2014
 Book valueMarket valueBook valueMarket value
Financial Assets    
Loans and receivables at amortized cost    
Trade accounts receivable523 4 075 
Restricted cash and cash equivalents0 4 546 
Rental guarantees0 254 
Prepaid service charges5 976 10 194 
Cash and cash equivalents2 787 21 684 
Financial assets at fair value through profit and loss    
Derivative financial instruments334 33 
Total9 620 40 786 
     
Financial Liabilities    
Financial Liabilities at amortized cost    
Mortgages218 411218 778485 062488 878
Bond35 27234 24155 31357 003
Liabilities from sharehoder loan49 58449 58400
Mandatory Convertible Securities003 0813 081
Rent deposits250 1 338 
Accrued interest980 3 065 
Prepaid service charges5 869 9 853 
Accounts payable714 6 719 
Bank dispocredit905 0 
Financial liabilities at fair value through profit and loss    
Derivative financial instuments29 481 33 096 
Total341 466 597 527 

The book value of the category “Loans and receivables at amortized cost” is equal to the market value as the relevant positions all have short maturities. 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.

In the category “Liabilities at amortized cost”, the reported amounts of the short-term liabilities reflect their market value. The fair values

of mortgages are calculated at the present values of the payment flows using the relevant yield curve (Level 2). In the case of the bond the fair value is based on the market price at the balance sheet date (Level 1), while for the shareholder loan and the Mandatory Convertible Securities, the market value as of the balance sheet date reflects the discounted amount of the outstanding liabilities (Level 2).

19. Derivative financial instruments

Cash Flow Hedges

in CHF thousandNotional amounts 31.3.2015Notional amounts 31.3.2014Fair value 31.3.2015Fair value 31.3.2014
     
1 to 12 months120 000265 5894 3895 872
1 to 3 years40 000217 3121 38911 208
3 to 5 years31 38992 3094 8055 018
More than 5 years80 000116 58218 89810 998
Total cash flow hedges271 389691 79229 48133 096
– of which liabilities  29 48133 096

The Züblin Group uses interest rate swaps to reduce the cash flow risks arising from its exposure to movements in interest rates.

As a result of the derecognitions in prior years, as at 31 March 2015 swaps with a notional value of CHF 31.4 million are subject to hedge accounting and have been designated as effective under the criteria of IAS 39. This represents around 12% of the current notional value of swaps. Changes in the fair value of effective swaps are recognized in the consolidated statement of comprehensive income. The change in fair value of the derecognized cash flow hedges of CHF –14.2 million (previous year CHF –16.3 million) was recognized in the income statement.

Currency options

in CHF thousandNotional amounts 31.3.2015Notional amounts 31.3.2014Fair value 31.3.2015Fair value 31.3.2014
     
1 to 12 months9 50003340
1 to 3 years014 000033
3 to 5 years0000
Total foreign currency put-options9 50014 00033433
– of which assets  33433

Total derivative financial instruments

in CHF thousandNotional amounts 31.3.2015Notional amounts 31.3.2014Fair value 31.3.2015Fair value 31.3.2014
     
Cash flow hedges271 389691 792–29 481–33 096
Foreign currency put-options9 50014 00033433
Total derivative financial instruments280 889705 792–29 147–33 063
– of which liabilities  –29 481–33 096
– of which assets  33433

20. Mortgages

Overview mortgages as of 31.3.2015

In CHF thousandSwitzerlandGermanyTotal%
     
     
Interest term structure, including swaps    
1 to 12 months108 15678 866187 02286%
1 to 3 years0000%
3 to 5 years031 38931 38914%
More than 5 years0000%
Total108 156110 255218 411100%
Average interest rates0.85%2.80%1.99% 
Average duration2.51.62.2 
     
Contractual maturity dates of mortgages    
1 to 12 months089 27689 27641%
1 to 3 years108 1562 301110 45751%
3 to 5 years02 3022 3021%
More than 5 years016 37616 3767%
Total108 156110 255218 411100%
Average duration2.54.52.6 
of which:    
– Non-current mortgages strategic108 15620 979129 135 
– Current mortgages strategic075 47575 475 
– Mortgages non-strategic held for sale013 80113 801 
     
Fair value of mortgages    
Variable rate mortgages108 156110 622218 778100%
Total108 156110 622218 778100%

Overview mortgages as of 31.3.2014

In CHF thousandSwitzerlandFranceGermanyNetherlandsTotal%
       
       
Interest term structure, including swaps      
1 to 12 months108 036118 854117 69120 735365 31675%
1 to 3 years000000%
3 to 5 years092 3090092 30919%
More than 5 years0027 437027 4376%
Total108 036211 163145 12820 735485 062100%
Average interest rates2.89%4.04%5.23%2.71%4.08% 
Average duration8.91.61.71.43.3 
       
Contractual maturity dates of mortgages      
1 to 12 months00117 99511 007129 00227%
1 to 3 years0211 16327 1339 728248 02451%
3 to 5 years108 036000108 03622%
More than 5 years000000%
Total108 036211 163145 12820 735485 062100%
Average duration3.52.70.91.42.3 
of which:      
– Non-current mortgages strategic0187 21425 5630212 777 
– Current mortgages strategic02 00094 173096 173 
– Mortgages strategic held for sale108 03621 94900129 985 
– Mortgages non-strategic held for sale0025 39220 73546 127 
       
Fair value of mortgages      
Fixed rate mortgages00120 9030120 90325%
Variable rate mortgages107 965212 20427 11220 694367 97575%
Total107 965212 204148 01520 694488 878100%

IIn the current financial year, the Company repaid CHF 69.4 million of mortgages and rolled over mortgage contracts to the value of CHF 100.1 million. As at 31 March 2015 Züblin Group's real estate portfolio is financed entirely by variable-rate loans. In prior years a portion of the portfolio amounting to CHF 118.1 million was financed with fixed-rate loans. The figure for long-term mortgages includes closing fees of CHF 0.4 million (previous year CHF 2.9 million).

Some of the mortgages include financial covenants which specify, among other things, adherence to certain financial indicators (total debt/EBITDA, level of interest cover, loan-to-value ratio and equity ratio). The financial covenants vary by country and loan contract, as summarized in the table below:

 SwitzerlandFrance
   
   
Interest coverage ratio1.61.1
Loan to value65%65%
Equity %32.5%

The Company monitors these covenants every quarter and performs sensitivity analyses to changes in earnings, interest rate movements and property valuations. The breach of a covenant may have a variety of consequences depending upon the individual contract, but in the first instance typically leads to a higher interest rate and/or an accelerated repayment schedule. The Company then normally has a certain period in which to correct the breach. If the breach has not been corrected at the end of this period, the bank normally demands a faster repayment schedule or a (partial) repayment of the loan. Some contracts contain a change in ownership clause which stipulates certain consequences, such as declaring the loan to be immediately due and repayable if Züblin Immobilien Holding AG's stake in the borrowing subsidiary declines below 50%. The mortgage agreement for the Swiss portfolio contains the same clause in the event that a new shareholder acquires more than 50% of Züblin Immobilien Holding AG.

In the case of one loan a covenant was temporarily reduced from its usual level so that it was met on the reporting date.

The table below summarizes the value of investment properties pledged as security for mortgages:

in CHF thousand31.3.201531.3.2014
   
Book value of assets pledged (investment properties)321 648790 524
Credit drawn (debt secured)218 778485 062

Future rent receivables from properties, property insurance policies and shares in subsidiary companies have in some cases been pledged as security for mortgage loans over and above the charges under the mortgage.

21. 4% bond 11/15

21. 4% bond 11/15
in CHF thousandNominal valuePrice in %Fair valueEffective interest rate in % 1
     
As of 31.3.201535 30097.00%34 2414.42%
     
As of 31.3.201455 445102.81%57 0034.42%

1The effective interest rate is made up of the coupon of 4% and the amortisation of the transaction costs.

On 20 July 2011 Züblin Immobilien Holding AG issued a 4% bond of CHF 60.0 million. The bond is quoted on the SIX Swiss Exchange. The bond has a maturity of four years and its proceeds were used to repay short-term loans, refinance a number of mortgages and to finance a renovation project in France.

In the financial year 2013/2014 the Company reduced the amount outstanding on the bond by CHF 4.6 million to CHF 55.4 million through repurchases for its own holdings on the open market.

A public tender offer was made to all holders of the 4% bond on 18 November 2014. Bonds with a nominal value of CHF 22.5 million were repurchased on 12 February 2015, which reduced the amount outstanding on the bond to CHF 32.9 million. The increase in the amount outstanding by CHF 2.4 million to CHF 35.3 million as at 31 March 2015 resulted from a partial sale of the bonds held by the Company after the repurchases in the financial year 2013/2014.

22. 2,0% Mandatory Convertible Securities France

22. 2,0% Mandatory Convertible Securities France
in CHF thousand31.3.201531.3.2014
   
Balance Sheet items  
Amount of debt – interest 103 081
Amount of equity 247 14047 140
   
Income statement  
Coupon 2.0% MCS–836–873
Amortized interest 1714711
Total interest expense–122–162

1Under IFRS, the amortized cost method requires that only the interest payment on the amount of debt, currently CHF 2.0 million (previous year CHF 3.1 million) be recorded as interest expense. The amount of debt simultaneously declines since the payment reduces the cash value of the interest payments to be made. The interest debt component is part of the balance sheet item "Mandatory Convertible Securities".

2The equity component of CHF 47.1 million (previous year CHF 47.1 million) is shown in equity as part of non-controlling interests and is unchanged from the previous year. The currency tranlsation adjustment is part of the currency translation adjustment on non-controlling interests.

23. Employee retirement benefit plan

On 7 August 2007, Züblin Immobilière France SA issued 10-year Mandatory Convertible Securities for EUR 35.5 million. The 2.0% Mandatory Convertible Securities are held in their entirety by Lamesa Holding SA, Panama. At the current conversion price the securities can be converted into 2 656 250 shares. Under the terms of the 2% Mandatory Convertible Securities 07/17, the holder has the right to convert the securities at any time after 7 August 2008. Once the term expires on 7 August 2017, the securities must be converted. The holder is entitled to a minimum interest level of 2%, but has the right to receive the same level of dividend distributions, or distributions from free or capital reserves, as existing shareholders.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 0.3 million (previous year CHF 0.3 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, Survivors' 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:

in CHF thousand31.3.201531.3.2014
   
Pension liabilities (present value)1 6453 838
Pension assets at market value1 2363 179
Pension liabilities (technical deficit)–409–659

The above amount has been recorded under “Other non-current liabilities”.

The pension liabilities and assets changed as follows in the Züblin Group's consolidated balance sheet:

in CHF thousand2014/20152013/2014
   
Pension liabilities (present value) at 1.4.3 8383 539
Actuarial pension expenses140191
Employees' contributions9578
Interest expenses5471
Paid coverage–2 313189
Accrued service cost–1337
Actuarial gains/losses–156–267
Pension liabilities (present value) at 31.3.1 6453 838
   
Pension assets at market value at 1.4.3 1792 649
Expected income on plan assets4256
Employer contributions146149
Employees' contributions95105
Paid coverage–2 313216
Actuarial gains/losses874
Pension assets at market value at 31.3.1 2363 179

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:

in CHF thousand31.3.201531.3.2014
   
Expected contribution in the coming year140120
   
Penison expense is comprised of the following items:  
– Current service cost140191
– Interest expense1316
– Accrued service cost–1337
Pension expenses140244

The remeasurement of the net pension obligation reported in other comprehensive income breaks down as follows:

in CHF thousand31.3.201531.3.2014
   
Actuarial gains/losses156267
Actuarial gains/losses8711
Defined Benefit Cost recognised in OCI243278

The calculation of the Group's pension liabilities is based on the following assumptions:

 31.3.201531.3.2014
   
Discount rate0.80%1.95%
Expected return on pension assets0,8%/1,75%1.95%
Expected future salary increases1.00%1.00%
Expected future pension increases0.00%0.00%
Life expectancy in years at age of retirement (man/woman)BVG 2010 GTBVG 2010 GT

A sensitivity analysis was carried out using constant assumptions for the most important assumptions used to calculate the pension liabilities.

 31.3.201531.3.2014
   
Pension liabilities (present value) at 31.3.1 6453 838
– Discount rate -0.25%1 7293 984
– Discount rate +0.25%1 5673 701
– Expected salary increases -0.25%1 6363 828
– Expected salary increases +0.25%1 6493 847
– Life expectancy in years – 1 year1 6783 896
– Life expectancy in years – 1 year1 6113 778

24. Liabilities from long-term rental contracts

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.In connection with the rental of its business premises, Züblin Immobilien Management AG has entered into fixed rental commitments up to 31 March 2016 at the latest, totalling CHF 0.3 million (previous year CHF 0.6 million). For the reporting financial year, the rental payments recorded in the income statement totalled CHF 0.3 million (previous year CHF 0.3 million).

in CHF thousand31.3.201531.3.2014
   
Liabilities from long-term rental contracts  
1 to 12 months293293
1 to 3 years0293
3 to 5 years00
more than 5 years00

25. 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 1

– Forum European Realty Income L.P., Cayman 2

– Bruin I, S.à.r.l., Luxembourg 2

11 The company is represented on the Board of Directors by Dr. Iosif Bakaleynik (Chairman), Vladislav Osipov and Iakov Tesis.

2. These shareholders formed a group which held 19.84% of the Company's shares and was represented on the Board of Directors by Andrew N. Walker until 16 June 2014. On 16 June 2014 the group sold their shares to Lamesa Holding SA, Panama.

Shareholdings by related parties as of 31 March 2015

  • Shareholdings by the Board of Directors and the Group Management are disclosed in detail in note 27 (see pages 141 to 142).
  • The 2.0% Mandatory Convertible Securities, which were issued in 2007 by Züblin Immobilière France SA (ZIF), are held in their entirety by Lamesa Holding SA, Panama, and can be converted into 2 656 250 shares in ZIF at the current conversion price.

Transactions with related parties and significant shareholders

The French subsidiary Züblin Immobilière France (ZIF) established a 100% asset management subsidiary, Züblin Immobilière France Asset Management (ZIFAM), on 3 May 2011. On 1 June 2011 the employment contract for Pierre Essig (member of the Group Management of Züblin Group and CEO in France) and all other employees were transferred from ZIF to the new company. ZIFAM was set up to perform the asset management for ZIF and will also provide property management services in future.

As part of this reorganization, the Company provided Pierre Essig with an option to buy the asset management company ZIFAM under certain circumstances. This option can only be exercised if Züblin Group or ZIF alter their strategy and give up their asset management activities. The option covers ZIFAM's entire capital and the exercise price is the market value of the company at the time of exercising the option.

Lamesa Holding SA, Panama has extended a US dollar loan to the value of CHF 80 million to the Company. This is intended to fund the bond buyback (see note 21) and to cover the Company's short-term liabilities. CHF 47.5 million of the loan, which has a maturity date of 30 September 2015, had been drawn down at the reporting date. The amount shown in the balance sheet (CHF 49.6 million) includes currency translation and accrued interest. Züblin has a unilateral option for a 1-year extension of the loan, which must be exercised by 31 July 2015. The loan carries an interest rate of 15% p.a., of which 13% is payable in cash and 2% is capitalised (see also notes 5 and 16).

There were no other transactions with related parties or significant shareholders in financial year 2014/2015. Nor were any advisory fees paid to related parties or significant shareholders over and above the remuneration disclosed on pages 139 to 140. The Board of Directors and Group Management continually monitor 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.

26. Compensation

Compensation of the members of the Board of Directors

in CHFBasic compensationSubsidiaries1Total
Financial year 2014/2015   
Dr. Iosif Bakaleynik, Chairman since 22 July 20142100 00029 438129 438
Urs Ledermann, Member since 22 July 201470 000070 000
Vladislav Osipov, Member 270 00023 55093 550
Iakov Tesis, Member since 22 July 2014 370 00018 84088 840
Dr. Markus Wesnitzer, Member 470 00014 71984 719
Dr. Wolfgang Zürcher, Member since 22 July 201470 000070 000
Total Board of Directors450 00086 546536 546
    
Financial year 2013/2014   
Pierre N. Rossier, Chairman 2120 00043 243163 243
Vladislav Osipov, Member45 000045 000
Andrew N. Walker, Member 345 00012 29757 297
Dr. Markus Wesnitzer, Member 450 00012 29762 297
Total Board of Directors260 00067 837327 837

1Board compensation at the subsidiary level.

2This member of the Board of Directors is/was also a member of the Board of Directors of Züblin Immobilière France SA, Paris, ZIAG Immobilien AG, Dusseldorf und Züblin Immobilien AG, Zurich.

3This member of the Board of Directors is/was also a member of the Board of Directors of Züblin Immobilière France SA, Paris.

4This member of the Board of Directors is also a member of the Board of Directors of ZIAG Immobilien AG, Dusseldorf.

Compensation of the Group Managment

in CHFBasic compensationShare based compensation in cashBonus in cashPension schemes 1Total
Financial year 2014/2015     
Dr. Iosif Bakaleynik, CEO since 1 October 2014 2250 000137 500043 766431 266
Thomas Wapp, CFO and COO360 0000041 481401 481
Pierre Essig, CEO France282 600028 26045 923356 783
Bruno Schefer, CEO until 31 July 2014 377 5000017 49994 999
Total Group Management970 100137 50028 260148 6691 284 529
      
Financial year 2013/2014     
Bruno Schefer, CEO 3542 5000071 884614 384
Thomas Wapp, CFO300 0000028 520328 520
Pierre Essig, CEO France325 1280040 114365 242
Total Group Management1 167 62800140 5181 308 146

1Employer's contribution (includes 2014/2015 also OASI contribution)

2Dr. Iosif Bakaleynik has an annual basic compensation of CHF 625'000.

3Bruno Schefer reduced his working hours as per 1.1.2014 by 50%. During fiscal year 2013/2014 this was calculated on a pro rata basis. The new annual basic compensation was CHF 310'000.

27. Shareholdings

Shareholdings of the Board of Directors

 Shares ZIHAG 1Shares ZIF 2
Financial year 2014/2015  
Dr. Iosif Bakaleynik, Chairman since 22 July 201400
Urs Ledermann, Member since 22 July 201400
Vladislav Osipov, Member00
Iakov Tesis, Member since 22 July 201400
Dr. Markus Wesnitzer, Member1 1390
Dr. Wolfgang Zürcher, Mitglied since 22 July 201400
Total Board of Directors1 1390
   
Financial year 2013/2014  
Pierre N. Rossier, Chairman116 93210 625
Vladislav Osipov, Member00
Andrew N. Walker, Member2 72448
Dr. Markus Wesnitzer, Member1 1390
Total Board of Directors120 79510 673

1Shares ZIHAG = shares in Züblin Immobilien Holding AG.

2Shares ZIF = shares in Züblin Immobilière France SA.

Shareholdings of the Group Management

 Shares ZIHAG 1Shares ZIF 2
Financial year 2014/2015  
Dr. Iosif Bakaleynik, CEO since 1 October 201400
Thomas Wapp, CFO and COO00
Pierre Essig, CEO France029 307
Total Group Management029 307
   
Financial year 2013/2014  
Bruno Schefer, CEO40 2965 958
Thomas Wapp, CFO00
Pierre Essig, CEO France029 307
Total Group Management40 29635 265

1Shares ZIHAG = shares in Züblin Immobilien Holding AG.

2Shares ZIF = shares in Züblin Immobilière France SA.

28. Events after the balance sheet date

No significant events have been taken place since the balance sheet date.

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Annual Report 2014-2015

Annual Report 2014-2015 (13.83 MB)