Semi-Annual Report 2016

Other notes

Rental income

Rental income
in CHF thousandSwitzerlandGermanyTotal
    
1st half-year 2015/2016   
Rental income in presentation currency3 9535 3959 348
Rental income in local currency3 9535 104 
    
1st half-year 2016/2017   
Rental income in presentation currency3 9895 5019 490
Rental income in local currency3 9895 035 
Change to previous year in local currency36–69 
arising from:   
- Disposals0–253 
- Vacancy and indexation36184 

Despite the decrease of rental income due to the sale of one investment property in Germany in the prior period (CHF 0.3 million), rental income inreased by CHF 0.2 million as a result of vacany reduction and indexation.

Result from the sale of investment properties

In the first half of the financial year 2016/2017 no investment property has been sold. In the prior year period one investment property in Germany was sold with a loss of CHF 0.3 million.

Real estate expenses

Real estate expenses
in CHF thousand 1.4.2016 to 30.9.2016 1.4.2015 to 30.09.2015
     
Property taxes –9 –17
Legal fees –19 –23
Bad debts –6 –61
External property management fees –29 –7
Non recoverable service charges –192 –298
Other property-related expense –181 –92
Total real estate expense –436 –498

Administrative expense

Administrative expense
in CHF thousand 1.4.2016 to 30.9.2016 1.4.2015 to 30.09.2015
     
Salaries and Board of Directors' fees –1 408 –1 386
Rent expenses –119 –151
Bookkeeping and IT –145 –124
Travel expenses –113 –113
Audit –146 –229
Legal and tax advisory –190 –184
Other taxes –58 –65
Valuation –48 –37
Depreciation –20 –15
Other advisory and investor relations –333 –657
Other administrative expense –128 –85
Total administrative expense –2 707 –3 046

As a result of savings in the consulting area, administrative expenses were reduced by CHF 0.3 million compared to last year.

Financial expense and income

Financial expense and income
in CHF thousand 1.4.2016 to 30.9.2016 1.4.2015 to 30.09.2015
     
Financial expense    
Mortgage 1 and swaps interest expense 2 –2 043 –1 841
Interest expense shareholder loan 1 0 –4 067
Interest expense and other financial charges 1 –13 –32
Interest expense 4% bond Züblin Immobilien Holding AG 1 0 –461
Currency translation adjustments –116 –335
Total financial expense –2 172 –6 736
     
Financial income    
Interest income 3 4 17
Interest income shareholder loan 3 195 0
Total financial income 199 17
Net financial expense –1 973 –6 719

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 through profit and loss".

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

Net financial expense

The repayment of the shareholder loan and the bond in the previous year led to a decline in net financial expenses by CHF 4.7 million to CHF 2.0 million (previous year CHF 6.7 million). The mortgage and swap interest expense includes an income amount of CHF 0.3 million (previous year CHF 0.3 million) relating to swap ineffectiveness.

Discontinued operations

Income statement

The result from discontinued operations in the prior year relates to France until the loss of control on 31 July 2015.

in CHF thousand 1.4.2016 to 30.9.2016 1.4.2015 to 30.09.2015
     
Rental income 0 1 917
Total operating income 0 1 917
Real estate expense 0 –2 114
Maintenance and repairs 0 –200
Net operating income 0 –397
     
Administrative expense 0 –3 099
Change in market value 0 –4 451
     
Earnings before interest and taxes (EBIT) 0 –7 947
Financial expense / income 0 –3 547
Changes in market value of swaps 0 –4 158
Currency losses 0 –10 958
Earnings from discontinued operations 0 –26 610
of which attributable to:    
- Shareholders of Züblin Immobilien Holding AG 0 –23 992
- Non-controlling interests 0 –2 618
     
Earnings per share from discontinued operations 0.00 –9.11

Cash flow from discontinued operations presents as follows:

Net Cash Flows

in CHF thousand 1.4.2016 to 30.9.2016 1.4.2015 to 30.09.2015
     
Operating activities 0 869
Investing activities 0 –1 592
Financing activities 0 1 083
Net-Cashflow 0 359

Investment properties

1st half-year 2016/2017

in CHF thousandSwitzerlandGermanyTotal
    
Balance as of 31.3.2016 audited195 860135 391331 251
Value-enhancing investments1331 0271 160
Sales000
Positive change in market value4 2703 3297 599
Negative change in market value–763–500–1 263
Change in market value3 5072 8296 336
Currency translation adjustments0–698–698
Balance as of 30.9.2016199 500138 549338 049

The change in value of the investment properties from CHF 331.3 million to CHF 338.0 million mainly stems from the following factors:

  • The value of the portfolio was increased by investments of CHF 1.2 million (full previous year CHF 3.3 million).
  • On the other hand the revaluation of the investment properties led to a positive overall impact of 1.9% and amounted to CHF 6.3 million across the portfolio (full previous year increase of CHF 7.8 million). This increase is corresponding to the current market environment. Assumptions regarding reletting and market rents mainly remained unchanged.

Financial year 2015/2016

in CHF thousandSwitzerlandGermanyTotalGermany held for saleTotal
      
Balance as of 31.3.2015189 720122 166311 8869 762321 648
Value-enhancing investments4882 7713 259273 286
Sales000–7 072–7 072
Positive change in market value6 9324 73711 6698611 755
Negative change in market value–1 280–2 548–3 828–177–4 005
Change in market value5 6522 1897 841–917 750
Currency translation adjustments05 5545 554855 639
Reclassifications02 7112 711–2 7110
Balance as of 31.3.2016195 860135 391331 2510331 251

Share capital

Share capital

  Date Number of shares in CHF thousand
       
       
Issued shares at a nominal value CHF 1.00 31.3.15 59 724 486 59 724
       
Changes in capital structure in financial year 2015/2016      
Capital reduction through par value reduction from CHF 1.00 to CHF 0.05 1.12.15 - –56 737
Ordinary capital increase through issuing of new shares at nominal value of CHF 0.05 1.12.15 1 433 387 664 71 669
Reverse stock split at the ratio of 450:1 to create new shares at nominal value of CHF 22.50 3.3.16 –1 489 794 123 -
       
Issued shares at a nominal value CHF 22.50 31.3.16 3 318 027 74 656
       
No changes in capital structure in 1st half-year 2016/2017   - -
Issued shares at a nominal value CHF 1.00 30.9.16 3 318 027 74 656

Treasury shares

In fiscal year 2015/2016 all treasury shares were sold. During the first half year of financial year 2016/2017 no transactions with treasury shares took place.

Future contractual maturities

Future contractual maturities
  Carrying value < 1 year 1 to 3 years 3 to 5 years > 5 years
in CHF thousand   interest amortisation interest amortisation interest amortisation interest amortisation
                   
As of 30.9.2016                  
Mortgages 208 181 2 720 111 370 2 348 79 190 458 2 393 2 300 15 228
Trade accounts payable 571 0 571 0 0 0 0 0 0
Derivative financial instruments 28 668 4 301 0 7 954 0 5 519 0 10 894 0
Other short-term liabilities 16 701 0 16 471 0 0 0 0 0 230
Total as of 30.9.2016 254 121 7 021 128 412 10 302 79 190 5 977 2 393 13 194 15 458
                   
As of 31.3.2016 audited                  
Mortgages 210 221 2 742 3 230 3 638 188 680 568 2 405 2 921 15 906
Trade accounts payable 683 0 683 0 0 0 0 0 0
Derivative financial instruments 29 133 4 640 0 7 886 0 5 954 0 10 653 0
Other short-term liabilities 12 371 0 12 165 0 0 0 0 0 206
Total as of 31.3.2016 audited 252 408 7 382 16 078 11 524 188 680 6 522 2 405 13 574 16 112

In the next twelve months CHF 128.4 million (previous year CHF 16.1 million) of the liabilities reported above are due to mature. Of this amount CHF 108.2 million (previous year CHF 0.0 million) relates to mortgages in Switzerland and is expected to be extended in the normal course of business. Trade accounts payable and the other short-term liabilities are incurred in the course of the Group's operating activities and are covered by the short-term assets.

Derivative financial instruments

Interest rate swaps

in CHF thousand Notional amounts 30.9.2016 Notional amounts 31.3.2016 Fair value 30.9.2016 Fair value 31.3.2016
         
1 to 12 months 40 000 40 000 690 693
1 to 3 years 32 628 32 793 3 980 4 418
3 to 5 years 0 0 0 0
More than 5 years 80 000 80 000 23 998 24 022
Total 152 628 152 793 28 668 29 133
- of which liabilities     28 668 29 133

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

Mortgages

Overview mortgages as of 30.09.2016

In CHF thousand Switzerland Germany Total %
         
         
Interest term structure, including hedge effective swaps        
1 to 12 months 28 156 78 815 106 971 51%
1 to 3 years 0 0 0 0%
3 to 5 years 0 21 210 21 210 10%
More than 5 years 80 000 0 80 000 39%
Total 108 156 100 025 208 181 100%
Average interest rates 1.58% 2.95% 2.24%  
Average duration 7.0 2.5 4.8  
         
Contractual maturity dates of mortgages        
1 to 12 months 108 156 3 214 111 370 54%
1 to 3 years 0 79 190 79 190 38%
3 to 5 years 0 2 393 2 393 1%
More than 5 years 0 15 228 15 228 7%
Total 108 156 100 025 208 181 100%
Average duration 1.0 5.6 3.2  
         
Fair value of mortgages        
Variable rate mortgages 108 156 100 025 208 181 100%
Total 108 156 100 025 208 181 100%

Overview mortgages as of 31.3.2016

In CHF thousand Switzerland Germany Total %
         
Interest term structure, including hedge effective swaps        
1 to 12 months 28 156 80 146 108 302 52%
1 to 3 years 0 0 0 0%
3 to 5 years 0 21 919 21 919 10%
More than 5 years 80 000 0 80 000 38%
Total 108 156 102 065 210 221 100%
Average interest rates 1.53% 2.92% 2.21%  
Average duration 7.4 3.0 5.3  
         
Contractual maturity dates of mortgages        
1 to 12 months 0 3 230 3 230 1%
1 to 3 years 108 156 80 524 188 680 90%
3 to 5 years 0 2 405 2 405 1%
More than 5 years 0 15 906 15 906 8%
Total 108 156 102 065 210 221 100%
Average duration 1.5 6.1 3.7  
         
Fair value of mortgages        
Variable rate mortgages 108 156 102 065 210 221 100%
Total 108 156 102 065 210 221 100%

As of 30 September 2016 Züblin Group's real estate portfolio is financed entirely by variable-rate loans. The amounts shown as mortgages in the balance sheet include closing fees of CHF 0.4 million (previous year CHF 0.4 million).

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

  Switzerland Germany
Debt service cover ratio - 140%
Interest coverage ratio 1.6 -
Loan to value 65.0% 75.0%
Equity % 32.5% -

The Company monitors these covenants every quarter. 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 mortgage agreement also contain a “change of ownership” clause which stipulate certain consequences, such as the repayment of the entire loan if the ownership interest of Züblin Immobilien Holding AG on the borrowing subsidiary falls below 50%, or in the event that a single shareholder acquires more than 50% in Züblin Immobilien Holding AG.

During the first six months of the financial year and 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:

  30.9.2016 31.3.2016
Book value of assets pledged (investment properties) 338 049 331 251
Credit drawn (debt secured) 208 181 210 221

Future rental fee receivables for investment properties and insurance policies for investment properties have been pledged as security over and above the mortgage liens.

Loan to shareholder

The Group has granted a loan to Lamesa Holding SA, Panama in the amount of CHF 13 million. The loan bears an interest rate of 3% p.a. and is fully drawn as of balance sheet date. The loan amount as well as accrued interest in the amount of CHF 0.2 million is included in the line item “Other current assets”.

Events after the balance sheet date

No significant events have occured since the balance sheet date.

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Semi-Annual Report 2016

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