4. Other financial information

This section provides details of the various commitments and contingencies as well as information about the associated companies, the acquisitions and divestments, and the legal subsidiaries including the Group companies' shareholdings.

4.1 Commitments and contingencies

Lease commitments

Operating lease payments are charged to income (CHF 40.5 million in 2018/19 and CHF 41.1 million in 2017/18) on a straight-line basis over the lease term. The following table shows the future minimum lease payments resulting from non-cancellable operating leases:


CHF million	Financial year ended 30.06.2019	Financial year ended 30.06.2018
Future payment commitments for operating leases	130.0	130.7
Up to 1 year	33.3	36.1
2 to 5 years	74.1	71.8
Over 5 years	22.6	22.8

Operating lease commitments mainly refer to the lease of buildings used for operational purposes.

Accounting principles

Operating lease agreements are lease agreements that do not qualify as finance leases and are not capitalized in the balance sheet.

Other commitments and contingencies


CHF million	Financial year ended 30.06.2019	Financial year ended 30.06.2018
Current endorsement liabilities	3.7	5.0
Investments committed to purchase from third parties:
Property, plant, and equipment	13.4	15.2
Intangible assets	0.6	1.2

In addition to the table above, contingent liabilities related to the divestments of DORMA Beschlagtechnik GmbH (Germany) and the sanitary business of Provitris GmbH (Germany) remain with dormakaba and depend on the future development of these divested businesses.

4.2 Equity accounted investments


CHF million	Financial year ended 30.06.2019	Financial year ended 30.06.2018
Investments in associates - 30 June	3.5	40.6
Increase of investments in associates	1.5	1.5
Sale of investments in associates	–37.7	0.0
Dividends received	0.0	–1.4
Share of profit (loss)	–0.3	2.5
Translation exchange differences	–0.6	2.0
Investments in associates - 1 July	40.6	36.0
Result from associates	2.9	2.5
Share of profit (loss)	–0.3	2.5
Profit from sale of investments in associates	3.2	0.0

ISEO

The 40% shareholding in ISEO (Italy) was divested on 15 October 2018. ISEO is a manufacturer of security products, such as cylinders, master key systems, locks, and panic hardware, mainly for the European market. Pre-merger Dorma acquired a 40% stake in ISEO in December 2012 to strengthen its business by extending its product range. Following the merger, dormakaba’s comprehensive product range led to a reassessment of the strategic position and to the decision to divest.

Accounting principles

Investments in associates and joint ventures where dormakaba Group exercises significant influence but does not have control (i.e. usually an interest between 20% and 50%) are accounted for using the equity method of accounting. Under the equity method, investments in associated companies and joint ventures are initially recognized at cost, and the carrying amount is increased or decreased to recognize dormakaba Group’s share of the profit or loss of the associate/joint venture after the date of acquisition. Profit and loss are attributed to the owners of the parent and to the minority interests, even if this results in a negative balance. Investments in which dormakaba Group does not have significant influence (i.e. dormakaba Group’s interest is usually less than 20%) are recorded at cost.

4.3 Business combinations and divestments

Business combinations

In the reporting period, only smaller acquisitions were made: Autodor Services Ltd in New Zealand, GBS Groothandel in Beveiligingssystemen B.V. in the Netherlands, Chartwell Doors Ltd in the United Kingdom, and Locktech BVBA in Belgium.

The following table summarizes the considerations paid for businesses and the amounts of assets and liabilities acquired, recognized at fair value as at the acquisition date.


CHF million	Financial year ended 30.06.2019	Financial year ended 30.06.2018
Consideration as at acquisition date
Cash paid	6.2	134.7
Deferred payment	0.1	6.6
Acquisition-related costs	0.3	3.1
Total consideration	6.6	144.4
Identifiable assets and liabilities
Cash and cash equivalents	0.4	6.1
Trade receivables	0.7	10.0
Inventories	0.3	6.2
Current income tax assets	0.0	0.6
Other current assets	0.0	2.7
Property, plant, and equipment	0.2	10.2
Intangible assets	0.0	0.4
Non-current financial assets	0.0	0.1
Deferred income tax assets	0.0	0.3
Current borrowings	0.0	–2.9
Trade payables	–0.3	–2.8
Current income tax liabilities	–0.1	–0.7
Accrued and other current liabilities	–0.5	–12.6
Provisions	0.0	–0.1
Non-current borrowings	–0.3	–2.4
Accrued pension costs and benefits	0.0	–0.4
Deferred income tax liabilities	0.0	–2.1
Other non-interest bearing liabilities	0.0	–0.1
Total identifiable net assets	0.4	12.5
Goodwill	6.2	131.9
Total consideration	6.6	144.4

Accounting principles

Goodwill represents the excess of the consideration transferred, the amount of any non-controlling interest in the acquired entity and the book value as at the acquisition date of any previous equity interest in the acquired entity over the fair value of the Group’s share of the identifiable net assets acquired. Only intangible assets purchased separately are recognized as part of an acquisition. The positive or negative goodwill resulting from acquisitions is offset in equity at the date of acquisition against retained earnings.

If the purchase price contains elements that are dependent on future results, they are estimated as accurately as possible at the date of acquisition and recognized in the balance sheet. In the event of any disparities when the definitive purchase price is settled, the goodwill offset in equity is adjusted accordingly. The consequences of a theoretical capitalization and amortization of goodwill are explained in the note on the theoretical equity and goodwill movement (3.4).

Business divestments

In December 2018, dormakaba divested parts of the US Door Hardware Service Business in the AS AMER segment due to insufficient profitability.

The following table summarizes the considerations paid and received as well as the net assets divested. The resulting net goodwill was offset in equity.


CHF million	Financial year ended 30.06.2019	Financial year ended 30.06.2018
Consideration as at divestment date
Cash consideration received	0.0	44.7
Purchase price for minority shares paid	0.0	–8.3
Divestment-related costs paid	0.0	–1.2
Divestment price adjustment 1)	–1.8	0.0
Total consideration	–1.8	35.2
Assets and liabilities divested
Cash and cash equivalents	0.0	22.7
Trade receivables	0.0	11.1
Inventories	0.0	12.6
Other current assets	0.0	0.8
Property, plant, and equipment	0.0	12.9
Intangible assets	0.0	0.1
Non-current financial assets	0.0	0.3
Trade payables	0.0	–6.7
Current income tax liabilities	0.0	–0.3
Accrued and other current liabilities	0.0	–3.7
Provisions	0.0	–0.9
Accrued pension costs and benefits	0.0	–0.6
Total net assets divested	0.0	48.3
Goodwill, net	–1.8	–13.1
Total consideration	–1.8	35.2

1) In 2018/19: the divestment price adjustment of CHF 1.8 million relates to a business divestment from a previous year.

Accounting principles

Upon the disposal of an entity, the goodwill previously offset in equity is transferred to the income statement.