Notes to the consolidated financial statements for the financial year 2019/20

The consolidated financial statements have been optimized in order to provide users better organized and more understandable financial information to explain the financial performance and financial position of the Group. The notes have been divided into five sections. Each section starts with an introduction, which summarizes the information provided. In addition, the accounting policies and accounting estimates applied to prepare the consolidated financial statements now appear at the end of the note to which they relate in order to provide appropriate context.

1. Performance

This section provides information on the operational performance of dormakaba Group. The description of the operating model provides useful information to understand the segment reporting, which corresponds to the Group's internal reporting system. In addition, information is presented on selected income and expense items.

The key headlines concerning the Group's performance are:

  • Consolidated net sales of CHF 2,539.8 million (previous year CHF 2,818.3 million)
  • EBITDA reaches CHF 325.0 million (previous year CHF 448.0 million), with an EBITDA margin of 12.8% (previous year 15.9%)
  • Net profit of CHF 164.1 million (previous year CHF 252.5 million)
  • Operating cash flow margin up to 12.9% (previous year 10.0%)

1.1 Segment reporting

Operating model

dormakaba Group has divided the areas of business in which the company is globally active into five segments. Access Solutions (AS) is structured in four segments by region: AS AMER (North and South America), AS APAC (Asia Pacific), AS DACH (Germany, Austria, and Switzerland), and AS EMEA (Europe, Middle East, and Africa). The Key & Wall Solutions segment is global.

To best meet customers’ needs, dormakaba Group’s operating model is based on a matrix structure, which means that all four Access Solutions segments have a dual responsibility. The Access Solutions global product portfolio is arranged in eight Global Product Clusters: Lodging Systems, Safe Locks, Door Hardware, Interior Glass Systems, Entrance Systems, Mechanical Key Systems, Electronic Access & Data, and Services. The Global Product Clusters are each assigned to specific segments, along with the related production facilities, regardless of the geographical location. These Global Product Clusters are complemented by local products in all Access Solutions segments.

dormakaba Group’s worldwide operations are as follows:

AS AMER: this segment includes dormakaba Group’s business activities for access solutions in North and South America. It also has overall responsibility across all segments for the global Lodging Systems and Safe Locks Product Clusters.

AS APAC: this segment includes dormakaba Group’s business activities for access solutions in the Asia-Pacific region.

AS DACH: this segment includes dormakaba Group’s business activities for access solutions in Germany, Austria, and Switzerland. It also has overall responsibility across all segments for the Door Hardware, Interior Glass Systems, and Entrance Systems Global Product Clusters, including the associated production facilities and competence centers, in particular in Singapore, Suzhou (China), Melaka (Malaysia), and Sofia (Bulgaria).

AS EMEA: this segment includes dormakaba Group’s business activities for access solutions in Europe (excluding DACH), the Middle East, and Africa. It also has overall responsibility across all segments for the Global Product Clusters Mechanical Key Systems and Electronic Access & Data, including the associated production facilities and competence centers, in particular in Wetzikon and Rümlang (Switzerland), Herzogenburg and Eggenburg (Austria), and Villingen-Schwenningen (Germany).

Key & Wall Solutions: this segment combines the two global business units, Key Systems and Movable Walls. Key Systems includes the Keys, Key Cutting Machines, and Automotive Solutions product categories. Movable Walls specializes in acoustic movable partitions and in horizontal and vertical partitioning systems in the space-dividing systems sector. The segment has production facilities in Europe, North and South America, and Asia.

Other business activities, which do not fit into the basic segment structure, are disclosed in the “Other” segment. These mainly consist of operations involving contactless identification systems and trusted services based on the Legic SmartCard and Connect technologies.

Offering

dormakaba stands for security, sustainability, and reliability. It aims to develop products, solutions, and services that make access in life of its customers smart and secure. dormakaba offers an expanded, comprehensive portfolio of products, solutions, and services for access to buildings and rooms from a single source – whether it be hotels, shops, sporting venues, airports, hospitals, the home, or the office. The product offering includes:

  • For the Access Solutions segments: the four AS segments – AMER, APAC, DACH, and EMEA – include all hardware- and software-based components, products, and solutions for access solutions as well as related services. The offering includes the Global Product Clusters (Lodging Systems, Safe Locks, Door Hardware, Interior Glass Systems, Entrance Systems, Mechanical Key Systems, Electronic Access & Data, and Services) as well as local products. The multifaceted portfolio ranges from door technology solutions, automatic door systems, a wide variety of fittings, door closers and stoppers, and locking systems – from cylinders, keys, and locks all the way to fully networked electronic access solutions for companies, public facilities, hotels, and many other applications. The range also includes physical access systems, high-security locks, glass fittings, solutions for workforce management, as well as services for all these applications.
    The profitability of each AS segment depends on the different market dynamics of the geographical regions but also reflects dormakaba Group’s operating model. In compliance with transfer pricing regulation, profit is allocated to entities based on the functions they perform and the risks they assume. As a result, the profitability of AS EMEA, for example, is lower as the segment consists mainly of sales companies and it has fewer production sites; therefore, products sold in this segment might contribute to the financial performance of another segment as well.
  • Key & Wall Solutions segment: the global Key Systems and Movable Walls business units are combined in this segment. Key Systems offers a range of high-performance key blanks and mechanical, electronic, and (semi-)industrial key cutting and origination machines. In addition, the portfolio covers solutions for the automotive industry, such as vehicle keys, transponders, and key programming devices and duplication equipment. The Movable Walls unit specializes in acoustic movable partitions as well as horizontal and vertical partitioning systems. The business is global and offers partition solutions that range from manual application to fully automatic/electronic walls.

In accordance with the management organization and the reporting to the Group management level, the reporting segments consist of the businesses as described above. The reporting forms the basis for assessing performance and allocating resources. Segment accounting is prepared up to the level of EBITDA/EBIT because these are the key figures used for management purposes. Net working capital that is directly attributable or can be allocated on a reasonable basis to a specific segment is reported under the segment concerned. With the exception of certain central costs and items that affect comparability, which are not allocated to the individual segments for internal reporting purposes, the segment results are based on the same accounting principles that are used to determine the operating profit of the Group. Intersegment transactions are based on the arm’s length principle.

 

 

Access Solutions AMER

 

Access Solutions APAC

 

Access Solutions DACH

 

Access Solutions EMEA

 

Eliminations

 

Access Solutions TOTAL

 

Key & Wall Solutions

 

Other

 

Corporate

 

Eliminations

 

Group

CHF million

 

Financial year ended 30.06.2020

 

Financial year ended 30.06.2019

 

Financial year ended 30.06.2020

 

Financial year ended 30.06.2019

 

Financial year ended 30.06.2020

 

Financial year ended 30.06.2019

 

Financial year ended 30.06.2020

 

Financial year ended 30.06.2019

 

Financial year ended 30.06.2020

 

Financial year ended 30.06.2019

 

Financial year ended 30.06.2020

 

Financial year ended 30.06.2019

 

Financial year ended 30.06.2020

 

Financial year ended 30.06.2019

 

Financial year ended 30.06.2020

 

Financial year ended 30.06.2019

 

Financial year ended 30.06.2020

 

Financial year ended 30.06.2019

 

Financial year ended 30.06.2020

 

Financial year ended 30.06.2019

 

Financial year ended 30.06.2020

 

Financial year ended 30.06.2019

Net sales third parties

 

720.4

 

783.7

 

378.2

 

435.8

 

501.4

 

534.4

 

585.2

 

660.7

 

0.0

 

0.0

 

2,185.2

 

2,414.6

 

340.2

 

388.0

 

14.4

 

15.7

 

0.0

 

0.0

 

0.0

 

0.0

 

2,539.8

 

2,818.3

Intercompany sales

 

34.9

 

33.0

 

24.2

 

26.5

 

290.5

 

328.6

 

110.9

 

117.1

 

–454.3

 

–497.9

 

6.2

 

7.3

 

11.2

 

13.9

 

4.5

 

3.2

 

0.0

 

0.0

 

–21.9

 

–24.4

 

0.0

 

0.0

Total sales

 

755.3

 

816.7

 

402.4

 

462.3

 

791.9

 

863.0

 

696.1

 

777.8

 

–454.3

 

–497.9

 

2,191.4

 

2,421.9

 

351.4

 

401.9

 

18.9

 

18.9

 

0.0

 

0.0

 

–21.9

 

–24.4

 

2,539.8

 

2,818.3

Operating profit (EBIT)

 

114.8

 

154.7

 

46.6

 

60.4

 

112.3

 

136.4

 

32.8

 

43.6

 

–2.1

 

–0.8

 

304.4

 

394.3

 

41.7

 

54.0

 

0.4

 

0.8

 

–93.3

 

–74.1

 

0.0

 

0.0

 

253.2

 

375.0

as % of sales

 

15.2%

 

18.9%

 

11.6%

 

13.1%

 

14.2%

 

15.8%

 

4.7%

 

5.6%

 

0.5%

 

0.2%

 

13.9%

 

16.3%

 

11.9%

 

13.4%

 

2.1%

 

4.0%

 

0.0%

 

0.0%

 

0.0%

 

0.0%

 

10.0%

 

13.3%

Depreciation and amortization

 

13.3

 

13.4

 

8.2

 

8.5

 

17.0

 

17.2

 

12.7

 

13.1

 

0.0

 

0.0

 

51.2

 

52.2

 

8.8

 

9.0

 

0.1

 

0.2

 

11.7

 

11.6

 

0.0

 

0.0

 

71.8

 

73.0

Operating profit before depreciation and amortization (EBITDA)

 

128.1

 

168.1

 

54.8

 

68.9

 

129.3

 

153.6

 

45.5

 

56.7

 

–2.1

 

–0.8

 

355.6

 

446.5

 

50.5

 

63.0

 

0.5

 

1.0

 

–81.6

 

–62.5

 

0.0

 

0.0

 

325.0

 

448.0

as % of sales

 

17.0%

 

20.6%

 

13.6%

 

14.9%

 

16.3%

 

17.8%

 

6.5%

 

7.3%

 

0.5%

 

0.2%

 

16.2%

 

18.4%

 

14.4%

 

15.7%

 

2.6%

 

5.3%

 

0.0%

 

0.0%

 

0.0%

 

0.0%

 

12.8%

 

15.9%

Net working capital

 

165.8

 

210.2

 

100.4

 

109.1

 

136.5

 

138.8

 

167.1

 

199.2

 

–14.5

 

–14.3

 

555.3

 

643.0

 

84.0

 

111.5

 

3.8

 

3.8

 

–13.2

 

–6.2

 

2.0

 

1.1

 

631.9

 

753.2

Capital expenditure

 

24.3

 

19.9

 

8.0

 

10.9

 

16.8

 

32.3

 

11.8

 

14.4

 

0.0

 

0.0

 

60.9

 

77.5

 

10.4

 

15.4

 

7.0

 

1.7

 

16.6

 

16.8

 

0.0

 

0.0

 

94.9

 

111.4

1.2 Net sales by region

CHF million

 

 

Financial year ended 30.06.2020

%

 

Financial year ended 30.06.2019

%

Net sales to third parties

 

 

2,539.8

100.0

 

2,818.3

100.0

Switzerland

 

 

178.9

7.0

 

176.3

6.3

Germany

 

 

329.8

13.0

 

352.9

12.5

Rest of EMEA

 

 

726.9

28.6

 

836.3

29.7

Americas

 

 

942.5

37.2

 

1,027.4

36.4

Asia Pacific

 

 

361.7

14.2

 

425.4

15.1

Accounting principles

Net sales include all sales of goods and related services, after deduction of any sales reductions including rebates, discounts, value-added taxes, and commissions.

Sales related to tangible and intangible products is recognized when the products have been delivered and the benefits and risks as well as the authority to dispose of the products have been transferred to the customer. Sales related to services is recognized when the services have been performed. Distinctive components related to multi-element contracts are recognized separately.

1.3 Personnel expenses

CHF million

 

 

Financial year ended 30.06.2020

%

 

Financial year ended 30.06.2019

%

Personnel expenses

 

 

1,027.7

100.0

 

1,055.1

100.0

Salaries and wages

 

 

815.4

79.3

 

847.0

80.2

Social security expenses

 

 

163.8

16.0

 

166.4

15.8

Share-based payments

 

 

6.0

0.6

 

9.1

0.9

Pension cost (see note 2.5)

 

 

25.9

2.5

 

25.7

2.4

Employment termination expenses

 

 

15.4

1.5

 

5.9

0.6

Other benefits

 

 

1.2

0.1

 

1.0

0.1

Employees at balance sheet date

 

 

15,189

 

 

15,829

 

Average number of full-time equivalent employees

 

 

15,676

 

 

15,811

 

Average number of employees per segment

 

 

15,676

100.0

 

15,811

100.0

Access Solutions AMER

 

 

2,811

17.9

 

2,875

18.2

Access Solutions APAC

 

 

3,299

21.0

 

3,326

21.0

Access Solutions DACH

 

 

3,452

22.0

 

3,481

22.0

Access Solutions EMEA

 

 

3,468

22.1

 

3,408

21.6

Key & Wall Solutions

 

 

2,188

14.0

 

2,296

14.5

Other

 

 

61

0.4

 

66

0.4

Corporate

 

 

397

2.6

 

359

2.3

Average number of employees per geographical region

 

 

15,676

100.0

 

15,811

100.0

Switzerland

 

 

825

5.3

 

804

5.1

Germany

 

 

2,971

19.0

 

3,022

19.1

Rest of EMEA

 

 

3,688

23.5

 

3,615

22.9

Americas

 

 

3,825

24.4

 

3,975

25.1

Asia Pacific

 

 

4,367

27.8

 

4,395

27.8

Share-based payments

The Compensation Committee nominates individual Executive Committee (EC) members and other members of Senior Management for long-term incentive awards. The long-term incentive award is split into two components: in the 2019/20 financial year one-half (2018/19: two-thirds) is granted in the form of restricted shares of dormakaba subject to a three-year blocking period. This component of the award is designed to provide participants an ownership interest in the long-term value creation of the company by making them shareholders. The second half (2018/19: one-third) of the award is granted in the form of performance share units of dormakaba subject to a three-year performance-based vesting period. This component of the award is designed to reward participants for the future performance of the earnings per share (EPS) and, since the 2018/19 financial year, the relative Total Shareholder Return (TSR) of the company over the three-year performance period. Both performance conditions are equally weighted at 50%. The vesting level may range from 0% to a maximum of 200% of the original number of units granted (maximum two shares for each performance share unit originally granted).

The fair value of the restricted shares corresponds to the value of the closing price of the dormakaba Holding AG share on the SIX Swiss Exchange as at the business day prior to the date of the allocation.

The fair value of the performance share units as at the grant date comprises adjustments for lost dividends during the vesting periods and the TSR performance condition. The expenses for the performance share units are allocated on a straight-line basis over the vesting period.

The restricted shares allocated to the members of the Board of Directors (BoD) are also blocked for three years.

Further information about the allocation of treasury shares is disclosed in the note on share capital and treasury shares (3.2), and further details about long-term incentive stock award plans are outlined in the Compensation Report.

Accounting principles

The fair value of the employee services received in exchange for shares is measured at the fair value of the shares as at the grant date and recognized as an expense with a corresponding entry in equity. Expenses for shares that vest immediately are recognized accordingly. Shares that are subject to future services are recognized over the vesting period.

1.4 Financial result

CHF million

Note

 

Financial year ended 30.06.2020

 

Financial year ended 30.06.2019

Financial income

 

 

1.4

 

2.2

Interest income

 

 

1.2

 

1.4

Other financial income

 

 

0.2

 

0.8

Financial expense

 

 

43.2

 

47.4

Interest expenses for bonds

3.1

 

4.5

 

4.4

Interest expenses for forward contracts

3.5

 

22.1

 

26.3

Other interest expenses

 

 

10.1

 

11.4

Foreign exchange losses (gains)

3.5

 

2.8

 

2.4

Other financial expenses

 

 

3.7

 

2.9

1.5 Taxes

Income taxes

The weighted applicable tax rate is calculated using the expected income tax rates of the individual Group companies in each jurisdiction. These rates vary significantly. The change in the weighted applicable tax rate is mainly due to benefits from the US tax reform.

CHF million

 

Financial year ended 30.06.2020

 

Financial year ended 30.06.2019

Profit before taxes

 

211.2

 

332.7

Weighted applicable tax rate

 

23.4%

 

24.2%

Tax calculated at applicable tax rate

 

49.4

 

80.6

Current income taxes

 

39.0

 

67.7

Deferred income taxes

 

8.1

 

12.5

Income taxes

 

47.1

 

80.2

Difference between applicable and effective income taxes

 

–2.3

 

–0.4

Impact of losses and tax loss carryforwards

 

–4.2

 

–2.4

Tax-exempt income

 

–2.7

 

–2.6

Non-deductible expenses

 

3.3

 

3.1

Non-recoverable withholding tax expenses

 

3.5

 

2.9

Tax charges (credits) relating to prior periods, net

 

1.8

 

0.8

Other

 

–4.0

 

–2.2

Income taxes charged to equity

 

0.5

 

0.1

Deferred taxes

CHF million

 

Financial year ended 30.06.2020

 

Financial year ended 30.06.2019

Balance sheet presentation of deferred income taxes

 

 

 

 

Total deferred income taxes, net

 

135.3

 

147.9

Deferred income tax assets

 

159.7

 

173.3

Deferred income tax liabilities

 

24.4

 

25.4

Expiration of tax loss carryforwards not recognized as deferred tax assets

 

 

 

 

Balance of tax loss carryforwards at end of financial year

 

139.9

 

170.0

Expiry in 1 year

 

0.0

 

0.2

Expiry in 2 to 5 years

 

8.3

 

14.2

Expiry after 5 years

 

3.0

 

12.0

No expiry

 

128.6

 

143.6

Accounting principles

Current income taxes are based on taxable income for the current year and charged to income when incurred. Deferred income taxes are determined using the liability method, with the applicable and substantially enacted income tax rates applied on a comprehensive basis to eligible temporary differences. Deferred income tax assets arising from temporary differences are only recognized to the extent that it is probable that future taxable profit will be available, against which the temporary differences can be utilized. Deferred income taxes resulting from tax loss carryforwards applicable to future taxable income are only recognized to the extent of the available deferred tax liabilities.

Use of accounting estimates

The recoverable amount of deferred income tax assets is based on past performance and forecasts of the corresponding taxable entity over a period of several years. Deviations between actual and projected results can lead to impairment losses.

Consolidated statement of changes in equityFinancial statements dormakaba Holding AG

This website uses cookies to ensure you get the best experience on our website.Privacy statement

You are using an outdated browser. Please update your browser to view this website correctly: https://browsehappy.com/