2. Operating assets and liabilities

Detailed information on the operating assets used and liabilities incurred to support the Group’s operating activities are disclosed in this section. This includes disclosures on the valuation of trade receivables and inventory as well as movements in tangible and intangible assets, provisions, and employee benefits.

2.1 Trade receivables

Maturity analysis

 

Financial year ended 30.06.2020

 

Financial year ended 30.06.2019

CHF million

 

Gross

 

Allow.

 

Net

 

Gross

 

Allow.

 

Net

Trade receivables

 

412.8

 

–24.7

 

388.1

 

522.2

 

–22.7

 

499.5

Not yet due

 

271.4

 

–0.4

 

271.0

 

345.0

 

–1.2

 

343.8

1–30 day(s) overdue

 

42.5

 

–0.3

 

42.2

 

81.7

 

–0.2

 

81.5

31–60 days overdue

 

18.3

 

–0.1

 

18.2

 

26.3

 

–0.2

 

26.1

61–90 days overdue

 

17.9

 

–0.1

 

17.8

 

17.8

 

–0.1

 

17.7

91–120 days overdue

 

12.6

 

–0.4

 

12.2

 

10.2

 

–0.4

 

9.8

121–150 days overdue

 

7.8

 

–0.5

 

7.3

 

5.0

 

–0.3

 

4.7

More than 150 days overdue

 

42.3

 

–22.9

 

19.4

 

36.2

 

–20.3

 

15.9

The Group does not hold material collateral as security for trade receivables.

Accounting principles

Short-term accounts receivable are stated at nominal value less allowance for doubtful accounts. The amount of the allowance is the difference between the asset’s carrying amount and the present value of estimated future cash flows. It is assessed based on the maturity structure. In addition, accounts receivable are individually impaired if there is clear evidence of insolvency or other indications that collectability is severely endangered.

2.2 Inventories

CHF million

 

Financial year ended 30.06.2020

 

Financial year ended 30.06.2019

Inventories, net

 

445.0

 

454.7

Allowance for obsolete and slow-moving items

 

57.1

 

52.8

Inventories, gross

 

502.1

 

507.5

Raw materials and supplies

 

205.8

 

196.3

Semi-finished goods and work in progress

 

74.6

 

85.9

Finished goods

 

218.7

 

221.2

Prepayments to suppliers

 

3.0

 

4.1

Accounting principles

Inventories are valued at the lower of purchase/manufacturing cost and net realizable value. Cost is determined using the weighted average method. Manufacturing cost includes direct labor and material as well as a commensurate share of related overhead cost. Allowances are made for obsolete and slow-moving items. Cash discounts from suppliers are treated as purchase cost reductions.

2.3 Property, plant, and equipment/Intangible assets

CHF million, except where indicated

 

Land and buildings

 

Plant, machinery, and equipment

 

Furniture and fixtures

 

Pre- payments

 

Total property, plant, and equipment

 

Intangible assets

30 June 2020, net

 

234.8

 

127.7

 

58.7

 

20.6

 

441.8

 

83.7

30 June 2019, net

 

234.6

 

127.4

 

61.2

 

42.2

 

465.4

 

63.7

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost 30 June 2020

 

348.1

 

345.1

 

176.0

 

20.6

 

889.8

 

166.0

Additions

 

4.2

 

18.2

 

16.2

 

21.0

 

59.6

 

35.3

Disposals

 

–7.4

 

–8.2

 

–6.2

 

–0.1

 

–21.9

 

–0.5

Reclassifications

 

20.2

 

12.8

 

6.1

 

–41.5

 

–2.4

 

2.3

Acquisition of businesses

 

0.0

 

0.1

 

0.4

 

0.0

 

0.5

 

0.0

Translation exchange differences

 

–11.3

 

–12.5

 

–8.0

 

–1.1

 

–32.9

 

–5.1

30 June 2019

 

342.4

 

334.7

 

167.5

 

42.3

 

886.9

 

134.0

Additions

 

7.8

 

18.8

 

19.3

 

38.5

 

84.4

 

27.0

Disposals

 

–8.1

 

–8.1

 

–5.8

 

0.0

 

–22.0

 

–1.3

Reclassifications

 

2.0

 

17.3

 

5.9

 

–25.5

 

–0.3

 

0.3

Acquisition of businesses

 

0.0

 

0.1

 

0.1

 

0.0

 

0.2

 

0.0

Translation exchange differences

 

–7.3

 

–8.9

 

–5.4

 

–1.2

 

–22.8

 

–3.5

1 July 2018

 

348.0

 

315.5

 

153.4

 

30.5

 

847.4

 

111.5

 

 

 

 

 

 

 

 

 

 

 

 

 

Estimated useful life (in years)

 

20-50 1)

 

4-15

 

3-15

 

 

 

 

 

2-5

Accumulated depreciation 30 June 2020

 

113.3

 

217.4

 

117.3

 

0.0

 

448.0

 

82.3

Additions

 

9.7

 

25.7

 

21.3

 

0.0

 

56.7

 

15.1

Disposals

 

–2.4

 

–8.0

 

–5.6

 

0.0

 

–16.0

 

–0.4

Reclassifications

 

0.1

 

–0.4

 

0.4

 

–0.1

 

0.0

 

0.0

Divestment of businesses

 

0.0

 

0.0

 

0.0

 

0.0

 

0.0

 

0.0

Translation exchange differences

 

–1.9

 

–7.2

 

–5.1

 

0.0

 

–14.2

 

–2.7

30 June 2019

 

107.8

 

207.3

 

106.3

 

0.1

 

421.5

 

70.3

Additions

 

11.5

 

26.8

 

21.1

 

0.1

 

59.5

 

13.5

Disposals

 

–2.9

 

–7.9

 

–5.9

 

0.0

 

–16.7

 

–1.3

Reclassifications

 

0.1

 

–1.3

 

1.2

 

0.0

 

0.0

 

–0.2

Translation exchange differences

 

–1.6

 

–5.4

 

–3.1

 

0.0

 

–10.1

 

–1.7

1 July 2018

 

100.7

 

195.1

 

93.0

 

0.0

 

388.8

 

60.0

1) Land is not depreciated.

Intangible assets: additions to cost include CHF 9.6 million (2018/19: CHF 5.4 million) invested in research and development projects.

Accounting principles

Property, plant, and equipment are recorded at cost less accumulated depreciation using the straight-line method. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

Items of minor value are charged directly to the income statement. All gains and losses on the disposal of property, plant, and equipment are recognized in the income statement.

Intangible assets that embody future economic benefits (such as acquired licenses, patents, and similar rights) and eligible development costs are capitalized at cost and are amortized using the straight-line method.

Development costs are recognized as an asset when specific recognition criteria are met and the amount recognized is assessed to be recoverable through future economic benefits.

Use of accounting estimates

Property, plant, and equipment as well as intangible assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. To determine whether impairment exists, estimates are made of the expected future cash flows arising from the use of the asset. Actual cost may differ from the discounted future cash flows based on these estimates.

2.4 Provisions

CHF million

 

Warranty and customer returns

 

Restructuring

 

Other

 

Total

Provisions 30 June 2020

 

14.3

 

12.6

 

17.0

 

43.9

Additions

 

9.0

 

10.5

 

7.8

 

27.3

Releases

 

–1.0

 

–1.0

 

–0.7

 

–2.7

Usage

 

–8.2

 

–4.0

 

–5.5

 

–17.7

Acquisition of businesses

 

0.1

 

0.0

 

0.0

 

0.1

Translation exchange differences

 

–0.5

 

–0.4

 

–1.2

 

–2.1

Provisions 30 June 2019

 

14.9

 

7.5

 

16.6

 

39.0

Additions

 

9.9

 

3.7

 

5.9

 

19.5

Releases

 

–0.8

 

–0.4

 

–1.5

 

–2.7

Usage

 

–7.5

 

–12.3

 

–7.7

 

–27.5

Translation exchange differences

 

–0.5

 

–0.3

 

–0.6

 

–1.4

Provisions 1 July 2018

 

13.8

 

16.8

 

20.5

 

51.1

The additions in the provisions for restructuring mainly relates to initiatives to address the ongoing Covid-19 pandemic.

Accounting principles

Provisions are recognized when:

  • the Group has a present obligation (legal or constructive) as a result of a past event;
  • it is probable that a use of resources will be required to settle the obligation; and
  • the amount of the obligation can be reliably estimated.

The provision for warranty and customer returns covers customer warranty claims and voluntary concessions as well as customer returns.

A restructuring is a program planned and controlled by the Management that materially changes the manner in which the business is conducted. Costs relating to restructuring plans or agreements, including the reduction of excess staff, the discontinuation of certain activities, the streamlining of facilities and operations, and other restructuring measures, are recorded in the period in which the Group commits itself to a detailed formal plan.

Other provisions mainly comprise those relating to environmental risks, litigation, and sales agents' indemnities.

Use of accounting estimates

In the course of their ordinary operating activities, Group companies can face claims from third parties. Provisions for pending claims are measured on the basis of the information available and a realistic estimate of the expected outflow of resources. The outcome of these proceedings may result in claims against the Group that cannot be met at all or in full through provisions or insurance cover.

Significant judgment is required to determine the costs of restructuring plans. The actual cost might deviate from the original plan.

2.5 Employee benefit liabilities

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

 

Economic part of the Corporation

 

Translation differences

 

Change to previous year period or recognized in current result of the period, respectively

 

Contributions concerning the business period

 

Pension benefit expenses within personnel expenses

Total

 

288.4

 

295.5

 

–10.0

 

0.4

 

25.5

 

25.9

 

25.7

Pension institutions with surplus

 

 

 

 

 

 

 

 

 

9.5

 

9.5

 

9.0

Pension institutions without surplus/deficit

 

 

 

 

 

 

 

 

 

15.0

 

15.0

 

12.2

Pension institutions without own assets

 

263.0

 

272.6

 

–10.0

 

0.4

 

1.0

 

1.4

 

4.5

Other long-term employee benefits

 

25.4

 

22.9

 

 

 

 

 

 

 

 

 

 

CHF million

 

Financial year ended 30.06.2020

 

Financial year ended 30.06.2019

Pension benefit expenses within personnel expenses

 

25.9

 

25.7

Decrease/increase economic obligation from pension institutions without own assets

 

1.4

 

4.5

Contributions and changes employer contribution reserves

 

24.5

 

21.2

Contributions to pension institutions from Group entities

 

24.5

 

21.2

The expenses for pension institutions with a surplus relate entirely to pension plans in Switzerland. The Swiss plans are valued annually as of December and in line with Swiss GAAP FER 26. The pension institutions without own assets are assessed annually as of the financial year-end closing. They relate mainly to pension liabilities of Group companies in Germany, Austria, and Italy.

Accounting principles

There are various pension plans in existence within the Group, which are individually aligned with local conditions in the respective countries. The plans are financed either by means of contributions to legally independent pension/insurance funds or by recognition as liabilities in the balance sheet of the respective Group companies. An economic obligation or an economic benefit arising from a Swiss pension scheme is determined from the statements made on the basis of Swiss GAAP FER 26 “Accounting of Pension Plans” and recognized in the balance sheet accordingly.
The provision for pension plans of foreign subsidiaries, which are not organized as an independent legal entity, is determined based on the local valuation methods.

Use of accounting estimates

dormakaba Group operates pension plans in various countries. The calculation of pension provisions for plans that do not have their own assets is based on actuarial assumptions, which may differ from the actual results.

2.6 Other assets and liabilities

Other assets

CHF million

Note

 

Financial year ended 30.06.2020

 

Financial year ended 30.06.2019

Other current assets

 

 

60.4

 

58.8

Prepaid expenses

 

 

17.5

 

21.9

Retentions

 

 

5.7

 

5.5

Sales, withholding and other recoverable taxes

 

 

33.0

 

28.7

Fair value of forward contracts

3.5

 

1.0

 

0.0

Other receivables and miscellaneous

 

 

3.2

 

2.7

Non-current financial assets

 

 

35.9

 

39.5

Loans

 

 

0.0

 

1.7

Pension-related assets

 

 

19.4

 

21.7

Long-term prepaid expenses

 

 

6.6

 

7.0

Long-term held securities

 

 

9.9

 

9.1

Accounting principles

Long-term held securities are recorded at fair value. All realized and unrealized gains and losses are recognized in the income statement. Other non-current financial assets are stated at amortized cost less valuation adjustments.

Other liabilities

CHF million

Note

 

Financial year ended 30.06.2020

 

Financial year ended 30.06.2019

Accrued and other current liabilities

 

 

312.6

 

336.7

Advances from customers

 

 

38.8

 

32.6

Deferred income

 

 

33.4

 

34.1

Sales, withholding and other tax payable

 

 

35.7

 

38.7

Payables to social security and pension fund

 

 

17.3

 

13.3

Accruals for vacation, overtime, and other employee benefits

 

 

89.3

 

112.4

Accrued interest

 

 

3.6

 

3.3

Fair value of forward contracts

3.5

 

0.7

 

1.9

Other accruals and current non-interest-bearing liabilities

 

 

93.8

 

100.4

Current borrowings and other non-current liabilities are disclosed in the note on capital management (3.1) as this information relates to capital management disclosures.

Accounting principles

Financial liabilities measured at amortized cost are initially recorded at fair value, net of transaction costs incurred, and subsequently measured at amortized cost. Any difference between the proceeds from disposal (net of transaction costs) and the redemption value is recognized in the income statement over the period of the borrowing using the effective interest method.

 
 

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