Consolidated financial statements Operating assets and liabilities

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 30.06.2022			Financial year ended 30.06.2021
CHF million	Gross	Allow.	Net	Gross	Allow.	Net
Trade receivables	500.5	–17.7	482.8	446.9	–22.4	424.5
Not yet due	365.8	–0.4	365.4	327.4	–0.5	326.9
1–30 day(s) overdue	55.2	–0.3	54.9	50.5	–0.1	50.4
31–60 days overdue	23.1	–0.1	23.0	19.2	–0.1	19.1
61–90 days overdue	16.0	–0.1	15.9	10.6	0.0	10.6
91–120 days overdue	7.3	–0.3	7.0	5.5	–0.2	5.3
121–150 days overdue	3.5	–0.3	3.2	4.2	–0.3	3.9
More than 150 days overdue	29.6	–16.2	13.4	29.5	–21.2	8.3

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 30.06.2022	Financial year ended 30.06.2021
Inventories, net	537.0	450.6
Allowance for obsolete and slow-moving items	59.6	60.6
Inventories, gross	596.6	511.2
Raw materials and supplies	284.1	228.5
Semi-finished goods and work in progress	79.6	84.8
Finished goods	225.0	193.9
Prepayments to suppliers	7.9	4.0

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

Property, plant, and equipment

CHF million, except where indicated	Land and buildings	Plant, machinery, and equipment	Furniture and fixtures	Pre- payments	Total property, plant, and equipment
30 June 2022, net	215.8	122.3	49.4	22.4	409.9
30 June 2021, net	232.3	125.4	53.6	24.6	435.9

Cost 30 June 2022	324.2	358.9	181.8	22.4	887.3
Additions	3.3	11.1	14.8	23.5	52.7
Disposals	–1.0	–4.9	–5.0	–0.2	–11.1
Reclassifications	5.8	17.3	0.9	–24.4	–0.4
Acquisition of businesses	0.6	3.2	4.2	0.2	8.2
Divestment of businesses	–21.8	–20.3	–12.5	–0.4	–55.0
Translation exchange differences	–6.6	–9.2	–8.3	–0.9	–25.0
30 June 2021	343.9	361.7	187.7	24.6	917.9
Additions	4.2	8.7	12.2	21.5	46.6
Disposals	–11.6	–8.6	–7.6	–0.1	–27.9
Reclassifications	0.7	13.2	3.5	–17.6	–0.2
Acquisition of businesses	0.1	0.1	0.3	0.0	0.5
Divestment of businesses	0.0	–0.2	–0.1	0.0	–0.3
Translation exchange differences	2.4	3.4	3.4	0.2	9.4
1 July 2020	348.1	345.1	176.0	20.6	889.8

Estimated useful life (in years)	20-50 1)	4-15	3-15
Accumulated depreciation 30 June 2022	108.4	236.6	132.4	0.0	477.4
Additions	9.1	25.4	20.6	0.1	55.2
Disposals	–1.0	–4.6	–4.4	–0.1	–10.1
Reclassifications	0.7	0.5	–1.4	0.0	–0.2
Divestment of businesses	–10.6	–14.6	–10.5	0.0	–35.7
Translation exchange differences	–1.4	–6.4	–6.0	0.0	–13.8
30 June 2021	111.6	236.3	134.1	0.0	482.0
Additions	9.6	24.6	21.0	0.0	55.2
Disposals	–11.8	–8.0	–6.1	0.0	–25.9
Reclassifications	0.1	0.1	–0.3	0.0	–0.1
Divestment of businesses	0.0	–0.2	–0.1	0.0	–0.3
Translation exchange differences	0.4	2.4	2.3	0.0	5.1
1 July 2020	113.3	217.4	117.3	0.0	448.0

1) Land is not depreciated.

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

CHF million, except where indicated	Software	Develop- ment	Other	Intangible assets
30 June 2022, net	49.0	31.6	7.3	87.9
30 June 2021, net	52.1	24.2	14.5	90.8

Cost 30 June 2022	94.2	54.7	41.1	190.0
Additions	12.7	10.1	3.0	25.8
Disposals	–2.9	–0.5	–2.3	–5.7
Reclassifications	4.0	1.8	–5.4	0.4
Acquisition of businesses	0.2	0.0	0.1	0.3
Divestment of businesses	–2.1	0.0	–0.3	–2.4
Translation exchange differences	–5.3	–0.7	–2.7	–8.7
30 June 2021	87.6	44.0	48.7	180.3
Additions	15.6	8.4	5.5	29.5
Disposals	–14.0	–0.6	–3.9	–18.5
Reclassifications	85.1	1.4	–86.3	0.2
Translation exchange differences	0.9	0.8	1.4	3.1
1 July 2020	0.0	34.0	132.0	166.0

Accumulated depreciation 30 June 2022	45.2	23.1	33.8	102.1
Additions	15.3	3.8	5.3	24.4
Disposals	–2.7	–0.5	–2.4	–5.6
Reclassifications	0.6	0.3	–0.7	0.2
Divestment of businesses	–1.4	0.0	–0.3	–1.7
Translation exchange differences	–2.1	–0.3	–2.3	–4.7
30 June 2021	35.5	19.8	34.2	89.5
Additions	9.7	6.0	7.9	23.6
Disposals	–13.8	–0.5	–3.8	–18.1
Reclassifications	39.2	1.0	–40.1	0.1
Translation exchange differences	0.4	0.3	0.9	1.6
1 July 2020	0.0	13.0	69.3	82.3

Accounting principles

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 over a period of 2–5 years.

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.

Other intangible assets consist mainly of licenses, patents and advance payments.

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 2022	10.5	5.5	8.4	24.4
Additions	4.2	6.2	4.3	14.7
Releases	–1.8	–0.9	–1.2	–3.9
Usage	–5.1	–3.9	–3.8	–12.8
Acquisition of businesses	0.5	0.0	0.2	0.7
Divestment of business	–0.1	0.0	0.0	–0.1
Translation exchange differences	–0.5	–0.1	–0.3	–0.9
Provisions 30 June 2021	13.3	4.2	9.2	26.7
Additions	7.2	0.2	3.4	10.8
Releases	–1.3	–2.8	–6.6	–10.7
Usage	–7.0	–5.9	–4.6	–17.5
Translation exchange differences	0.1	0.1	0.0	0.2
Provisions 1 July 2020	14.3	12.6	17.0	43.9

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

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

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.

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.

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 30.06.2022	Financial year ended 30.06.2021					Financial year ended 30.06.2022	Financial year ended 30.06.2021
	Economic part of the Corporation		Acquisition and divestment of Businesses Economical 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	254.1	294.6	–18.9	–20.7	–1.6	28.6	27.0	23.3
Pension institutions with surplus						10.7	10.7	10.0
Pension institutions without surplus/deficit						13.6	13.6	12.2
Pension institutions without own assets	228.1	269.3	–18.9	–20.7	–1.6	4.3	2.7	1.1
Other long-term employee benefits	26.0	25.3

CHF million	Financial year ended 30.06.2022	Financial year ended 30.06.2021
Pension benefit expenses within personnel expenses	27.0	23.3
Decrease/increase economic obligation from pension institutions without own assets	2.7	1.1
Contributions and changes employer contribution reserves	24.3	22.2
Contributions to pension institutions from Group entities	24.3	22.2

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 30.06.2022	Financial year ended 30.06.2021
Other current assets		68.5	65.7
Prepaid expenses		22.6	21.3
Retentions		7.9	6.6
Sales, withholding and other recoverable taxes		33.2	33.1
Fair value of forward contracts	3.5	2.3	1.9
Other receivables and miscellaneous		2.5	2.8
Non-current financial assets		45.0	38.8
Loans		9.9	0.0
Pension-related assets		17.4	20.1
Long-term prepaid expenses		8.0	8.3
Long-term held securities		9.7	10.4

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 30.06.2022	Financial year ended 30.06.2021
Accrued and other current liabilities		379.8	364.2
Advances from customers		50.5	30.6
Deferred income		39.3	33.8
Sales, withholding and other tax payable		37.9	42.8
Payables to social security and pension fund		18.9	20.9
Accruals for salary payments, bonuses, vacation, overtime and other employee benefits		131.7	135.5
Accrued interest		2.4	3.3
Fair value of forward contracts	3.5	0.7	0.8
Other accruals and current non-interest-bearing liabilities		98.4	96.5

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.