3.1 Capital management

Capital management has the following objectives:

• securing sufficient liquidity to meet the Group’s needs to fulfil its financial obligations;
• securing sufficient funding capacity for future investments and acquisitions;
• ensuring creditworthiness;
• achieving an appropriate risk-adjusted return for investors.

In response to ongoing economic and geopolitical uncertainties, including the war in Ukraine, dormakaba has maintained a strong focus on tightly managing cash positions and net working capital. This includes stringent credit management, disciplined collection of trade receivables, and careful cash conversion to effectively mitigate risks. Daily monitoring of liquidity and financial debt status at the Group level, including oversight of financial covenants and undrawn credit facilities, remains a key priority. Alongside these cash management efforts, dormakaba also conducts regular reviews of safety stocks to ensure supply capabilities amidst ongoing supply chain challenges, further reinforcing the companyʼs financial stability.

Borrowings and other financial liabilities

Credit facility

As of 30 June 2024, short-term bank loans and overdrafts amount to CHF 5.0 million (2022/23: CHF 110.0 million).

In November 2020, dormakaba secured a five-year syndicated credit facility in the amount of CHF 525 million that includes options for a prolongation of two additional years and for an increase of up to CHF 200 million. In line with our ambitious sustainability strategy, the contract contains an incentivized ESG (Environmental, Social, and Governance) performance target for CO₂ reduction. The syndicated credit facility contains the leverage ratio as the only financial covenant. It is calculated based on net debt relative to EBITDA for the past 12 months as of June and December. As of 30 June 2024 and throughout the 2023/24 financial year, dormakaba complied with the financial covenant.

Net debt

The key figures, including the maturities, as of 30 June 2024 and 30 June 2023 are disclosed below.

The interest expenses for short-term bank loans and overdrafts are recorded within other interest expenses. Interest expenses are disclosed in detail in the note on the financial result (1.5).

Bonds

dormakaba Finance AG issued bonds with a total nominal value of CHF 595 million (ISIN CH0384629892 and ISIN CH1206367497). Of this amount, CHF 320 million will mature in October 2025 and CHF 275 million will mature in October 2027.

The interest expenses for the bonds amount to CHF 13.6 million in 2023/24 (2022/23: CHF 10.6 million). This is disclosed in the note on the financial result (1.5).

3.2 Share capital and treasury shares

Share capital

As of 30 June 2024, the share capital comprised 4,200,026 registered shares with a par value of CHF 0.10 each. The shares are listed on the SIX Swiss Exchange (DOKA/ISIN CH0011795959).

Conditional capital as of 30 June 2024 amounted to CHF 42,438.40.

The Company has a capital range ranging from CHF 378,002.60 (lower limit) to CHF 462,002.60 (upper limit). The Board of Directors is authorized within the capital range to increase or reduce the share capital once or several times and in any amounts or to acquire or dispose of shares directly or indirectly, until 5 October 2028, or until an earlier expiry of the capital range. The capital increase or reduction may be effected by issuing up to 420,000 fully paid registered shares with a nominal value of CHF 0.10 each or by cancelling up to 420,000 registered shares with a nominal value of CHF 0.10 each, as applicable, or by increasing or reducing the nominal value of the existing registered shares within the limits of the capital range or by simultaneous reduction and re-increase of the share capital. No shares were issued out of authorized capital in the 2023/24 financial year.

Treasury shares

Treasury shares are recorded as a negative balance within equity and disclosed in the consolidated statement of changes in equity. These registered shares are predominantly intended for share-based compensation. Further information about the long-term incentive stock award plans are disclosed in the note on personnel expenses (1.3) and within the Compensation Report.

In the 2023/24 financial year, a total of 4,627 shares (2022/23: 10,647 shares) were allocated. 1,992 performance shares were vested as part of the long-term incentive stock award plans (2022/23: 6,862 shares made up of 4,984 restricted and 1,878 performance shares) and 2,635 restricted shares (2022/23: 3,785 restricted shares) were allocated to the BoD members. Further information on the long-term incentive stock award plans is included in the Compensation Report.

3.3 Earnings per share and dividends

Earnings per share

The earnings per share is calculated based on the profit attributable to the owners of the parent only. Net profit attributable to minority interests is not taken into account. The minorities represent mainly the shareholders who hold 47.5% of the shares of dormakaba Holding GmbH + Co. KGaA, a direct subsidiary of the Group parent, dormakaba Holding AG, which holds the remaining 52.5%. The legal subsidiaries are disclosed in the note on the legal structure of the dormakaba Group (5.4).

Dividends

dormakaba Group envisages a dividend policy whereby the minimum payout ratio should be 50% of the consolidated net profit after minority interests.

The dividend distribution is proposed to the AGM in the form of a distribution from capital contribution reserves and statutory retained earnings of the parent entity, dormakaba Holding AG. After approval of this proposal by the AGM, the distribution from capital contribution reserves as well as dividend distribution from statutory retained earnings will be paid out as from 16 October 2024 according to the instructions received: CHF 8.00 (2022/23: CHF 9.50) gross per listed registered share at CHF 0.10 par value, whereof only the distribution from capital contribution reserves up to CHF 1.5 million in total will be paid free of Swiss withholding tax in accordance with Art. 5 para. 1bis of the Federal Law on Withholding Tax.

3.4 Financial risk management

The tasks of the BoD include identifying risks, determining suitable measures, and implementing these measures or having them implemented. The BoD of dormakaba Holding AG conducted a regular Group-wide risk assessment in the year under review and determined the risks to be managed at particular management levels.

The inflationary environment with globally increased interest rates, geopolitical and tariff tensions, as well as ongoing weaponed conflicts continue to impact the global economic environment. In response, the Group management has continued its comprehensive response strategy, ensuring that relevant reporting is provided to the EC and BoD. The measures are designed to safeguard employees, minimize disruptions to business operations and supply chains, and ensure that the focus remains on strong cash conversion and capital management.

dormakaba has continued its robust financial management and forecasting practices to maintain entrepreneurial flexibility and financial stability. This includes daily monitoring of liquidity and financial debt status, encompassing financial covenants and undrawn credit facilities at the Group level. Additionally, the solvency and credit spreads of all business banks are carefully evaluated, bank balances are managed within a risk budget, and excess cash is concentrated efficiently. The Ukraine Taskforce has maintained and enforced stringent sanction controls and business adjustments for Russia. This approach ensures that operating risks are effectively addressed, reported, and measures are taken.

Liquidity risk

Liquidity risk arises due to the possibility that dormakaba Group might experience difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities.

Liquidity risk is managed centrally by Group Treasury. The Group aims, secured by solid free cash flow, to balance funding continuity and flexibility, considering funding for the ongoing transformation and restructuring programs to ensure adequate liquidity for strategic initiatives. To avoid excessive refinancing in any single period, the Group maintains a diversified spread of maturities and ensures funding flexibility by securing a mix of uncommitted and committed credit lines with a range of counterparties and employing various financing instruments.

Credit risk

Credit risk is the risk of loss if a counterparty fails to fulfil its obligations to dormakaba Group. Hence, dormakaba Group is exposed to credit risk arising from financing activities, including deposits with banks and financial institutions, foreign exchange transactions, and other financial instruments such as trade receivables, other current assets, and non-current financial assets.

Cash and cash equivalents are mainly held in the form of current accounts and current fixed-term deposits. Counterparty risks with financial institutions are monitored continuously and are minimized by the Group limiting its relationships to high-ranking banks only and limiting cash balances within a risk budget or level of national deposit protection schemes.

Trade receivables are monitored on an ongoing basis locally and via Group management reporting procedures. The danger of cluster risks with trade receivables is limited due to the large number and wide geographical spread of customers. The extent of the credit risk is determined mainly by the individual characteristics of each customer. The assessment of this risk involves a review of the customer’s creditworthiness based on its financial situation and experience. The maturity analysis of trade receivables is disclosed in the note on trade receivables (2.1).

Interest rate risk

Interest rate risk is the risk that the Group’s financial situation is impacted by changes in interest rates.

dormakaba Group’s interest rate risk arises from its short-term and long-term borrowings. Management strives for a well-balanced mix of long- and short-term interest rate exposure, taking into consideration the planned funding requirements. Funding and related interest are managed centrally by Group Treasury.

Foreign currency exposure

Translation risk

dormakaba Group does not actively manage the translation risk.

In the 2023/24 financial year, the Group’s equity was negatively impacted in the amount of CHF 7.2 million by foreign currency translation (2022/23: CHF 29.1 million negative impact).

The key exchange rates based on net sales in foreign currencies are disclosed in the table below:

In the 2023/24 financial year, dormakaba Group’s sales growth was negatively impacted by foreign currency translations in the amount of CHF 139.5 million (2022/23: CHF 109.2 million negative impact) and its adjusted EBITDA negatively by CHF 21.5 million (2022/23: CHF 14.6 million negative impact).

Transaction risk

Management monitors foreign exchange risks on a regular basis. When management deems it appropriate to do so, dormakaba uses derivative financial instruments to manage its transaction risk exposure to fluctuations in exchange rates.

Foreign exchange risks relating to intercompany loans are covered fully by forward exchange contracts with third parties. The external counterparties involved are high-ranking financial institutions. dormakaba enters into financial transactions only to hedge against a related off-balance-sheet risk or a highly probable future business transaction. No uncovered short transactions are entered into.

Intercompany invoicing is structured in a way that foreign exchange risks within the dormakaba Group are concentrated in the manufacturing units. The use of a group netting system with intercompany payment terms of up to 60 days reduces the intercompany exposure and foreign exchange risk. The third party and intercompany cross-currency exposures are reduced through natural hedges or using financial instruments.

dormakaba Group actively manages the transaction risk arising from third party and intercompany cross-currency exposures in foreign currencies.

The following currency forward contracts for hedging purposes existed as at the balance sheet date:

In the 2023/24 financial year, the net foreign exchange loss amounts to CHF 2.6 million (2022/23: loss amounts to CHF 4.3 million). While the hedges mitigate the foreign currency effect arising from intercompany loans, the interest expenses for forward contracts amount to CHF 12.5 million (2022/23: CHF 14.4 million). The foreign exchange gains and losses as well as the interest expenses and income are disclosed in the note on the financial result (1.5).