Notes to the financial statements – Conzzeta AG

Principles

General

The financial statements 2019 of Conzzeta AG have been prepared in accordance with the provisions of the Swiss Code of Obligations. The significant valuation policies applied, over and above those required by law, are described in the following.

The financial statements were approved for publication by the Board of Directors on Friday, March 13, 2020. They are also subject to approval by the Annual General Meeting.

Financial assets

The financial investments comprise securities held as a long-term investment. Loans granted in foreign currencies are valued at year-end exchange rates.

Derivative financial instruments

Currency hedges are used against currency risks arising from business operations. All outstanding derivatives are recognized at market value on the balance sheet date and shown at gross values under other receivables or other short-term liabilities. Changes in the value of derivatives used to hedge recognized underlying transactions are reported in the income statement, as is the underlying transaction.

Interest-bearing liabilities

Interest-bearing liabilities are shown at par value.

Treasury shares

Treasury shares are recognized at cost at the time of acquisition. The holding of treasury shares is disclosed as a negative item in equity. Upon resale, the profit or loss is allocated directly to the capital reserves.

Share-based compensation

Share-based compensation for members of the Board of Directors is measured at cost at the grant date and charged to personnel expenses in the period in which the service is rendered.

Information on the income statement and balance sheet items

Income

The dividend payments by the subsidiaries were determined in relation to available retained earnings and capital requirements. The divestment of Bystronic Maschinen AG resulted in a gain from the sale of equity holdings of CHF 16.9 million. The financial income comprises the interest income on accounts receivable from equity holdings of CHF 7.5 million (2018: CHF 5.8 million) and interest income from third parties amounting to CHF 0.1 million (2018: CHF 0.3 million). In the previous year, this position also contained the reversal of provisions for loans of CHF 1.0 million, gains on securities of CHF 0.1 million and currency gains on liquid assets and on accounts receivable from equity holdings of CHF 0.1 million.

Expenses

Financial expenses are the result of interest on liabilities towards equity holdings of CHF 0.4 million (2018: CHF 0.4 million), interest on short-term bank loans of CHF 0.1 million (2018: CHF 0.1 million), the cost of currency hedging (interest rate differences) for balance sheet items in foreign currencies of CHF 3.6 million (2018: CHF 2.0 million) and currency losses on liquid assets and on accounts receivable from equity holdings of CHF 0.2 million. Personnel and other operating expenses include current administration expenses, the cost of organizing the Annual General Meeting, the production of the annual report, project costs, taxes on capital, as well as fees to the Board of Directors.

Current assets

Liquid assets consist of current account bank balances, the majority of which are in Swiss francs. Other accounts receivable due from third parties include recoverable input tax and withholding tax of CHF 0.4 million (2018: CHF 0.2 million) and a balance of CHF 5.6 million (2018: CHF 5.3 million) from exchange rate hedges due from banks. Other accounts receivable from equity holdings include a balance of CHF 0.9 million (2018: CHF 0.5 million) from exchange rate hedges against equity holdings and accounts receivable from equity holdings of CHF 0.3 million.

Fixed assets

The financial investments comprise securities held as a long-term investment. In the year under review, accounts receivable from equity holdings grew by CHF 49.6 million. Equity holdings fell by CHF 19.0 million due to the sale of Bystronic Maschinen AG.

Liabilities

Other payables include mainly debts of CHF 2.1 million (2018: CHF 1.4 million) resulting from exchange rate hedges owed to banks, debts of CHF 2.0 million (2018: CHF 1.4 million) resulting from exchange rate hedges against equity holdings and trade payables of CHF 0.4 million.

Shareholdersʼ equity

The share capital of CHF 4.1 million (2018: CHF 4.1 million) is divided into 1,827,000 class A registered shares and 1,215,000 class B registered shares. At the end of 2018, 4,506 class A registered shares acquired at an average purchase price of CHF 894 each were held. In the reporting year, 2,484 class A registered shares were acquired at an average transaction price of CHF 1,025 each for the share-based compensation program. The Board of Directors received 669 class A registered shares at an average transaction price of CHF 914 each. A total of 2,134 class A registered shares were sold to Group companies at an average transaction price of CHF 904 each for allocation to members of the Executive Committee and other members of the management team. In each case, the transaction price corresponded to the market value. The holding as of December 31, 2019 was 4,187 class A registered shares acquired at an average purchase price of CHF 941 each.

Further information

Full-time positions

Conzzeta AG has no employees.

Contingent liabilities

Equity holdings

See note 4.2 to the consolidated financial statements for details of equity holdings. The voting shares correspond to the capital shares.

Significant shareholders

The Auer, Schmidheiny and Spoerry shareholder group comprises Dr. Matthias Auer, Ruth Byland-Auer, Martin Byland, Caliza Holding AG, Marina Marti-Auer, Marina Milz, Adrian and Annemarie Herzig-Büchler, Sven and Rosmarie Mumenthaler-Sigrist, Jacob Schmidheiny, Margrit Schmidheiny, Felix Schmidheiny, Helen Schmidheiny, Kathrin Spoerry, Christina Spoerry, Heinrich Spoerry-Niggli, Lotti Spoerry and Robert F. Spoerry.

Shareholdings held by members of the Board of Directors, Executive Committee and related persons

M. Auer, J. Schmidheiny and R. F. Spoerry hold further registered shares under a shareholder agreement within the Auer, Schmidheiny and Spoerry shareholder group.

Compensation paid to members of the Board of Directors and Executive Committee is shown in the Compensation Report.

Share-based compensation

The base compensation for members of the Board of Directors is paid in cash and shares (approx. 50% each) that are subject to a four-year vesting period. Neither discounts nor performance components are taken into consideration when calculating the share allocation of the Board of Directors. The calculation is based on the average share price for the three months from November 1 to January 31.

In 2019, a total of 669 class A registered shares were allocated to the Board of Directors for the previous year. The CHF 0.6 million valuation was based on a share price of CHF 914 each. Personnel expenses contain deferred expenses for the reporting year amounting to CHF 0.4 million (2018: CHF 0.4 million) for the share-based component of compensation.

Events after the balance sheet date

On December 20, 2019, Conzzeta announced the signing of a binding agreement to sell its business unit Schmid Rhyner to the German specialty chemicals group Altana. Closing of the transaction was on February 28, 2020.