5. Other information

5. Other information

This section provides other information and disclosures not included in other sections for example information about the employee benefits obligations. It also includes an overview of the balance-sheet related deferred tax assets and liabilities and then significant events occurring after the reporting date.

5.1 Employee benefit liabilities

5. Other information

This section provides other information and disclosures not included in other sections for example information about the employee benefits obligations. It also includes an overview of the balance-sheet related deferred tax assets and liabilities and then significant events occurring after the reporting date.

5.1 Employee benefit liabilities

Economic benefit/economic obligation and pension benefit expenses

 

 

 

 

2018

 

2017

 

 

 

 

 

 

 

2018

 

2017

CHF million

 

Surplus/ deficit according to FER 26

 

Economic part of the Corporation

 

Economic part of the Corporation

 

Translation differences

 

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

 

Contri- butions concering the business period

 

Pension benefit expenses within personnel expenses

 

Pension benefit expenses within personnel expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Patronage funds

 

20

 

9

 

 

 

 

 

 

 

1

 

1

 

1

Employee benefit plans w/o surplus/deficit

 

 

 

 

 

 

 

 

 

 

 

15

 

15

 

13

Employee benefit plans with surplus

 

32

 

 

 

 

 

 

 

 

 

10

 

10

 

9

Employee benefit plans with deficit

 

–20

 

–14

 

–20

 

–1

 

–5

 

2

 

–3

 

 

Employee benefit plans without own assets

 

 

 

–33

 

–107

 

–2

 

7

 

2

 

9

 

1

Loans from pension fund institutions

 

 

 

–4

 

–28

 

2

 

 

 

 

 

 

 

 

Total

 

32

 

–42

 

–155

 

–1

 

2

 

30

 

32

 

24

GF maintains mostly defined benefit pension plans in Switzerland, Germany, Great Britain and the USA, with the employee benefit plan in the USA intended to be closed in the second half of 2019. With the exception of pension plans in Germany, the employee pension plans have their own assets in addition to the respective pension obligations.

The table shows the economic benefit and the economic obligation at the end of the year under review and for the previous year, as well as the changes in pension benefit expenses.

The economic proportion in the patronage fund in the amount of CHF 9 million is attributable to the acquisition of Precicast Industrial Holding SA and represents long-term investments in securities as collateral for pension liabilities, which are included under “Other financial assets” see note 5.2.

The pension plans overfunded in the amount of CHF 32 million (previous year: CHF 24 million) are attributable to the Georg Fischer Pension Fund. The assets developed positively in the year under review thanks to the revaluation of the real estate. However, the GF Machining Solutions Pension Fund is no longer overfunded (previous year: CHF 24 million), partly due to the loss made on assets and changes in technical parameters.

The pension plans underfunded in the amount of CHF 20 million (previous year: CHF 24 million) are based on the defined benefit plans in Great Britain and the USA. The amount of the underfunding depends significantly on the value of the securities and on the discount rate and the expected mortality rate used in the calculation of the pension liabilities. The total economic obligation, which represents the expected cash outflow in the medium term, amounts to CHF 14 million (previous year: CHF 20 million). Due to the upcoming liquidation of the pension fund in the USA as at the end of 2019, which is expected to have a slightly positive outcome, and the favourable trend in the discount rate in Great Britain, the economic obligation was reduced by CHF 5 million. The income is included in the pension fund expenses for the period.

The recognized economic obligation from the pension plans with no assets of their own, i.e. unfunded plans, amounted to CHF 33 million (previous year: CHF 107 million) and concerns primarily the employee pension plans in Germany. The CHF 74 million decrease was largely due to the divestment of the two iron casting plants in Singen and in Mettmann in the amount of CHF 79 million. In addition, the mortality tables in Germany were adjusted. This led to a corresponding increase in the economic obligation in the amount of CHF 7 million and is included in the pension fund expenses for the period.

Loans from pension funds in the amount of CHF 4 million (previous year: CHF 28 million) are current account balances of patronage foundations at Georg Fischer AG. In the previous year, these loans mainly originated from pension funds in Germany that had invested their fund assets in Group companies. The CHF 24 million decrease is due to the divestment of the two iron casting plants in Singen and Mettmann.

The following table summarizes the pension benefit expenses in the year under review and for the previous year:

CHF million

 

2018

 

2017

 

 

 

 

 

Contributions to employee benefit plans from Corporate Companies

 

30

 

26

Contributions to employee benefit plans from employer contribution reserves

 

 

 

 

Total contributions

 

30

 

26

+/- Change in ECR from asset developments, value adjustments, etc.

 

 

 

 

Contributions and change in employer contribution reserves (ECR)

 

30

 

26

 

 

 

 

 

Decrease/increase in economic benefit of the Corporation from surplus

 

 

 

 

Increase/decrease in economic obligation of the Corporation from deficit

 

 

 

–1

Increase/decrease in economic obligation of the Corporation (employee benefit plans without own assets)

 

2

 

–1

Total change in economic effect of surplus/deficit

 

2

 

–2

Pension benefit expenses within personnel expenses in the period under review

 

32

 

24

Movements in the recognized economic obligations from pension plans and the employer-paid contributions for the year under review amounted to CHF 32 million (previous year: CHF 24 million) and are included in “Personnel expenses”.

Accounting principles

The employee benefit plans of the Corporation comply with the legislation in force in each country. Employee benefit plans are mostly institutions and foundations that are independent of the Corporation. They are usually financed by both, employee and employer contributions.

The economic impact of the employee benefit plans is assessed each year. Surpluses or deficits are determined by means of the annual statements of each specific benefit plan, which are based either on Swiss GAAP FER 26 (Swiss benefit plans) or on the accepted methods in each foreign country (foreign plans). An economic benefit is capitalized if it is permitted and intended to use the surplus to reduce the employee contributions. If employer contribution reserves exist, they are also capitalized. An economic obligation is recognized as a liability if the conditions for an accrual are met. They are reported under “Employee benefit obligations”. Changes in the economic benefit or economic obligation, as well as the contributions incurred for the period, are recognized in “Personnel expenses” in the income statement.

5.2 Other financial assets

5.2 Other financial assets

Other financial assets amounted to CHF 99 million (previous year: CHF 13 million) and included non-current loans and receivables in the amount of CHF 79 million (previous year: CHF 9 million), securities for the settlement of pension liabilities in the amount of CHF 12 million (previous year: CHF 3 million) as well as investments in associates of CHF 8 million (previous year: CHF 1 million).

At the beginning of December 2018, GF divested two iron-casting plants in a management buy-out transaction. Through the divestment GF granted a loan in the amount of CHF 52 million and recognized investments in associates in the amount of CHF 6 million, see note 4.1 for further details.

The loan amount was subsequently increased by CHF 10 million following the of sale production equipment. CHF 9 million of the increase was recorded as non-current loan. The total of CHF 10 million represents the net amount of the production equipment sold after taking into consideration related financing arrangements that were also part of the sale transaction, see note 2.4 for further details.

The loan agreement has an expected maturity of up to 5 years and includes stepped-up interest rates (3%–5%).

Accounting principles

Non-current loans and receivables are initially recorded at fair value and subsequently accounted for at amortized cost. Investments in associates are accounted for under the equity method or stated at fair value.

5.3 Deferred tax assets and liabilities

5.3 Deferred tax assets and liabilities

CHF million

 

Tax assets

 

Tax liabilities

 

2018 net

 

Tax assets

 

Tax liabilities

 

2017 net

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment properties

 

 

 

23

 

–23

 

 

 

7

 

–7

Property, plant, and equipment for own use

 

25

 

45

 

–20

 

11

 

34

 

–23

Intangible assets

 

2

 

2

 

 

2

 

2

 

Tax loss carryforwards

 

6

 

 

 

6

 

4

 

 

 

4

Inventories

 

23

 

16

 

7

 

24

 

14

 

10

Provisions

 

10

 

3

 

7

 

14

 

4

 

10

Other interest-bearing liabilities

 

3

 

2

 

1

 

2

 

 

2

Other non-interest-bearing liabilities

 

19

 

7

 

12

 

41

 

9

 

32

Other balance sheet items

 

5

 

5

 

 

14

 

4

 

10

Total

 

93

 

103

 

–10

 

112

 

74

 

38

 

 

 

 

 

 

 

 

 

 

 

 

 

Offsetting

 

–40

 

–40

 

 

 

–27

 

–27

 

 

Deferred tax assets/liabilities

 

53

 

63

 

–10

 

85

 

47

 

38

Deferred tax assets and liabilities are offset within GF Corporate Companies when there is a legally enforceable right to offset current tax assets against current tax liabilities and the deferred taxes related to the same fiscal authority. The effect of offsetting at the GF Corporate Company level amounted to CHF 40 million (previous year: CHF 27 million). Deferred tax assets and liabilities are calculated based on the actually expected income tax rates for each GF Corporate Company. For further information on the recognition of tax loss carryforwards, see note 1.4.

Temporary differences associated with investments in subsidiaries, for which no deferred tax liabilities have been recognized, amounted to CHF 449 million as of 31 December 2018 (previous year: CHF 437 million).

5.4 Events after the balance sheet date

5.4 Events after the balance sheet date

The consolidated financial statements were approved and released for publication by the Board of Directors on 21 February 2019. They must also be approved at the Annual Shareholders’ Meeting.

There were no events between 31 December 2018 and 21 February 2019 that would require an adjustment to the carrying amounts of assets and liabilities and equity or would need to be disclosed under this heading.