5.2 Other financial assets

Tabelle anzeigen Tabelle ausblenden
Show table Hide table

CHF million

 

2019

 

2018

 

 

 

 

 

Non-current loans to associates

 

75

 

61

Investment in associates

 

1

 

8

Net investment in associates

 

76

 

69

 

 

 

 

 

Non-current loans and receivables

 

22

 

7

Securities for the settlement of pension liabilities

 

3

 

12

Other securities

 

9

 

11

Other financial assets third parties

 

34

 

30

Other financial assets total

 

110

 

99

Non-current loans to associates relate to the divestment of the two iron foundries in 2018, see also note 4.1 (4.1.1 Additions, disposals and mergers). The change is explained by an ordinary increase of CHF 21 million due to a credit facility drawn over the year 2019 that existed already in 2018, the granting of an additional loan of up to CHF 22 million of which CHF 3 million were drawn, impairments of CHF 7 million as well as movements in the foreign exchange rate. Investment in associates was reduced by CHF 3 million due to the application of the equity method as well as a further reduction of CHF 3 million due to impairments (see also note 3.2).

The impairments were required due to losses at the divested entities and the resulting requirement for an operational and financial restructuring. The financial restructuring included the subordination of CHF 47 million of outstanding loans. In order to reflect the subordination the interest rate was increased to 6.5% (previous year: Stepped-up interest rates of 3% – 5%). The loans have an expected maturity of 4 years (previous year: 5 years).

The increase in non-current loans and receivables to third parties is explained by the granting of a loan to a third party following the sale of the iron foundry in Herzogenburg (Austria), in 2019.

Management assumptions and estimates

The recoverability of non-current loans and receivables is assessed based on the debtor’s ability to repay on time and in full. In order to build this assessment management regularly observe the debtor’s adherence to the interest payment and principal amortization schedule. Further, as well as in the case of investments in associates, management assess the debtor’s ability of going concern. Assessing the debtor’s going concern assumptions requires the management to assess the viability of the debtor’s business model which is inherently subject to a higher level of estimation uncertainty.

Accounting principles

Non-current loans and receivables are recognized at amortized cost. In addition, an impairment is recorded in case the assumed present value of expected cash flows is below the carrying value of the non-current loans and receivables.

Investments in associates and non-current loans to associates are assessed for their recoverability holistically (net investment approach). First, investments and non-current loans are recorded at their actual values. Subsequently, the value of the investment is increased for the proportionate share in undistributed profits and reduced for the proportionate share in incurred losses as well as dividends obtained. In case, the value of the investment is reduced to zero, further proportionate shares in losses are allocated to the non-current loans. The value of the investment and the non-current loans are further reduced in case of impairments.

In order to give you a better experience GF uses cookies. Use of cookies & Disclaimer

https://annual-report.georgfischer.com/19/wp-json/wp/v2/posts/