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Consolidated financial statements

5 Other information

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

5.1Employee benefit obligations

The table shows the employee benefit obligations as well as the employee benefit expenses.

 

 

 

 

 

 

2021

 

 

Employee benefit plans

 

CHF million

Patronage funds

Without surplus/deficit

With surplus

With deficit

Without own assets

Total

 

 

 

 

 

 

 

Balance at 1.1.2021

 

 

 

16

36

52

Contributions to employee benefit plans

 

2

26

1

1

29

Increase/decrease in economic benefit of surplus/deficit

 

 

 

–7

3

–4

Payments of contributions to employee benefit plans

 

–2

–26

–1

–1

–29

Translation differences

 

 

 

0

–2

–1

Balance at 31.12.2021

 

 

 

10

37

47

 

 

 

 

 

 

 

Surplus/deficit according to FER 26

29

 

99

–8

 

119

Employee benefits within personnel expenses

 

2

26

–6

4

25

 

 

 

 

 

 

 

 

 

 

 

 

 

2020

Employee benefits within personnel expenses

 

5

22

4

3

34

Employee benefit plans in Switzerland are overfunded by CHF 99 million (previous year: CHF 24 million). This is mainly due to the good performance of the investments and the change in the technical parameters from BVG 2015 to BVG 2020 (BVG: federal law on pension benefits).

The employee benefit plan in the UK is underfunded by the amount of CHF 8 million (previous year: CHF 20 million). 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 10 million (previous year: CHF 16 million).

The recognized economic obligation from the employee benefit plan with no assets of their own, i.e. unfunded plans, amounted to CHF 37 million (previous year: CHF 36 million) and concerns primarily plans in Germany and Sweden. The CHF 3 million increase in the economic obligation is included in the pension fund expenses for the period.

Changes in the recognized economic obligations from employee benefit plans and the employer-paid contributions for the year under review amounted to CHF 25 million (previous year: CHF 34 million) and are included in “Personnel expenses”.

Accounting principles

The employee benefit plans of the GF Corporation comply with the legislation in force in each country. Employee benefit plans are mostly institutions and foundations that are independent of the GF 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 employer contributions. Any employer contribution reserves are also capitalized. An economic obligation is recognized as a liability if the conditions for a provision 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.

5.2Other financial assets

CHF million

31.12.2021

31.12.2020

 

 

 

Investments in associates

2

0

 

 

 

Non-current loans and receivables

80

83

Securities for the settlement of pension liabilities

3

3

Other securities

8

12

Other financial assets third parties

90

98

 

 

 

Total

93

98

In 2021, GF acquired a further stake of 16.67% in Oxford Flow Utility & Industries Ltd. As of 31 December, the stake amounted to 22.96%. Significant influence was assumed and the investment was reclassified from other securities to investment in associates. The acquired goodwill has been offset within equity.

The reduction in non-current loans was mainly due to currency effects. The former iron foundry in Austria drew down an additional CHF 3 million under an existing credit line granted by GF at the time of the divestment.

In 2020, GF supported an operational and financial restructuring of the other divested iron foundries in Germany (Fondium group). The financial restructuring included the sale of all remaining investments in these associates. In addition to the sale of the investments in the Fondium group, the loan terms were modified in 2020. CHF 72 million of subordinated loans before value adjustments were converted into mezzanine financing. For other subordinated loans over CHF 8 million before value adjustments, the maturity was extended to the end of 2024 and the interest was waived. Based on the original restructuring agreement, another CHF 8 million of subordinated loans were converted to mezzanine financing in 2021. As in the previous year, the mezzanine financing bears a conditional interest of up to 5% and the expected maturities remain at 7 to 10 years.

Other securities consist mainly of investment securities held in the captive insurance, non-consolidated investments without significant influence, as well as non-current prepayments.

Management assumptions and estimates

The recoverability of non-current loans and receivables is assessed based on the debtors’ ability to repay on time and in full. In order to build this assessment, management regularly observes the debtors’ adherence to the interest payments and principal amortization schedule. In the case of investments in associates, management also assesses the debtor’s ability to continue as a going concern. Assessing the going concern assumptions requires management to assess the risk and opportunities of the debtors’ business models, which are inherently subject to a higher level of estimation uncertainty. Such assessments may change in the following year depending on the future development of the debtors’ businesses.

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.

Associates are companies over which the GF Corporation exercises significant influence. Investments in associates are accounted for under the equity method. Any acquired goodwill is offset within equity. The share of results of associates is reported in the financial result.

5.3Deferred tax assets and liabilities

CHF million

Tax assets

Tax liabilities

2021 net

Tax assets

Tax liabilities

2020 net

 

 

 

 

 

 

 

Investment properties

 

20

–20

 

20

–20

Property, plant, and equipment

24

40

–16

28

45

–17

Intangible assets

8

3

6

10

2

8

Tax loss carryforwards

11

 

11

12

 

12

Inventories

29

12

17

28

15

13

Provisions

10

6

4

11

6

5

Other interest-bearing liabilities

1

2

–1

3

2

1

Other non-interest-bearing liabilities

21

2

19

22

6

16

Other balance sheet items

9

2

7

11

8

3

Total

112

86

26

125

104

21

 

 

 

 

 

 

 

Offsetting

–41

–41

 

–55

–55

 

Deferred tax assets/liabilities

71

44

26

70

49

21

The effect of offsetting at the GF Corporate Company level amounted to CHF 41 million (previous year: CHF 55 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 1.6 Income taxes.

Temporary differences associated with investments in subsidiaries, for which no deferred tax liabilities have been recognized, amounted to CHF 557 million as of 31 December 2021 (previous year: CHF 459 million).

Accounting principles

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. No deferred tax is provided for temporary differences on investments in subsidiaries where the timing of the reversal of the temporary difference is controlled by the GF Corporation and where it is probable that the temporary difference will not be reversed in the foreseeable future.

5.4Events after the balance sheet date

The consolidated financial statements were approved and released for publication by the Board of Directors on 22 February 2022. They must also be approved at the Annual Shareholders’ Meeting.

There were no events between 31 December 2021 and 22 February 2022 that would require an adjustment to the carrying amounts of assets and liabilities and equity or would need to be disclosed under this heading.

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