2  Restatement to Swiss GAAP FER

The effects that the change in accounting standards from IFRS to Swiss GAAP FER has on the principles of recognition and valuation are outlined in the following. The principles which remain unaffected are not shown. The effects on the consolidated financial statements and on consolidated equity are stated under section 2.8.

2.1  Earnings from renting investment real estate / investment real estate

Income from renting investment real estate includes net rental income after deduction of vacancy losses, losses due to bad debts and (new) deduction of ground rent. Under IFRS, ground rent was capitalised as a right-of-use asset and reported under yield-producing properties. Changes in right-of-use assets were recognised under gains from the revaluation of investment real estate. The change in recognition of ground rent obviates the need to capitalise it as a right-of-use asset and report it under yield-producing properties as per IFRS.

2.2  Employee pension plans

Under IFRS, pension funds were classed as defined benefit plans, with plan assets recognised at fair value and liabilities valued using the projected unit credit method.

Pension expenses comprised a past service and a net interest component which were recognised under personnel expenses, as well as a revaluation component which contains actuarial gains and losses and was recognised through other comprehensive income under changes in the pension fund.

Pension plans are now recognised in accordance with Swiss GAAP FER 16 “Pension benefit obligations”. Accordingly, actual expenditure for the pension fund is charged to personnel expenses. In application of the new standard, any economic benefit or obligation existing on the cut-off date must be taken to the balance sheet. The previous practice of reporting the net position “Pension plan assets” in the balance sheet under financial assets no longer applies.

2.3  Other operating expenses / other property, plant and equipment

Rental expenses from long-term rental agreements for offices and parking spaces are now recognised as operating leases and charged to income under other operating expenses. Under IFRS, these obligations were capitalised as right-of-use assets under the position “Other property, plant and equipment” and depreciated over the term. They are no longer capitalised as right-of-use assets under FER.

2.4  Financial expenses / Derivative financial instruments

In December 2016, Allreal terminated interest swaps (swaps) early. Their remaining negative replacement value (after deferred tax) was reported in the hedging reserve and under IFRS released to the income statement over the original residual term to maturity of the swaps.

Under FER, the balance of negative hedging reserves was allocated in the opening balance sheet of 1 January 2019 to retained earnings and has not been charged to the consolidated statement of comprehensive income since 2019.

2.5  Development real estate

Development real estate comprises land reserves, buildings under construction, and completed properties. Under FER, accrued investment costs (land and project costs) for notarised units are now no longer reported as contract assets or liabilities but – as buildings under construction – fall under development real estate.

2.6  Short-term receivables and liabilities

Receivables from construction activities undertaken on behalf of third parties are recognised according to the net principle, i.e. payments on account received from clients and partial settlements of accounts arising from the construction activities are offset against each other (order balances). In accordance with IFRS, positive net positions were previously reported as contract assets and negative net positions as contract liabilities. Now, under FER, order balances are reported as trade receivables or trade payables accordingly.

2.7  Lease liabilities

In connection with the two types of right-of-use assets – i.e. arising from ground rent and from long-term rental agreements – a long- and a short-term lease liability was recognised under IFRS. Under FER, rental expenses and ground rent are charged to the income statement as incurred, and no right-of-use assets are capitalised. Accordingly, there are no long- and short-term lease liabilities to recognise.

2.8  Reconciliation of net profit and equity

The changes in principles of accounting following adoption of FER were applied retroactively to 1 January 2019 with a restatement of the previous year’s figures. The effects of the change from IFRS to FER on net profit and equity are shown in the following tables.

Reconciliation of net profit from IFRS to FER

6 months

01.01.–30.06.2019

12 months

01.01.–31.12.2019

85.1

234.8

0.5

1.5

4.5

8.9

–0.7

–1.3

–1.6

–4.4

0.5

0.9

1.6

4.4

0.4

0.7

–1.1

–2.3

89.2

243.2

Reconciliation of equity from IFRS to FER

 

Share

capital

 

Capital

reserves

 

Treasury
shares

 

Hedging

reserves

 

Revaluation

reserves

 

Other

retained

reserves

 

Total

 

15.9

 

731.3

 

–8.9

 

–15.7

 

259.5

 

1 236.7

 

2 218.8

              
           

–10.6

 

–10.6

           

2.3

 

2.3

              
       

15.7

   

–15.7

 

0.0

 

15.9

 

731.3

 

–8.9

 

0.0

 

259.5

 

1 212.7

 

2 210.5

 

Share

capital

 

Capital

reserves

 

Treasury
shares

 

Hedging

reserves

 

Revaluation

reserves

 

Other

retained

reserves

 

Total

 

15.9

 

628.0

 

–8.7

 

–12.2

 

280.8

 

1 304.0

 

2 207.8

              
           

–14.5

 

–14.5

           

3.2

 

3.2

           

0.2

 

0.2

              
       

12.2

   

–12.2

 

0.0

 

15.9

 

628.0

 

–8.7

 

0.0

 

280.8

 

1 280.7

 

2 196.7

 

Share

capital

 

Capital

reserves

 

Treasury
shares

 

Hedging

reserves

 

Revaluation

reserves

 

Other

retained

reserves

 

Total

 

15.9

 

628.0

 

–7.1

 

–8.7

 

359.7

 

1 380.7

 

2 368.5

              
           

–20.2

 

–20.2

           

4.0

 

4.0

           

0.3

 

0.3

              
       

8.7

   

–8.7

 

0.0

 

15.9

 

628.0

 

–7.1

 

0.0

 

359.7

 

1 356.1

 

2 352.6