Explanations to the consolidated financial statements

1 | Trade receivables

 
in CHF thousands31.12.201531.12.2014
Trade receivables from hotel & catering activities8351 114
Rent receivables94386
Other trade receivables830533
Provisions for doubtful receivables– 79– 80
Total trade receivables1 6801 953

2 | Other receivables

 
in CHF thousands31.12.201531.12.2014
Withholding tax credits1557
Accounts for heating and service charge settlement7 1914 759
Other receivables9122
Total other receivables7 2974 838

3 | Properties held for sale

 
in CHF thousands31.12.201531.12.2014
Acquisition value at the beginning of reporting period4 8051 388
Additions2 4263 417
Disposals– 4 8050
Acquisition value at the end of reporting period2 4264 805

The properties held for sale at the end of 2015 are two apartments with appurtenant parking spaces and ancillary spaces at the Baar property, Rote Trotte 14–16.

4 | Investment properties, investment properties under construction and undeveloped plots

 
in CHF thousandsMetalli/
Zug City Center site, Zug
investment properties		Suurstoffi site,
Risch Rotkreuz,
investment properties		Other
investment properties		Total
investment properties		Total
investment properties
under construction1		Undeveloped plots 2Total
Balance as at 01.01.2014584 587227 09024 190835 86747 0239 269892 159
Investments1 6451 67003 31561 746065 061
Acquisitions 327 2000027 2000027 200
Disposals 400– 1 418– 1 41800– 1 418
Reclassification of properties under construction to investment properties 5024 470024 470– 24 47000
Revaluation (net)8 5162 508– 18210 84210 472021 314
Balance as at 31.12.2014621 948255 73822 590900 27694 7719 2691 004 316
Accumulated acquisition values as at 01.01.2014310 343186 61422 344519 30142 1369 269570 706
Accumulated acquisition values as at 31.12.2014339 188210 38121 460571 02981 7859 269662 083
Difference market values/acquisition values as at 01.01.2014274 24440 4761 846316 5664 8870321 453
Difference market values/acquisition values as at 31.12.2014282 76045 3571 130329 24712 9860342 233
Balance as at 01.01.2015621 948255 73822 590900 27694 7719 2691 004 316
Investments1025 9891306 22130 665036 886
Acquisitions 6000010 581010 581
Disposals 70– 16 500– 7 406– 23 90600– 23 906
Reclassification of undeveloped plots to properties under construction 800005 261– 5 2610
Reclassification of properties under construction to investment properties 9085 934085 934– 85 93400
Reclassification to properties for sale 1000– 2 426– 2 42600– 2 426
Reclassification to other tangible assets0– 6810– 68100– 681
Revaluation (net)43 7474 09325848 0982 379050 477
Balance as at 31.12.2015665 797334 57313 1461 013 51657 7234 0081 075 247
Accumulated acquisition values as at 01.01.2015339 188210 38121 460571 02981 7859 269662 083
Accumulated acquisition values as at 31.12.2015339 290269 1397 909616 33857 6074 008677 953
Difference market values/acquisition values as at 01.01.2015282 76045 3571 130329 24712 9860342 233
Difference market values/acquisition values as at 31.12.2015326 50765 4345 237397 1781160397 294
1 Comprises the properties under construction at the Suurstoffi site in Risch Rotkreuz
2 Comprises the undeveloped part of the Suurstoffi site in Risch Rotkreuz. The undeveloped plots are stated at cost less accumulated depreciation in accordance with the valuation principles
3 Acquisition of a 5.5% stake in MEG Metalli
4 Disposal of an apartment (incl. two parking spaces) at the Baar property, Rote Trotte 14–16
5 Reclassification of the Risch Rotkreuz properties, Suurstoffi 41 to investment properties
6 Acquisition of the Birkenstrasse 6 development site in Rotkreuz
7 Disposal of properties at Industriestrasse 8 in Oberentfelden and Suurstoffi 3a–c in Risch Rotkreuz, and of a hobby room at the Baar property, Rote Trotte 14–16
8 Reclassification of the Risch Rotkreuz properties, Suurstoffi 16–20 and site 1 plots to investment properties under construction
9 Reclassification of the Risch Rotkreuz properties, Suurstoffi 19–35 to investment properties
10 Reclassification of two apartments (incl. ancillary and parking spaces) at the Baar property, Rote Trotte 14–16

The fair values are based on the market value assessments performed annually by a recognized independent real estate expert (Wüest & Partner AG) as at December 31 using the DCF (discounted cash flow) method. The discount rates applied for the valuation of the investment properties and the investment properties under construction as at the balance sheet date were within a range of 3.2% to 3.7% (previous year: 3.4% to 5.5%).

Additional information per property can be found here.

5 | Operating properties

 
in CHF thousands 20152014
Acquisition value at the beginning of reporting period61 96361 700
Additions806263
Disposals00
Acquisition value at the end of reporting period62 76961 963
Accumulated depreciation at the beginning of reporting period– 22 873– 20 655
Disposals00
Depreciation in the reporting period– 1 888– 2 218
Accumulated depreciation at the end of reporting period– 24 761– 22 873
Net book value at the beginning of reporting period39 09041 045
Net book value at the end of reporting period38 00839 090

The following properties located in Zug serve completely or partly as operating properties: Industriestrasse 14 (Parkhotel Zug), Industriestrasse 16 (Résidence), Metallstrasse 20 (Hotel City Garden), Haldenstrasse 9, 10, 11 (serviced city apartments), Baarerstrasse 30 (Restaurant Bären) and Industriestrasse 12 (Zug Estates offices).

The market value of the operating properties as at the balance sheet date is TCHF 113 693 (previous year: TCHF 106 724). It was determined by the independent real estate expert (Wüest & Partner AG) using the DCF method. For the valuation as at the balance sheet date, discount rates within a range of 3.6% to 4.7% (previous year: 3.9% to 4.8%) were applied.

6 | Other tangible assets

 
in CHF thousands 20152014
Acquisition value at the beginning of reporting period16 32019 077
Additions302811
Reclassification6810
Disposals– 415– 3 568
Acquisition value at the end of reporting period16 88816 320
Accumulated depreciation at the beginning of reporting period– 11 416– 13 633
Disposals4853 568
Depreciation in the reporting period– 1 386– 1 351
Accumulated depreciation at the end of reporting period– 12 317– 11 416
Net book value at the beginning of reporting period4 9045 444
Net book value at the end of reporting period4 5714 904

7 | Prepayments for tangible assets

Prepayments for investment properties amounted to TCHF 178 (previous year: TCHF 0).

8 | Intangible assets

 
in CHF thousands 20152014
Acquisition value at the beginning of reporting period187197
Additions1519
Disposals– 3– 29
Acquisition value at the end of reporting period199187
Accumulated amortization at the beginning of reporting period– 144– 144
Disposals329
Amortization in the reporting period– 35– 29
Accumulated amortization at the end of reporting period– 176– 144
Net book value at the beginning of reporting period4353
Net book value at the end of reporting period2343

Intangible assets comprise software utilized in the business units.

9 | Financial liabilities

All financial liabilities are mortgage loans with financial institutions. They are structured as follows by maturity:

 
Residual term
in CHF thousands		 31.12.201531.12.2014
Under 1 year045 000
1 to 3 years00
3 to 5 years100 000100 000
5 to 10 years90 00040 000
Over 10 years160 000135 000
Total350 000320 000
Of which current045 000
Of which long-term350 000275 000

The average residual term of the interest-bearing debt is 9.2 years (previous year: 7.6 years). The average capital-weighted interest rate on all interestbearing financial liabilities is 2.5% (previous year: 2.2%). The long-term loans were taken out at fixed interest rates.

To secure the long-term financial liabilities, properties with a book value of TCHF 677 049 (previous year: TCHF 631 158) have been encumbered.

10 | Trade payables

 
in CHF thousands 31.12.201531.12.2014
Advance payments from tenants1 7471 702
Trade payables to suppliers3 1183 048
Total trade payables4 8654 750

11 | Provisions

 
in CHF thousands 20152014
Provisions at the beginning of the reporting period320305
Increase3215
Utilization– 285– 200
Release00
Provisions at the end of the reporting period38320
Of which current at the end of reporting period0236
Of which long-term at the end of reporting period3884

12 | Deferred tax liabilities

 
in CHF thousands 20152014
Deferred tax liabilities at the beginning of reporting period83 59680 315
Net creation recognized in the income statement in reporting period8 6003 281
Increase from acquisition5620
Deferred tax liabilities at the end of reporting period92 75883 596

The average tax rate for deferred income taxes amounts to 14.6% (unchanged).

13 | Shareholders' equity

 
Shares issued Security
number		Par
value CHF		NumberVotesCapital CHF
Series A registered shares14 805 2112.501 948 6401 948 6404 871 600
Series B registered shares14 805 21225.00315 136315 1367 878 400
Total 2 263 77612 750 000

In the year under review, Zug Estates Holding AG acquired no series A and B registered treasury shares and sold 18 400 series A registered treasury shares at an average price of CHF 138.25 (previous year: acquired 16 315 series B registered treasury shares at an average price of CHF 1 178 and sold 13 321 series B registered treasury shares at an average price of CHF 1 203).

As at December 31, 2015, Zug Estates Holding AG holds no series A registered treasury shares (previous year: 18 400) and 17 592 series B registered treasury shares (unchanged).

Non-distributable statutory reserves amount to December 31, 2015 TCHF 7 701 (previous year: TCHF 7 676).

Shareholders' equity per share

in CHF 31.12.201531.12.2014
Shareholders' equity per outstanding series B registered share, before deferred taxes    1 657.561 521.55
Shareholders' equity per outstanding series B registered share, after deferred taxes1 469.181 351.15

NAV at market value per share

in CHF 31.12.201531.12.2014
NAV at market value per outstanding series B registered share1 600.451 468.89

NAV at market value per share includes properties used for operational purposes at market value and corresponding deferred taxes.

Earnings per share

Information on series A registered shares20152014
Series A registered shares issuedNumber1 948 6401 948 640
Series A registered treasury shares (weighted average)Number12 26718 400
Average outstanding series A registered sharesNumber1 936 3731 930 240
Share in net income attributable to series A registered sharesTCHF26 46817 711
Applicable number of series A registered sharesNumber1 936 3731 930 240
Earnings per series A registered share, undilutedCHF13.679.18
Information on series B registered shares 20152014
Series B registered shares issuedNumber315 136315 136
Series B registered treasury shares (weighted average)Number17 59216 095
Average outstanding series B registered sharesNumber297 544299 041
Share in net income attributable to series B registered sharesTCHF40 67127 438
Applicable number of series B registered sharesNumber297 544299 041
Earnings per series B registered share, undilutedCHF136.6991.75

There are no potential dilutive effects to report. The diluted earnings per share correspond to the undiluted earnings per share.

14 | Significant shareholders

As of December 31, 2015, the following shareholders owned more than 3% of total voting rights:

 
number or % Series A
registered
shares		Series B
registered
shares		VotesVotes
previous
year
Heinz and Elisabeth Buhofer as well as Heinz M. Buhofer ¹1 489 6504 96566.0%65.6%
Stöckli Group 2340 80017 48615.8%–
Ursula Stöckli-Rubli–––15.2%
Werner O. Weber, indirectly held through Wemaco Invest AG   82 00046 6005.7%5.7%
1 The Group also comprises Annelies Häcki Buhofer, Philipp Buhofer, Martin Buhofer and Julia Häcki, if acting in mutual agreement
2 The Group comprises Ursula Stöckli-Rubli, Walter Stöckli-Rubli, Elisabeth Stöckli Enzmann, Johannes Stöckli, Matthias Stöckli, Helen Jauch-Stöckli, Hubert Stöckli and Othmar Stöckli

The shares held by current members of the corporate bodies are shown in the notes to the annual financial statements of Zug Estates Holding AG.

15 | Property income

The reported property income of TCHF 39 111 (previous year: TCHF 37 450) comprises actual rental income and income from Miteigentümergemeinschaft Metalli. This position contains rental revenue from all properties.

 
in CHF thousands 20152014
Actual rental income26 36924 701
Income from Miteigentümergemeinschaft Metalli 112 74212 749
Total property income39 11137 450
1 Proportional gross profit

The individual contractual relationships with external tenants had the following terms as at the balance sheet date, based on the annualized projected rental revenue:

 
Term, share in % 31.12.201531.12.2014
Under 1 year, incl. unlimited rental contracts45.244.4
Over 1 year2.85.1
Over 2 years7.82.0
Over 3 years5.86.6
Over 4 years1.85.8
Over 5 years4.21.1
Over 6 years1.62.1
Over 7 years15.50.8
Over 8 years7.915.5
Over 9 years0.08.5
Over 10 years7.48.1
Total100.0100.0

As at December 31, 2015, the five largest tenant Groups together generate 26.9% (previous year: 27.0%) of annualized projected rental revenue.

 
Tenants, share in % 31.12.2015 Tenants, share in %31.12.2014
Novartis8.2 Novartis8.3
Migros 17.2 Migros 17.2
UBS5.7 UBS5.7
Dosenbach-Ochsner3.0 Nord Stream3.0
H&M2.8 Dosenbach-Ochsner2.8
1 Various companies of the Migros Group

16 | Hotel & catering income

 
in CHF thousands20152014
Accommodation11 22411 170
Catering7 7848 582
Ancillary services746811
Sales deductions0– 8
Total hotel & catering income19 75420 555

17 | Other operating revenue

 
in CHF thousands20152014
Revenue from services1 5821 563
Revenue from own work475346
Revenue from leasing of personnel1 7562 090
Other revenue35261
Total other operating revenue4 1654 060

18 | Personnel expenses

 
in CHF thousands20152014
Wages and salaries11 58311 622
Pension expenses607626
Other personnel expenses1 6791 617
Total personnel expenses13 86913 865

19 | Other operating expenses

 
in CHF thousands20152014
Marketing/sales promotion1 101890
Maintenance and repair440449
Administrative expenses785643
IT/software396364
Legal and consultancy costs550417
Hire, leasing322453
Other costs 12 2452 437
Total other operating expenses5 8395 653
1 Other operating expenses mainly include costs incurred by the hotel & catering business unit for laundering services and for the operation of the properties.

20 | Depreciation

 
in CHF thousands20152014
Depreciation of operating properties1 8882 218
Depreciation of other tangible assets1 3861 351
Amortization of intangible assets3529
Total depreciation3 3093 598

21 | Financial result

 
in CHF thousands20152014
Interest income from banks212
Gain on securities42475
Fair value of financial assets129192
Total financial income173679
Interest expense mortgage loans7 6265 978
Other financial expenses2750
Total financial expenses7 6536 028
Financial result– 7 480– 5 349

In the reporting period, borrowing costs in the amount of TCHF 1 063 (previous year: TCHF 1 449) were capitalized.

22 | Taxes

 
in CHF thousands20152014
Income taxes3 1062 076
Deferred taxes8 6003 281
Total taxes11 7065 357
Average weighted tax rate
in CHF thousands or %		20152014
Income before taxes (EBT)78 84550 506
Average tax rate14.83%14.86%
Income taxes at average tax rate11 6907 505
Utilization of previously unrecognized tax losses0– 31
Change of tax rate16– 2 117
Total income taxes11 7065 357

Potential tax reductions resulting from unrecognized loss carry forwards and temporary differences amount to TCHF 0 (previous year: TCHF 33).

23 | Contingent liabilities and other off-balance sheet obligations

Zug Estates AG is the majority owner of Miteigentümergemeinschaft Metalli, Zug. For this reason, joint liability may apply in relations with third parties.

In relation to the construction and operation of City Garden Hotel, Zug Estates AG accepted a demolition obligation amounting to TCHF 490. This comes into effect in 2025 at the earliest, and then only if the land on which the hotel was built has to be vacated for construction of the access road to the Zug city tunnel. In a local referendum held on June 14, 2015, the population of Zug rejected the city tunnel scheme.

Zug Estates AG is owner and developer of the Suurstoffi development in Risch Rotkreuz. Under the terms of a rental contract, penalties amounting to a maximum of TCHF 290 were agreed with one tenant. In addition, the tenant is to be compensated for any damage incurred in excess of the penalty. The following rental contract provisions have been agreed with two other tenants: compensation for any extra costs incurred owing to delayed completion of the premises. If the commencement of tenancy is delayed beyond the stipulated dates, the tenants will be entitled, though not obliged, to withdraw from the rental contract. Compensation will also be paid for any additional costs.

Although a commitment to invest has been made, this is subject to the political approval process. Approval is likely to be granted in 2016.

24 | Leasing liabilities

The liabilities from operating leasing that are not recognized in the balance sheet are structured as follows, according to maturity:

 
in CHF thousands31.12.201531.12.2014
up to 1 year1618
up to 3 years800
over 3 years1042
Total10660

25 | Pension plan liabilities

The employee benefit plan of Zug Estates Holding AG and its subsidiary takes the form of independent foundations or, as the case may be, collective foundations in accordance with Swiss pensions legislation (BVG). In the financial year under review and the previous year, all payments were made to pension institutions that are themselves risk bearers.

Employer's contribution reserves (ECR))

As at December 31, 2015 there are no employer"s contribution reserves (unchanged to prior period).

Economic benefits/economic liabilities and pension expenses

in CHF thousandsDeficit/
surplus
of joint
pension plans
31.12.2015		Economic
share of
com-
pany
31.12.2015		Economic
share of
com-
pany
31.12.2014		Change
or impact
on net income
in financial
period		Contri-
butions
for the
period		Pension
expenses
in personnel
expenses
2015		Pension
expenses
in personnel
expenses
2014
Patronage funds/pension schemes0000000
Pension plans without surplus/deficit0000424424626
Pension plans with surplus0000000
Pension plans with deficit– 210001831830
Total pension expenses– 21000607607626

The pension plans are funded by employer and employee contributions. Contributions are calculated as a percentage of the insured salary.

Composition of pension expenses

in CHF thousands20152014
Pension contributions at the company's expense607626
Contributions to pension plans from employer's contribution reserves00
Total contributions607626
Change in ECR due to asset development, value adjustments, discounting, interest payments, etc.00
Total contributions and changes in employer's contribution reserves607626
Change in economic benefits for the company from surplus00
Change in economic liabilities for the company from deficit00
Total change in economic impact of surplus/deficit00
Total pension expenses in personnel expenses in the period607626

Total pension expenses in personnel expenses in the period under review amounted to TCHF 607 (previous year: TCHF 626). No extraordinary contributions were agreed or paid in the reporting period.

26 | Segment report

The Group's business activities comprise the business units «real estate» and «hotel & catering».

 
01.01.2014–31.12.2014
in CHF thousands    		Real estateHotel &
catering		Corporate &
eliminations 1		Total
Operating revenue47 47020 619– 6 02462 065
Operating expenses10 58119 4525 62424 409
Result from sale of investment properties21 3140021 314
Result from sale of investment properties48300483
Operating income before depreciation (EBITDA)58 6861 167– 40059 453
Operating income (EBIT)56 126157– 42855 855
01.01.2015–31.12.2015
in CHF thousands    
Operating revenue49 10419 980– 6 05463 030
Operating expenses10 52818 5385 21623 850
Result from sale of investment properties50 4770050 477
Result from sale of investment properties– 2300– 23
Operating income before depreciation (EBITDA)89 0301 442– 83889 634
Operating income (EBIT)86 768442– 88586 325
1 Holding company expenses and inter-segment revenues are eliminated in the Corporate & eliminations column.

All revenues were generated in the Canton of Zug and the Canton of Aargau.

Ownership of the entire portfolio – i.e. investment and operating properties – stays with the real estate business unit. Based on an integrated view of the hotel & catering business unit, i.e. factoring in all properties used by the unit and all associated expenses and credits arising from rent paid to the real estate business unit, in the year under review the hotel & catering business unit generated operating income of CHF 4.3 million (previous year: CHF 3.4 million) and an annualized EBITDA return of 6.4% (unchanged) on the market values of these properties.

27 | Transactions with related parties

In the year under review, revenue of TCHF 185 (previous year: TCHF 195) from hotel, catering and property management services were received from companies of the Metall Zug Group. This was offset by expenses and investments of TCHF 111 (previous year: TCHF 122) for services and deliveries of equipment. As at the balance sheet date, receivables due from Metall Zug Group companies amounted to TCHF 5 (previous year: TCHF 18) and liabilities to them TCHF 5 (previous year: TCHF 21). In addition, 9 400 of the company’s series A registered treasury shares were sold to a member of the board of directors of the company in the year under review at the market price of TCHF 1 300.

Information on the procedure for determining the compensation of members of the board of directors and Group Management and on the compensation amounts paid to them is available in the compensation report. As at the balance sheet date, liabilities to members of the board of directors amounted to TCHF 37 (previous year: TCHF 134).

28 | Event after the balance sheet date

No events requiring disclosure took place after the balance sheet date.

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