Annual Report 2023

The share purchase plan gives the employees of Belimo (including members of the Executive Committee) an opportunity to purchase shares of BELIMO Holding AG at preferential conditions. These shares are subject to a restriction period of three years.

The share-based payment transactions are classified as equity-settled share-based payments in accordance with IFRS 2. The cost of equity-settled transactions is measured with reference to the fair value at the date on which they are granted. The fair value is determined indirectly, based on observable market prices of the shares of BELIMO Holding AG, reduced by the contribution of the employee. Upon transfer of the shares, the employee will have full shareholder rights (including voting and dividend rights) and as such, the restriction period has no impact on the fair value. The fair value is not subsequently re-measured after the grant date. The purchase price per share shall generally be equivalent to 70% of the lower of the average closing price one month before the purchase date or the closing price at the purchase date of BELIMO Holding AG shares at the SIX Swiss Exchange.

The shares are granted with the final approval of the execution of the share-based payment transactions by the Board of Directors close before or at the purchase date. The Board of Directors may amend, suspend, or terminate the employee share purchase plan at any time in any respect the Board of Directors deems necessary or advisable. No purchase rights may be granted under the employee share purchase plan while the employee share purchase plan is suspended or after it is terminated. The plan includes a vesting condition (service condition between the grant date and the purchase date), but no option features.

Swiss pension schemes are governed by the Swiss Federal Law on Occupational Retirement, Survivors‘ and Disability Pension Plans (BVG), and their implementing regulations. The BVG defines the minimum and maximum insured salary, the minimum retirement credits, as well as the interest rate applied to these credits and the conversion rate. Based on these legal provisions and the plan structure, the employer is exposed to actuarial risks such as investment risk, interest rate risk and the risk of disability, as well as the risk of longevity. The employee and employer contributions are defined by the Board of Trustees of the foundation. In the event of statutory underfunding, measures for its elimination must be taken. Possible measures could be an adjustment to the conversion rate or restructuring contributions from both the employer and the employees.

The Swiss pension plan is organized via an autonomous foundation. The plan is classified as a defined benefit plan in accordance with IAS 19 and as a defined contribution plan in accordance with the BVG. The most senior management body is the Board of Trustees, which is composed of an equal number of employee and employer representatives. It is legally obliged to act in the interests of the plan participants. The Board of Trustees is responsible for defining the investment strategy, effecting changes to the post­-employment benefit plan regulations, and determining the funding of pension plan benefits. The investment strategy is reviewed at least once a year.

Employer contributions to the pension scheme are defined in the applicable regulations as a fixed percentage of the insured salaries and include both savings and risk components. Retirement benefits are determined based on the retirement savings capital held at the time of retirement. The insured individual can choose between a life­long annuity and a lump sum payment. The annuity is calculated by multiplying the retirement savings capital by the conversion rate as defined in the regulations. The annual retirement contributions and interest thereon are credited to the retirement savings capital. When employees leave the Company, their retirement savings capital is transferred to the pension scheme of the new employer or to a vested benefits account.

Development

The movements in the net defined benefit asset/liability were as follows:

In 2023, the return on plan assets (including interest income) of CHF 25.7 million (2022: CHF -60.0 million), an actuarial loss on the defined benefit obligation of CHF -29.4 million (2022: gain of CHF 56.5 million), as well as other movements of CHF -0.1 million (2022: CHF 1.1 million) led to a total surplus of CHF 29.9 million (2022: surplus of CHF 33.6 million). The asset ceiling, being the economic benefits available in the form of reduction in future contribution to the Swiss pension plan, was zero in the reporting period (2022: zero). Therefore, the surplus was not recognized as a non-­current asset as at December 31, 2023 and 2022.

There were no significant unfunded plans in the reporting period (2022: none).

The weighted average duration of the defined benefit obligations is 12.9 years (2022: 12.0 years). The expected employer contributions for 2024 amount to CHF 12.4 million.

Investment Portfolio

The major categories of plan assets were as follows:

The shares and bonds have quoted market prices on an active market. Real estate includes listed real estate funds and an investment in a Swiss real estate investment foundation. The investment strategy ensures the availability of liquidity at all times. The Group does not use any pension scheme assets.

Actuarial Assumptions and Sensitivity Analysis

The following principal actuarial assumptions were applied:

The following sensitivity analysis shows the impact of a reasonably possible change in the principal actuarial assumptions on the present value of the defined benefit obligations at the reporting date. Each change was analyzed separately. Interdependencies were not considered.

The determination of post-em­ploy­ment retirement benefit obligations re­quires an estimation of the future service periods, the de­vel­op­ment of future salaries and pensions, interest accruing on the employee savings accounts, the timing of contractual pension benefit payments, and the employees’ share of the funding shortfall. This evaluation is made based on prior experience and anticipated future trends. Anticipated future payments are discounted with the yields of Swiss franc-denominated corporate bonds from domestic and foreign issuers quoted on the Swiss Exchange with an AAA or AA rating. The discount rates match the anticipated payment maturities of the liabilities.

The present value of the defined benefit obligations and the fair value of the plan assets are determined annually by independent actuaries for each plan and are recognized as a net defined benefit asset/liability. The present values of the defined benefit obligations are calculated using the projected unit credit method. 

Defined benefit costs recognized in the income statement include current service costs (service costs in the reporting period), past service costs (gains/losses from plan amendments and curtailments), and gains/losses on settlements. The net interest result (multiplication of the net defined benefit asset/liability and the effect of the asset ceiling with the discount rate) is recognized in the financial result. Remeasurement of the net defined benefit asset/liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest), and the effect of the asset ceiling (excluding interest), are recognized in other comprehensive income and are not reclassified subsequently to the income statement. Asset surpluses are considered only to the extent of possible future reimbursement or reduction of contributions in accordance with IFRIC 14.