3 Capital and Financial Risk Management
This chapter sets out the capital structure and the financial risks to which Belimo is exposed. Furthermore, it describes how the cash management is made to cover the liquidity risk and which financial liabilities Belimo has to consider for its operational business. A solid capital structure enables Belimo to offer an appropriate dividend.
3.1Cash and Cash Equivalents
in CHF 1 000 | December 31, 2024 | December 31, 2023 | ||
|---|---|---|---|---|
Cash | 82 166 | 60 833 | ||
Cash equivalents | 15 000 | 50 000 | ||
Total | 97 166 | 110 833 |
Cash consists of demand deposits and cash on hand. Cash equivalents include term deposits with a maturity of three months or less from the date of acquisition. The impairment assessment in the reporting period and previous year showed no need for an adjustment.
Cash and cash equivalents are measured at amortized cost. They are subject to the impairment requirements of IFRS 9.
3.2Financial Risk Management
Due to the nature of its activities, Belimo is exposed to several financial risks such as credit risk, liquidity risk, foreign currency risk, and interest rate risk.
Risk management policies are established to identify and to analyze the risks to which the Group is exposed, to define appropriate limits, to establish controls, and to monitor the risks and compliance. Risk management policies and processes are reviewed regularly to reflect changes in market conditions and in the Group’s activities. The identified risks and measures to minimize them are presented below:
Risk | Source | Risk mitigation | ||
|---|---|---|---|---|
Credit risk | Through its operational business, Belimo is exposed to the risk of financial loss if a customer or a counterparty fails to meet its contractual obligations. The credit risk mainly arises from cash and cash equivalents, trade receivables, and term deposits. | High standards on financial institutes to cooperate with, as well as analyzing the credit worthiness of counterparties considering a variety of factors such as credit ratings or payment history. | ||
Liquidity risk | Liquidity risks result from difficulties in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. | Aim to always have sufficient liquidity and unused credit lines available. Centrally managed liquidity by Group Treasury and various principles to ensure adequate liquidity for subsidiaries on short notice. | ||
Foreign currency risk | Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s operating activities (when revenue or expense is denominated in a foreign currency) and the Group’s net investments in foreign subsidiaries. | Achieve natural hedging by matching cash inflows and outflows in a specific currency as far as possible as well as facilitating risk management by using forward contracts. | ||
Interest rate risk | Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. | Belimo has no material exposure to the interest rate risk. |
Credit Risk
Belimo invests its cash and cash equivalents worldwide in deposit accounts held mainly with major, creditworthy financial institutions headquartered in Switzerland, Germany, and the United Kingdom. These deposits generally have terms of less than three months. Term deposits that have a maturity of more than three months from the date of acquisition are only held with major, creditworthy financial institutions headquartered in Switzerland and Germany.
The credit risk from trade receivables is limited, since the Group’s customer base is broad and spread over a variety of geographical areas. Credit risk is mainly influenced by the specific characteristics of each individual customer. The risk assessment includes an analysis of the creditworthiness, taking into account a variety of factors such as credit ratings or payment history. Credit limits are set according to regional aspects. Certain new customers are supplied only against payment in advance.
The maximum default risk is the carrying amount of the individual assets as at the reporting date (see table in chapter Categories of Financial Instruments below). There are no guarantees or similar obligations that could lead to an increase in risk beyond the carrying amounts.
Liquidity Risk
At the reporting date, the contractual maturities of the undiscounted financial liabilities (including contractual interest payments) were as follows:
in CHF 1 000 | Less than 1 year | 1–5 years | More than 5 years | Total | ||||
|---|---|---|---|---|---|---|---|---|
As at December 31, 2024 | ||||||||
Trade payables | 39 335 | - | - | 39 335 | ||||
Bank loans | 559 | 3 060 | 8 410 | 12 029 | ||||
Lease liabilities | 4 046 | 7 344 | 1 555 | 12 945 | ||||
Other financial liabilities | 388 | - | - | 388 | ||||
Other liabilities qualifying as financial instruments | 50 084 | - | - | 50 084 | ||||
Derivative financial instruments | 2 835 | - | - | 2 835 | ||||
Total | 97 247 | 10 405 | 9 965 | 117 616 | ||||
As at December 31, 2023 | ||||||||
Trade payables | 21 635 | - | - | 21 635 | ||||
Bank loans | 276 | 1 830 | 1 861 | 3 966 | ||||
Lease liabilities | 3 463 | 6 670 | 1 204 | 11 337 | ||||
Other financial liabilities | - | 138 | - | 138 | ||||
Other liabilities qualifying as financial instruments | 36 739 | - | - | 36 739 | ||||
Derivative financial instruments | 112 | - | - | 112 | ||||
Total | 62 225 | 8 637 | 3 065 | 73 927 |
Liquidity is centrally managed and controlled by Group Treasury. The subsidiaries are adequately financed by intercompany loans to meet their ongoing commitments.
Belimo can draw down loans at fixed or floating rates for various terms, based on its short and medium-term liquidity needs. Belimo aims to preserve maximum flexibility in its liquidity planning through flexible use of the general credit lines and by staggering the maturity dates of the individual amounts. Belimo has CHF 110.0 million of committed credit lines (not used as at December 31, 2024). In the previous year, the total amount of CHF 100.0 million of committed credit lines were available (not used as at December 31, 2023).
Foreign Currency Risk
The following table shows the main foreign exchange risk exposure for financial instruments (excluding currency forward instruments) with a currency that differs from the functional currency of the Group company holding them.
December 31, 2024 | December 31, 2023 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
in CHF 1 000 | Assets | Liabilities | Net | Assets | Liabilities | Net | ||||||
CAD | 7 377 | -407 | 6 969 | 6 332 | -251 | 6 081 | ||||||
CHF | 1 496 | -20 008 | -18 513 | 852 | -11 353 | -10 501 | ||||||
EUR | 36 949 | -33 937 | 3 013 | 28 470 | -16 728 | 11 742 | ||||||
GBP | 2 954 | -150 | 2 804 | 3 180 | -178 | 3 002 | ||||||
HKD | 6 512 | - | 6 512 | 3 483 | - | 3 483 | ||||||
PLN | 8 436 | -56 | 8 380 | 4 510 | -27 | 4 483 | ||||||
USD | 43 582 | -12 658 | 30 924 | 47 711 | -7 017 | 40 694 | ||||||
Other | 13 423 | -326 | 13 097 | 10 484 | -906 | 9 578 | ||||||
Total | 120 728 | -67 542 | 53 186 | 105 021 | -36 460 | 68 561 | ||||||
At the reporting date, the following currency forward instruments were held, whereas foreign currency forward contracts selling foreign currencies are disclosed as positive figures and contracts buying foreign currencies as negative figures:
in CHF 1 000 | December 31, 2024 | December 31, 2023 | ||
|---|---|---|---|---|
Face values | ||||
in CAD | 13 033 | 10 283 | ||
in EUR | - | 5 279 | ||
in GBP | 5 153 | 3 804 | ||
in PLN | 7 178 | 5 496 | ||
in USD | 58 065 | 46 934 | ||
Other | 6 161 | 4 931 | ||
Total | 89 590 | 76 727 | ||
Fair values | ||||
positive | 34 | 1 914 | ||
negative | -2 835 | -112 | ||
Total | -2 800 | 1 802 |
The currency-related sensitivity of financial instruments is shown in the following table:
December 31, 2024 | December 31, 2023 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
Exchange | Exchange | |||||||||||
in CHF 1 000 | gain | loss | gain | loss | ||||||||
CAD | -/+ 5% | 308 | -308 | -/+ 5% | 197 | -197 | ||||||
CHF | -/+ 5% | 926 | -926 | -/+ 5% | 525 | -525 | ||||||
EUR | +/- 5% | 151 | -151 | +/- 5% | 328 | -328 | ||||||
GBP | -/+ 5% | 119 | -119 | -/+ 5% | 35 | -35 | ||||||
HKD | +/- 5% | 326 | -326 | +/- 5% | 174 | -174 | ||||||
PLN | +/- 5% | 55 | -55 | -/+ 5% | 50 | -50 | ||||||
USD | -/+ 5% | 1 480 | -1 480 | -/+ 5% | 232 | -232 | ||||||
Other | +/- 5% | 347 | -347 | +/- 5% | 233 | -233 | ||||||
Total | 3 712 | -3 712 | 1 774 | -1 774 | ||||||||
This analysis assumes that all other variables are held constant and takes into account hedging transactions. The same assumptions were applied in the previous year.
In order to limit the foreign exchange risk, Belimo primarily aims to achieve natural hedging by matching cash inflows and outflows in a specific currency as far as possible. Belimo has centralized its foreign exchange management in Switzerland. Within EMEA, invoices between Group companies are mainly denominated in the currency of the company receiving the invoice. Other subsidiaries of Belimo hedge their currency risk through other intercompany transactions, thus ensuring efficient risk management as currency flows can be offset within the Group as far as possible. Its net currency positions are hedged on a rolling basis by the Swiss companies, usually by entering into forward contracts.
Interest Rate Risk
The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s long term bank loans. The Group did not perform any quantitative sensitivity analysis as at December 31, 2024 and 2023 for the exposure to the risk of changes in market interest rates, as they are considered to be immaterial.
Categories of Financial Instruments
The following tables summarize all financial instruments classified by categories according to IFRS 9:
Carrying amounts | ||||
|---|---|---|---|---|
in CHF 1 000 | December 31, 2024 | December 31, 2023 | ||
Assets held to collect measured at amortized cost | ||||
Cash and cash equivalents | 97 166 | 110 833 | ||
Term deposits | 40 000 | - | ||
Trade receivables | 126 867 | 111 015 | ||
Other assets qualifying as financial instruments | 2 823 | 1 575 | ||
Other financial assets | 181 | 1 312 | ||
Total | 267 037 | 224 736 | ||
Financial assets measured at fair value through OCI | ||||
Investments1), 3) | 5 111 | 2 524 | ||
Total | 5 111 | 2 524 | ||
Financial assets measured at fair value through profit and loss | ||||
Investments1), 3) | 2 265 | 2 095 | ||
Derivative financial instruments2) | 34 | 1 914 | ||
Total | 2 299 | 4 009 | ||
Liabilities measured at amortized cost | ||||
Trade payables | 39 335 | 21 635 | ||
Bank loans | 10 119 | 3 966 | ||
Lease liabilities | 12 021 | 10 606 | ||
Other financial liabilities | 388 | 138 | ||
Other liabilities qualifying as financial instruments | 50 084 | 36 739 | ||
Total | 111 947 | 73 084 | ||
Financial liabilities measured at fair value through profit and loss | ||||
Derivative financial instruments2) | 2 835 | 112 | ||
Total | 2 835 | 112 | ||
1) Measured at fair values that are calculated based on factors that are not observable market data (level 3).
2) Measured at fair values that are calculated based on observable market data (level 2).
3) Investments are presented within "non-current financial assets" in the primary statement.
The derivative financial instruments as at December 31, 2024, mature in 178 days or less (2023: 179 days or less).
In 2024 and 2023, there were no transfers between the fair value hierarchical levels.
The unquoted equity instrument measured at fair value through OCI is allocated to level 3 and relates to a minority investment in an innovative start-up in the heating, ventilation, and air-conditioning systems sector. It was designated as investment at fair value through OCI because this equity instrument represents an investment that the Group intends to hold over the long term for strategic purposes.
The fair value of the equity investment has been estimated using a discounted cash flow model. The valuation requires management to make certain assumptions about the model inputs, including forecast cash flows, the discount rate, credit risk and volatility. The probabilities of the various estimates within the range can be reasonably assessed and are used in management’s estimate of fair value for the non-listed equity investment.
The significant unobservable inputs used in the fair value measurement are long-term growth rate for cash flows for subsequent years with a probability weighted average of 1.0% and WACC with a probability weighted average of 17.1%. A 1% increase in the growth rate would result in an increase in fair value by CHF 0.3 million, while a 1% decrease would result in a decrease by CHF 0.3 million. A 5% increase in the WACC would result in a decrease in fair value by CHF 2.0 million, while a 5% decrease would result in an increase by CHF 4.1 million.
The investment measured at fair value through profit and loss allocated to level 3 belongs to a simple agreement for future equity in a start-up in the heating, ventilation, and air-conditioning systems sector. The Group did not perform any quantitative sensitivity analysis as at December 31, 2024 and 2023, as it is considered to be immaterial.
For assets and liabilities not measured at fair value in the table above (excluding lease liabilities), the carrying amount is a reasonable approximation of fair value. In accordance with IFRS Accounting Standards, the fair value of the lease liabilities is neither calculated nor disclosed.
Fair values are allocated to one of the following three hierarchical levels:
- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
- Level 2: inputs other than level 1 quoted prices that are directly or indirectly observable
- Level 3: factors that are not based on observable market data
The fair value of derivatives financial instruments is determined based on input factors observed directly or indirectly on the market (level 2). The fair value of these instruments is based on forward exchange rates; the positive fair values are included in current financial assets, the negative fair values in current financial liabilities. The changes in fair values recognized in the income statement are included in the financial result.
The fair value measurement of investments in start-up entities are based on non-observable market data, therefore allocated to hierarchy level 3.
Capital Management
Belimo aims to maintain an equity ratio that is in line with its strategy, and that will remain stable over time to secure the confidence of investors, creditors, and other market players, and to strengthen the future development of its business activities. This entails refinancing that is adapted to the asset structure, and an equity-to-liability ratio that is adequate to the level of risk.
The Board of Directors monitors the shareholder structure and the return on equity. Belimo strives for a diversified and international shareholder base. The return on equity was 26.4% as at December 31, 2024 (2023: 26.0%). The Board of Directors strives to pay a stable or increasing dividend per share, but it may diverge from this policy depending on business development, corporate financing needs, general economic conditions as well as legal and contractual constraints. The Board of Directors of BELIMO Holding AG will propose a dividend of CHF 9.50 at the Annual General Meeting 2025, which results in a pay-out ratio of 79.6% (2023: 76.3%).
Belimo can buy or sell treasury shares on the market. Its current holdings of treasury shares are not earmarked for any specific purpose and can be sold on the market at any time.
The Alternative Performance Measures are described here.
3.3Financial Assets and Liabilities
Financial Assets
in CHF 1 000 | December 31, 2024 | December 31, 2023 | ||
|---|---|---|---|---|
Term deposits | 40 000 | - | ||
Derivative financial instruments | 34 | 1 914 | ||
Investments | 7 376 | 4 619 | ||
Other financial assets | 181 | 1 312 | ||
Total | 47 592 | 7 846 | ||
of which current financial assets | 40 034 | 1 956 | ||
of which non-current financial assets | 7 558 | 5 890 |
Term deposits consist of bank deposits with maturities of more than three but less than twelve months from the date of acquisition. Investments comprise an equity investment as well as a simple agreement for future equity in innovative start-ups in the heating, ventilation, and air-conditioning systems sector. In 2024, an immaterial valuation allowance was recognized on other financial assets (2023: immaterial valuation allowance).
Financial Liabilities
in CHF 1 000 | December 31, 2024 | December 31, 2023 | ||
|---|---|---|---|---|
Bank loans | 10 119 | 3 966 | ||
Lease liabilities | 12 021 | 10 606 | ||
Derivative financial instruments | 2 835 | 112 | ||
Other financial liabilities | 388 | 138 | ||
Total | 25 363 | 14 822 | ||
of which current financial liabilities | 7 563 | 3 814 | ||
of which non-current financial liabilities | 17 800 | 11 008 |
Bank loans are entered into locally by subsidiaries, at commercial terms prevailing in the local environment and some are subject to standard financial and non-financial covenants. The Group is in compliance with these covenants, and they are not expected to affect the classification of the bank loans within the next twelve months.
The changes in financial liabilities were as follows:
in CHF 1 000 | 2024 | 2023 | ||
|---|---|---|---|---|
As at January 1 | 14 822 | 11 473 | ||
Interest paid financial borrowings | -332 | -596 | ||
Interest paid lease liabilities | -403 | -342 | ||
Repayment of financial borrowings | -30 284 | -59 707 | ||
Repayment of lease liabilities | -3 955 | -3 824 | ||
Proceeds from financial borrowings | 36 140 | 63 669 | ||
Cash flow from financing activities | 1 166 | -800 | ||
Non-cash effective movements lease liabilities | 5 094 | 5 505 | ||
Other non-cash effective movements | 2 967 | -1 229 | ||
Interest expenses financial borrowings | 353 | 626 | ||
Interest expenses lease liabilities | 403 | 342 | ||
Translation differences | 557 | -1 093 | ||
Non-cash effective movements | 9 375 | 4 150 | ||
As at December 31 | 25 363 | 14 822 |
Interest paid not related to financial liabilities and therefore not included in the table above amounted to CHF 0.8 million (2023: CHF 0.3 million).
Management judgment is required to determine the lease liabilities. Further details regarding lease accounting are described in note Property, Plant and Equipment.
The fair value of investments is determined using valuation techniques. The Group uses its judgement to select a variety of methods and make assumptions. For details of the key assumptions used, and the impact of changes to these assumptions, see note Financial Risk Management.
Financial assets are measured at amortized costs, with the exception of investments held at fair value through other comprehensive income as well as investments held at fair value through profit and loss. Derivative financial instruments are measured at fair value through profit and loss with any changes therein recognized in the financial result. Financial assets measured at amortized costs are subject to the impairment requirements of IFRS 9.
Financial liabilities are initially recognized at fair value and subsequently measured at amortized costs using the effective interest method. Interest expense and foreign exchange gains and losses are recognized in profit and loss. Lease liabilities are initially measured at the present value of the lease payments. Derivative financial instruments are measured at fair value through profit and loss with any changes therein recognized in the financial result.
3.4Financial Result
in CHF 1 000 | 2024 | 2023 | ||
|---|---|---|---|---|
Interest income | 810 | 373 | ||
Net gain from derivative financial instruments | - | 422 | ||
Other financial income | 182 | - | ||
Financial income | 992 | 796 | ||
Interest expenses | -1 024 | -1 693 | ||
Net loss from derivative financial instruments | -4 602 | - | ||
Other financial expenses | -949 | -600 | ||
Financial expenses | -6 576 | -2 293 | ||
Net foreign exchange result | 609 | -8 556 | ||
Total | -4 975 | -10 053 |
The financial result is composed primarily of interest expenses on borrowings and lease liabilities, interest income, foreign exchange gains and losses, bank charges, fair value changes on financial assets, as well as gains and losses on derivative financial instruments. Interest income and expenses are recognized in accordance with the effective interest method.
3.5Shareholder’s Equity and Earnings per Share
As per the resolution of the Annual General Meeting of BELIMO Holding AG held on March 25, 2024, a dividend of CHF 8.50 per registered share (2023: CHF 8.50) was paid out on April 2, 2024. In total, a dividend payment of CHF 104.5 million (2023: CHF 104.5 million) was made.
2024 | 2023 | |||
|---|---|---|---|---|
Net income attributable to shareholders of BELIMO Holding AG, in CHF 1 000 | 146 782 | 136 963 | ||
Average number of outstanding shares | 12 298 408 | 12 298 145 | ||
Dividend proposed per registered share1), in CHF | 9.50 | 8.50 | ||
Total dividend proposed1), in CHF 1 000 | 116 850 | 104 550 | ||
Earnings per share (EPS), in CHF | 11.94 | 11.14 |
1) Proposed by the Board of Directors to the Annual General Meeting
The average number of outstanding shares is calculated based on the number of shares issued, less the average number of treasury shares held.
Share Capital
December 31, 2024 | December 31, 2023 | |||
|---|---|---|---|---|
Par value per share, in CHF | 0.05 | 0.05 | ||
Outstanding number of shares | 12 299 880 | 12 298 908 | ||
Number of treasury shares | 120 | 1 092 | ||
Total number of registered shares | 12 300 000 | 12 300 000 |
The share capital of BELIMO Holding AG consists of one class of voting rights.
Treasury Shares
Number of shares | 2024 | 2023 | ||
|---|---|---|---|---|
As at January 1 | 1 092 | 1 257 | ||
Purchases of treasury shares | 6 880 | 8 500 | ||
Treasury shares awarded for share-based payments | -7 852 | -8 665 | ||
As at December 31 | 120 | 1 092 |
Reserves and Retained Earnings
in CHF 1 000 | December 31, 2024 | December 31, 2023 | ||
|---|---|---|---|---|
Currency translation adjustment | -30 933 | -40 675 | ||
Financial assets at FVOCI | 2 636 | 551 | ||
Total other reserves | -28 297 | -40 124 | ||
Capital reserves | 24 337 | 24 061 | ||
Retained earnings | 584 152 | 546 551 | ||
Total | 580 192 | 530 489 |
Shares are a component of equity, as they are not redeemable and there is no dividend guarantee. Treasury shares are recorded as a deduction from equity. Capital reserves correspond to premiums from capital increases, and the gains or losses from treasury share sales as well as from share-based payment awards. Other reserves contain the accumulated foreign exchange differences arising from the translation of the financial statements of foreign Group companies and intercompany loans that form part of a net investment in a foreign operation, as well as the accumulated fair value changes of investments measured at fair value through other comprehensive income (FVOCI). Retained earnings include the remeasurement of the post-employment benefits, as well as remeasurement of share-based payment transactions, and accumulated retained earnings of prior periods.