Another Swiss SIX-listed Company Switches from complex IFRS to pragmatic Swiss GAAP FER

After Meyer Burger (SIX: MBTN) at the end of October 2013 and Burckhalter Holding (SIX: BKRN) beginning of October 2013 today a further company has joined the list of those dissatisfied with IFRS rules, complexity and costs: Kaba (SIX: KABN) released this press release today: kaba-switches-from-ifrs-to-swiss-gaap-fer. Kaba Group sells its products and solutions all over the world. Its main markets are Europe, North America and, increasingly, the Asia-Pacific region.

The press release:

Kaba switches from IFRS to Swiss GAAP FER

The Board of Directors of Kaba Holding AG has decided to change to Swiss GAAP FER for the preparation of the company’s consolidated accounts as from the new financial year (starting 1 July 2014). Kaba’s registered shares remain listed on the SIX Swiss Exchange and are still included in the Swiss Performance Index (SPI).

Kaba Holding has used the IFRS accounting standard since 2004. In recent years this standard has become more and more demanding. It has required increasingly complex and time-consuming details and disclosures, which have tied up ever more internal resources. Swiss GAAP FER takes a more pragmatic approach that meets all the needs of a medium-sized international company like Kaba Group and those of its stakeholders while keeping the work required to a sensible level. Using Swiss GAAP FER, Kaba will continue to report fully and transparently in accordance with the „true and fair“ principle.

The application of the new accounting standard will allow Kaba to charge all goodwill through shareholders‘ equity. This will reduce the level of total assets and the equity ratio, which, based on the last audited balance sheet of 30 June, will come to around 47%. Now that the proportion of long-term assets is lower, Kaba has defined a new target for the equity ratio of 20%. Even after the switch this target figure will easily be exceeded. The change of system will also make it simpler to value Kaba’s pension fund liabilities. Under Swiss GAAP FER there will no longer be any need to carry out expensive actuarial valuations. For the 2012/13 financial year, the absence of amortisation on intangibles would have left consolidated net profit around 5% higher. As a result of the switch from IFRS to Swiss GAAP FER, Kaba’s registered shares will now be traded in the Domestic Standard. Following the decision by Kaba’s Board of Directors to make this change, an application has been submitted accordingly to the SIX Swiss Exchange AG.

Kaba will produce a detailed assessment of the previous year under the new accounting system when it publishes the 2014/15 results.

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