Content

4.11 cash and cash equivalents
4.12 financial instruments
4.13 receivables
4.14 trade accounts receivable
4.15 construction contracts
4.16 inventories
4.17 financial assets
4.18 non-current assets held for sale
4.19 tangible assets in 2010
4.20 intangible assets in 2010
4.21 further details on tangible assets
4.22 investment property
4.23 investments
4.24 trade payables
4.25 financial liabilities
4.26 other current liabilities
4.27 provisions
4.28 retirement benefit obligations
4.29 deferred income tax
4.30 share capital
4.31 retained earnings

4.11 cash and cash equivalents
in CHF '000 at 31 December
 2010 2009
Cash at bank and in hand
 28,953 26,844
Short-term bank deposits
 641 92
Total cash and cash equivalents
 29,594 26,936

The actual interest rate for bank balances and for short-term bank deposits ranged between 0.125% (2009: between 0.125% and 3.58%). Bank deposits have an average maturity period of 60 days.

For the purpose of the cash flow statement, the fund “cash and cash equivalents” encompassed liquid assets. Current account credits were not part of the fund “cash and cash equivalents”.

4.12 financial instruments

Financial assets and financial liabilities can be allocated to the following categories:

financial assets
in CHF '000 at 31 December
 2010 2009
Held for trade
Marketable securities
 197 13
Derivative financial instruments
 905 74
Total held for trade
 1,102 87
Loans and receivables
Trade accounts receivable
 30,875 30,175
Financial assets
 983 16,744
Other non-current assets
 1,063 979
Total loans and receivables
 32,921 47,898
Held to maturity
N/A
 – –
Total held to maturity
 – –
Available for sale
Investments (refer to note 4.23)
 2,110 2,110
Total available for sale
 2,110 2,110
Total financial assets
 36,133 50,095

financial liabilities
in CHF '000 at 31 December
 2010 2009
At amortised costs
Trade payables
 22,538 30,711
Financial payables
 9,305 13,976
Other current payables
 6,770 7,625
Total at amortised costs
 38,613 52,312
At fair value through profit and loss
Derivative financial instruments
 – 296
Total at fair value through profit and loss
 – 296
Total financial liabilities
 38,613 52,608

The contractual undiscounted cash flow of financial liabilities is as follows:

contractual undiscounted cash flow of financial liabilities
in CHF '000 at 31 December
Liabilities from
borrowings,
trade payables
and other cur-
rent liabilities


Liabilities from
finance lease


Total
2010		 Liabilities from
borrowings,
trade payables
and other cur-
rent liabilities


Liabilities from
finance lease


Total
2009
From current financial liabilities
Due within 6 months
 35,572 148 35,720 49,041 160 49,201
Due between 6 and 12 months
 29 145 174 146 173 319
Total from current financial liabilities
 35,601 293 35,894 49,187 333 49,520
From non-current financial liabilities
Due between 1 and 2 years
 60 288 348 271 361 632
Due between 2 and 5 years
 227 614 841 63 1,192 1,255
Due later than 5 years
 1,245 953 2,198 625 1,152 1,777
Total from non-current financial liabilities
 1,532 1,855 3,387 959 2,705 3,664
Total contractual undiscounted cash flow of financial liabilities
 37,133 2,148 39,281 50,146 3,038 53,184

The fair value of marketable securities, derivative financial instruments and financial instruments available for sale is determined based on a three-level hierarchy as disclosed in paragraph 2.17 of the accounting principles. For each level different calculation methods are used to estimate the fair value of the recorded financial instruments.

fair value of financial assets
in CHF '000 at 31 December

Level 1
Level 2
Level 3		 Total
2010
Level 1
Level 2
Level 3		 Total
2009
Held for trade
Marketable securities
 197 – – 197 13 – – 13
Currency option contracts
 – – – – – – – –
Forward foreign exchange rate
 – 905 – 905 – 74 – 74
Total held for trade
 197 905 – 1,102 13 74 – 87
Available for sale
Investments
 – – 2,110 2,110 – – 2,110 2,110
Total available for sale
 – – 2,110 2,110 – – 2,110 2,110

fair value of financial liabilities
in CHF '000 at 31 December

Level 1
Level 2
Level 3		 Total
2010
Level 1
Level 2
Level 3		 Total
2009
Held for trade
Currency option contracts
 – – – – – – – –
Forward foreign exchange rate
 – – – – – 296 – 296
Total held for trade
 – – – – – 296 – 296
Available for sale
Purchase price option of minority interests
 – – 910 910 – – – –
Total available for sale
 – – 910 910 – – – –

The Group has included a participation in the retailer cooperation Schweizer Buchzentrum as financial instruments on level 3. According to IAS 39 such participation needs to be stated as financial instrument “available for sale”. As no direct or indirect observable market information is available to calculate the fair value the valuation is based on the purchase cost deducted by impairments, if any. The Orell Füssli Group considers the carrying amount of the investment of CHF 2,110,000 (2009: CHF 2,110,000) as corresponding to its approximate fair value. No plans exist to sell the position in the near future.

The purchase of a majority interest in SOFHA GmbH is linked to an option permitting the Orell Füssli Group to acquire the remaining minority interests in 2014 at the earliest. For the exercise of this option a liability has been accounted whose fair value cannot be derived from directly or indirectly obtainable market data and which is therefore stated as a level 3 financial liability. The contractually negotiated terms, which also take into account future earnings trends and other factors, are utilised as the basis for valuation. Weighing the probabilities and taking discounting effects into consideration, the Orell Füssli Group regards a financial liability of CHF 910,000 as a figure corresponding most closely to fair value.

As per 31 December 2010 and 31 December 2009, several option contracts are stated in the tables above as financial instruments held for trade. All of them expire within the coming twelve months and are linked to transactions which fall due with high probability during the following year. As the Group forgoes hedge accounting, any gain or loss of valuation will be directly included in the financial result and, on maturity, adjusted by the effective realised gain or loss through the same accounts. The calculation of the fair value as per balance sheet date is based on observable market information (level 2).

The contract values as disclosed in the following table do not represent the market risks; they solely provide indications on the upcoming transaction volume on the balance sheet date. The fair value at 31 December is based on market values or based on calculations supported by standardised option-pricing models using market prices.

contract value of derivative financial instruments
in CHF '000 at 31 December
 2010 2009
Currency option contracts
Currency option contracts
 – –
Total currency option contracts
 – –
Forward foreign exchange rate
Forward foreign exchange rate contracts in SGD
 8,796 18,964
Forward foreign exchange rate contracts in EUR
 – –
Forward foreign exchange rate contracts in other currencies
 12,115 3,356
Total foreign exchange rate contracts
 20,911 22,320
Total contract value of derivative financial instruments
 20,911 22,320

4.13 receivables
in CHF '000 at 31 December
 2010 2009
Trade accounts receivable gross
 32,697 32,000
Provisions for doubtful trade accounts receivable
 –1,822 –1,825
Total trade accounts receivable net
 30,875 30,175
Prepayments to suppliers
 609 546
Receivables from related parties
 6,398 2,858
Accrued income and deferred expenses
 2,648 5,077
Other receivables
 4,207 4,145
Total other receivables
 13,862 12,626
Total receivables
 44,737 42,801

The carrying amounts of the accounts receivable comply with their fair values.

4.14 trade accounts receivable

Taking into account the terms and conditions established with customers, the following table sets forth details of the age of trade accounts receivable:

aging structure of trade accounts receivable
in CHF '000 at 31 December
 2010 2009
Not overdue
 22,981 16,219
Past due not more than 30 days
 3,705 8,647
Past due from 31 to 60 days
 1,771 2,515
Past due from 61 to 90 days
 1,025 592
Past due from 91 to 180 days
 456 1,058
Past due more than 180 days
 2,759 2,969
Total trade accounts receivable gross
 32,697 32,000
Provisions for doubtful trade accounts receivable
 –1,822 –1,825
Total trade accounts receivable net
 30,875 30,175

Provisions for doubtful trade accounts receivable are based not only on decisions by individual judgment taking into account the different customer structure in each division, but also on updated information about past experience. The loss was included in the income statement as “other operating expenses”.

provision for doubtful trade accounts receivable
in CHF '000
 2010 2009
At 1 January
 –1,825 –2,969
Increase in provisions for doubtful trade accounts receivable
 –647 –1,687
Utilisation of provisions
 128 1,682
Reversal of provisions
 223 1,164
Translation effects
 299 –15
At 31 December
 –1,822 –1,825

Part of provisions for doubtful trade accounts receivable are individual allowances in an amount of CHF 1,042,000 (2009: CHF 896,000). The effective loss on accounts receivable within the past five years has always been less than 0.5% of the annual turnover.

Trade accounts receivable include amounts denominated in the following currencies:

trade accounts receivable by currencies
in CHF '000 at 31 December
 2010 2009
CHF
 6,550 12,503
EUR
 17,302 15,225
USD
 6,429 1,842
GBP
 237 541
Other
 357 64
Total trade accounts receivable net
 30,875 30,175

In the 2010 financial year, certain European subsidiaries of the Group forfeited receivables in an amount of CHF 2,152,000 (2009: CHF 1,752,000).

4.15 construction contracts

Revenue from construction contracts by using the PoC-method during the year ended 31 December 2010 was CHF 12,656,000 (2009: CHF 17,315,000). The aggregate amount of costs incurred and the recognised profits (less recognised losses) for all construction contracts in progress was as disclosed on the balance sheet date.

4.16 inventories
in CHF '000 at 31 December
 2010 2009
Raw materials, auxiliary materials and supplies
 10,782 19,212
Semi-finished and finished goods
 5,312 17,742
Trading goods
 13,618 7,952
Work-in-progress
 9,808 7,008
Total inventories
 39,520 51,914

The cost of inventories recognised as expense and included in the income statement amounted to CHF 135,028,000 (2009: CHF 135,204,000). The write-down on inventories recognised in the income statement during the financial year ended at 31 December 2010, was CHF –236,000 (2009: CHF –95,000).

4.17 financial assets

Current and non-current financial assets consist of receivables from finance lease and finance contracts as well as from loan contracts. The financial assets comprise:

financial assets
in CHF '000 at 31 December
Current
financial assets		 Non-current
financial assets		 Total 2010
financial assets		 Current
financial assets		 Non-current
financial assets		 Total 2009
financial assets
Financial assets
Loan assets
 228 755 983 4,342 12,083 16,425
Lease and finance contracts
 – – – 174 124 298
Other current financial assets
 – – – 21 – 21
Total financial assets
 228 755 983 4,537 12,207 16,744

Certain foreign subsidiaries enter finance lease contracts with their clients in connection with special production facilities. The following details can be disclosed with regard to finance lease assets:

finance lease assets
in CHF '000 at 31 December

Gross
investments in
finance lease		 Present value
of future
minimum
lease payments
Unrealised
interest income
2010
Gross
investments in
finance lease		 Present value
of future
minimum
lease payments
Unrealised
interest income
2009
Current finance lease assets
Due within 6 months
 – – – 110 101 9
Due between 6 and 12 months
 – – – 79 73 6
Total current finance lease assets
 – – – 189 174 15
Non-current finance lease assets
Due between 1 and 2 years
 – – – 134 124 10
Due between 2 and 5 years
 – – – – – –
Due later than 5 years
 – – – – – –
Total non-current finance lease assets
 – – – 134 124 10
Total finance lease assets
 – – – 323 298 25

No contingent finance lease assets relating to production output are recorded and no provision on finance lease assets was made.

4.18 non-current assets held for sale

At 31 December 2010 and 2009, there are no non-current assets held for sale by the Group.

4.19 tangible assets in 2010
in CHF '000

Land
and buildings		 Machinery
and technical
installations
Other
tangible assets
Assets under
construction
Total
2010
Cost at 1 January
 102,774 114,291 45,291 1,133 263,489
Change in scope of consolidation
 41 68 –536 – –427
Additions1)
 466 3,141 912 2,560 7,079
Disposals
 –5,033 –2,309 –4,218 – –11,560
Reclassification
 1,272 726 346 –2,174 170
Exchange differences
 –3,062 –1,341 –2,646 –16 –7,065
Cost at 31 December
 96,458 114,576 39,149 1,503 251,686
Accumulated depreciation and impairment at 1 January
 –59,019 –66,276 –27,361 2 –152,654
Change in scope of consolidation
 –23 –5 353 – 325
Depreciation on disposals
 5,031 2,283 4,028 – 11,342
Depreciation
 –3,500 –6,368 –4,335 – –14,203
Impairment
 –973 – – – –973
Reclassification
 – –406 112 –2 –296
Exchange differences
 1,384 1,021 2,093 – 4,498
Accumulated depreciation and impairment at 31 December
 –57,100 –69,751 –25,110 – –151,961
Net book value at 31 December
 39,358 44,825 14,039 1,503 99,725
Insured value at 31 December
 284,523
Net book value of tangible assets under finance lease
 2,854 – 9 – 2,863
Commitments for purchases of property, plant and other equipment
 1,560

tangible assets in 2009
in CHF '000

Land
and buildings		 Machinery
and technical
installations
Other
tangible assets
Assets under
construction
Total
2009
Cost at 1 January
 108,531 104,231 38,509 17,220 268,491
Change in scope of consolidation
 – – – – –
Additions1)
 2,096 4,355 1,617 5,341 13,409
Disposals
 –15,055 –1,171 –2,125 –2 –18,353
Reclassification
 7,233 6,798 7,294 –21,431 –106
Exchange differences
 –31 78 –4 5 48
Cost at 31 December
 102,774 114,291 45,291 1,133 263,489
Accumulated depreciation and impairment at 1 January
 –68,474 –65,122 –23,992 – –157,588
Change in scope of consolidation
 – – – – –
Depreciation on disposals
 12,559 1,170 1,829 2 15,560
Depreciation
 –2,852 –2,241 –4,727 – –9,820
Impairment
 –271 – –483 – –754
Reclassification
 – – – – –
Exchange differences
 19 –83 12 – –52
Accumulated depreciation and impairment at 31 December
 –59,019 –66,276 –27,361 2 –152,654
Net book value at 31 December
 43,755 48,015 17,930 1,135 110,835
Insured value at 31 December
 295,867
Net book value of tangible assets under finance lease
 3,656 63 7 – 3,726
Commitments for purchases of property, plant and other equipment
 275
1) Additions include additions by cash purchase, by capitalised costs and by acquisitions.

4.20 intangible assets in 2010
in CHF '000
Software and
developments		 Rights and
licenses
Goodwill		 Other in-
tangible assets		 Total
2010
Cost at 1 January
 5,631 1,815 – 850 8,296
Change in scope of consolidation
 422 1,007 3,943 2,103 7,475
Additions1)
 693 74 – 1,758 2,525
Disposals
 –89 –1,610 – – –1,699
Reclassification
 126 – – – 126
Exchange differences
 –635 –108 –389 –346 –1,478
Cost at 31 December
 6,148 1,178 3,554 4,365 15,245
Accumulated depreciation and impairment at 1 January
 –3,762 –1,705 – –845 –6,312
Change in scope of consolidation
 –3 –205 – – –208
Depreciation on disposals
 89 1,610 – – 1,699
Depreciation
 –844 –311 – –702 –1,857
Reclassification
 – – – – –
Exchange differences
 396 48 – 206 650
Accumulated depreciation and impairment at 31 December
 –4,124 –563 – –1,341 –6,028
Net book value at 31 December
 2,024 615 3,554 3,024 9,217

intangible assets in 2009
in CHF '000
Software and
developments		 Rights and
licenses
Goodwill		 Other in-
tangible assets		 Total
2009
Cost at 1 January
 5,462 1,690 – 850 8,002
Change in scope of consolidation
 – – – – –
Additions1)
 152 125 – – 277
Disposals
 –86 – – – –86
Reclassification
 106 – – – 106
Exchange differences
 –3 – – – –3
Cost at 31 December
 5,631 1,815 – 850 8,296
Accumulated depreciation and impairment at 1 January
 –3,223 –1,667 – –844 –5,734
Change in scope of consolidation
 – – – – –
Depreciation on disposals
 86 – – – 86
Depreciation
 –631 –38 – –2 –671
Reclassification
 – – – – –
Exchange differences
 6 – – 1 7
Accumulated depreciation and impairment at 31 December
 –3,762 –1,705 – –845 –6,312
Net book value at 31 December
 1,869 110 – 5 1,984
1) Additions include additions by cash purchase, by capitalised costs and by acquisitions.

4.21 further details on tangible assets

In 2010, a project for an integrated IT-solution of Orell Füssli Security Printing Ltd was started. We expect the implementation to be finalised within the first six month of the 2011 financial year. The workings and installations on the building of the Orell Füssli Group’s head office could be finalised as planned in the 2009 financial year. The expenditures included investments in production facilities and machineries for the security printing division.

Bank borrowings are secured on land and buildings for the value of CHF 204,000 (2009: CHF 577,000).

Lease rentals amounting to CHF 11,907,000 (2009: CHF 11,024,000), while CHF 845,000 (2009: CHF 846,000) are related to other leased tangible assets. Operating lease expenses are included in the income statement.

4.22 investment property
in CHF '000
 2010 2009
Cost at 1 January
 349 466
Exchange differences
 –42 –117
Cost at 31 December
 307 349
Accumulated depreciation and impairment at 1 January
 –269 –232
Depreciation
 –17 –18
Exchange differences
 34 –19
Accumulated depreciation and impairment at 31 December
 –252 –269
Net book value at 31 December
 55 80
Fair value of investment property at 31 December
 237 285
Amounts recognised in the income statement
Rental income
 75 79
Direct operating expenses arising from investment property generating rental income
 –12 –14
Direct operating expenses arising from investment property not generating rental income
 –12 –14

The fair values of investment property are based on the appraisal by an independent valuer. The appraisal is also based on the market value.

There is no commitment or obligation on repairs and maintenance of the investment property.

4.23 investments

In the 2010 financial year, the Group increased its investments in associates by the purchase of a minority interest in Bider & Tanner Ltd with its head office in Basle, as well as by the disposal of its controlling interest in Zurich-based Photoglob Ltd.

At 31 December the Orell Füssli Group holds the following investments:

investments
in CHF '000 at 31 December
 2010 2009
Photoglob Ltd (34 %)
 343 –
Travel Book Shop Ltd (35 %)
 35 35
Bider & Tanner Ltd (25 %)
 1,200 –
Orell Füssli Kartographie Ltd (24 %)
 270 270
Total investments in associates
 1,848 305
Participation in cooperatives
 2,110 2,110
Other investments
 795 64
Total investments
 4,753 2,479

The investments do not include any goodwill either at 31 December 2010 or at 31 December 2009. Neither is a listed company.

According to IAS 39, the participation in the retailer cooperative Schweizer Buchzentrum needs to be classified as a financial instrument “available-for-sale” (refer to note 4.12).

4.24 trade payables

The trade accounts payable can be allocated to the following currencies at their net book values:

trade payables by currencies
in CHF '000 at 31 December
Trade payables
third parties		 Trade payables
related parties		 Total
2010		 Trade payables
third parties		 Trade payables
related parties		 Total
2009
CHF
 14,823 – 14,823 21,695 13 21,708
EUR
 6,804 261 7,065 7,625 991 8,616
USD
 534 – 534 348 – 348
GBP
 110 – 110 39 – 39
Other
 6 – 6 – – –
Total trade payables
 22,277 261 22,538 29,707 1,004 30,711

4.25 financial liabilities

The carrying amount of financial liabilities corresponds approximately with its fair value. The maturities are as follows:

maturities of financial liabilities
in CHF '000 at 31 December
From
borrowings		 Liabilities from
finance lease		 Total
2010		 From
borrowings		 Liabilities from
finance lease		 Total
2009
From current financial liabilities
Due within 6 months
 6,287 146 6,433 10,405 157 10,562
Due between 6 and 12 months
 53 139 192 139 167 306
Total current financial liabilities
 6,340 285 6,625 10,544 324 10,868
From non-current financial liabilities
Due between 1 and 2 years
 99 268 367 246 335 581
Due between 2 and 5 years
 100 286 386 53 1,025 1,078
Due later than 5 years
 910 1,017 1,927 600 849 1,449
Total non-current financial liabilities
 1,109 1,571 2,680 899 2,209 3,108
Total financial liabilities
 7,449 1,856 9,305 11,443 2,533 13,976

Interest expenditure from finance lease liabilities was in an amount of CHF 171,000 (2009: 227,000).

No secured liabilities are included in the 2010 or 2009 financial liabilities. Finance lease liabilities are secured effectively as the rights to the lease asset revert to the lessor in the event of a breach of contract.

The carrying amounts of financial liabilities are denominated in the following currencies. The amounts are translated into Swiss Francs at the exchange rate of the balance sheet date.

financial liabilities by currencies
in CHF '000 at 31 December
From
borrowings		 Liabilities from
finance lease		 Total
2010		 From
borrowings		 Liabilities from
finance lease		 Total
2009
CHF
 100 29 129 600 62 662
EUR
 7,349 1,827 9,176 10,843 2,471 13,314
Total financial liabilities
 7,449 1,856 9,305 11,443 2,533 13,976

effective interest rates on financial liabilities
Per cent
 2010 2009
CHF
 0.94–9.00% 0.83–6.25%
EUR
 1.41–9.50% 1.42–7.75%

4.26 other current liabilities
in CHF '000 at 31 December
 2010 2009
Accrued expenses and deferred income
 7,488 7,567
Derivative financial instruments (refer to note 4.12)
 – 296
Other current payables
 6,770 7,627
Total other current liabilities
 14,258 15,490

In connection with the derivative financial instruments reference is made to note 4.12. The Orell Füssli Group concluded several currency option contracts in order to hedge certain currency risks. Due to different maturities the contract values will be reduced continuously over the next twelve months.

4.27 provisions

Provisions are considered for restructuring, warranties, outstanding commissions and projects that need to be finished. Provisions for restructuring refer to obligations due to the social compensation plan of 1992. No provision was made for legal claims either in 2010 or 2009. The maturities of the stated provisions as per balance sheet date were as follows:

maturities of provisions
in CHF '000 at 31 December
Due within
12 months		 Due between
1 and 5 years		 Due later
than 5 years		 Total
2010		 Due within
12 months		 Due between
1 and 5 years		 Due later
than 5 years		 Total
2009
Provisions for legal claims
 – – – – – – – –
Provisions for restructuring
 5 13 – 18 4 18 – 22
Warranty provisions
 401 – – 401 246 – – 246
Other provisions
 324 284 98 706 204 274 122 600
Total provisions
 730 297 98 1,125 454 292 122 868

The development of the stated provisions in the 2010 and 2009 financial year is stated below:

movement in provisions
in CHF '000
 2010 2009
At 1 January
 868 1,073
Change in consolidation circle
 212 –
Additions (charged to income statement)
 406 251
Reversals (charged to income statement)
 –61 –213
Utilisation during the year
 –222 –245
Exchange differences
 –78 2
At 31 December
 1,125 868

4.28 retirement benefit obligations

The pension plans of the Orell Füssli Group are related to retirement benefits for the employees. At 31 December 2010, the Group’s balance sheet includes pension fund assets of CHF 5,362,000 (2009: CHF 4,805,000) and pension fund liabilities of CHF 392,000 (2009: CHF 457,000). The calculation according to IAS 19 results in a net pension asset of CHF 4,970,000 (2009: CHF 4,348,000). The analysis of the pension fund liability and the amounts recognised in the income statement are as follows:

fair value of plan assets
in CHF '000
 2010 2009
At 1 January
 121,502 117,618
Expected return on plan assets
 4,556 4,411
Employer’s contribution
 3,087 3,056
Employees’ contribution
 2,863 2,887
Curtailments, settlements, plan amendments
 – –
Benefits paid
 –3,206 –5,171
Actuarial gain/(loss) on plan assets
 –480 –1,299
At 31 December
 128,322 121,502

present value of benefit obligations
in CHF '000
 2010 2009
At 1 January
 –124,732 –119,105
Service costs
 –5,895 –5,539
Interest costs
 –4,054 –4,169
Curtailments, settlements, plan amendments
 – –
Benefits paid
 3,206 5,171
Actuarial gain/(loss) on benefit obligations
 –7,055 –1,090
At 31 December
 –138,530 –124,732

amount recognised in personnel expenses
in CHF '000
 2010 2009
Service costs
 –5,895 –5,539
Interest costs
 –4,054 –4,169
Expected return on plan assets
 4,556 4,411
Curtailment gain
 – –
Adjustment due to IAS 19.58
 – 851
Net periodic benefit cost
 –5,393 –4,446
Employees’ contribution
 2,863 2,887
Total amount recognised in personnel expenses
 –2,530 –1,559

The actual return on the plan assets was 3.0% (2009: 10.4%).

The movement in the pension fund liability is as follows:

movement in pension fund liability
in CHF '000
 Switzerland Abroad Total 2010 Switzerland Abroad Total 2009
At 1 January
 5,671 –1,323 4,348 4,174 –1,263 2,911
Total expense charged to income statement
 –2,530 65 –2,465 –1,559 –60 –1,619
Employer’s contribution
 3,087 – 3,087 3,056 – 3,056
At 31 December
 6,228 –1,258 4,970 5,671 –1,323 4,348

Over the past five years, the development of the overfunding/underfunding and the actuarial gain/loss was as follows:

overfunding/underfunding over five years
in CHF '000 at 31 December
 2010 2009 2008 2007 2006
Fair value of plan assets
 128,322 121,502 117,618 133,274 121,750
Present value of pension obligations
 –138,530 –124,732 –119,105 –130,273 –119,937
Overfunding/(underfunding)
 –10,208 –3,230 –1,487 3,001 1,813
Limitation of assets according IAS 19.58
 – – –850 –1,260 –1,360
Unrecognised actuarial (gains)/losses
 16,436 8,901 6,511 –117 542
Asset/(liability) in the balance sheet – net
 6,228 5,671 4,174 1,624 995
Pension obligations abroad
 –1,258 –1,323 –1,263 –1,443 –1,391
Total overfunding/(underfunding)
 4,970 4,348 2,911 181 –396

actuarial gain/loss over five years
in CHF '000
 2010 2009 2008 2007 2006
Experience adjustments on plan liabilities
 –1,980 3,106 4,487 –7,547 2,967
Change in assumptions adjustment on plan liabilities
 –5,075 –4,197 – 7,833 2,635
Experience adjustments on plan assets
 –480 –1,299 –12,241 181 –2,556
Total actuarial gain/(loss)
 –7,535 –2,390 –7,754 467 3,046

The principal actuarial assumptions used were as follows:

actuarial assumptions
Per cent
 2010 2009
Discount rate
 2.75% 3.25%
Expected return on assets
 3.50% 3.75%
Future salary increases
 1.50% 2.00%
Future pension increase
 0.25% 0.25%
Life expectancy on the basis of EVK 2000 plus
 5.00% 4.50%

The expected returns of each asset class are based on the risk premium concept. Thereby it is supposed that the market compensates investors by higher expected returns for bearing risk that cannot be eliminated by diversification. Based on actual risk premiums and market outlook the expected risk premium for each asset class is estimated. The portfolio return results from the weighted sum of the asset class returns less charges.

asset allocation
Per cent
 2010 2009
Cash and cash equivalents
 4.8% 9.3%
Bonds
 39.6% 46.1%
Shares
 24.9% 23.2%
Properties
 20.4% 16.8%
Other
 10.3% 4.6%
Total
 100.0% 100.0%

The expected employer’s contribution will be in an amount of CHF 3,038,000 in the 2011 financial year.

4.29 deferred income tax

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset them and then the deferred income taxes relate to the same tax authority. The details of deferred taxes assets and liabilities as well as the changes in the deferred income taxes (net) are disclosed in the following tables:

deferred income tax assets and liabilities
in CHF '000 at 31 December
Deferred
income tax
assets		 Deferred
income tax
liabilities

Balance 2010		 Deferred
income tax
assets		 Deferred
income tax
liabilities

Balance 2009
Cash and cash equivalents and receivables
 592 –429 163 463 –676 –213
Inventories
 894 –419 475 1,657 –523 1,134
Construction contracts
 – –2,789 –2,789 – –4,878 –4,878
Non-current assets
 180 –4,004 –3,824 257 –3,411 –3,154
Current liabilities
 2,464 –2 2,462 3,277 –3 3,274
Non-current liabilities
 32 –31 1 40 –45 –5
Tax loss carry-forward
 3,455 – 3,455 2,518 – 2,518
Effects from offsetting
 –3,401 3,401 – –5,310 5,310 –
Total deferred income tax
 4,216 –4,273 –57 2,902 –4,226 –1,324

changes in deferred income taxes
in CHF '000
 2010 2009
At 1 January
 1,324 1,410
Effects of currency translation
 313 214
Change in scope of consolidation
 936 –
Charges to income statement
 –2,516 –300
At 31 December
 57 1,324

maturities of deferred income taxes
in CHF '000 at 31 December
Current
due within
12 months		 Non-current
due later than
12 months

2010		 Current
due within
12 months		 Non-current
due later than
12 months
Total
2009
Deferred tax assets
 458 3,758 4,216 547 2,355 2,902
Deferred tax liabilities
 –2,164 –2,109 –4,273 –2,686 –1,540 –4,226
Deferred tax assets/(liabilities) net
 –1,706 1,649 –57 –2,139 815 –1,324

Deferred income tax assets are recognised for tax loss carry-forwards to the extent that the realisation of the related tax benefit through the future taxable profits is probable. The Group did not recognise deferred tax income assets of CHF 82,000 (2009: CHF 153,000) in respect of losses amounting to CHF 390,000 (2009: CHF 727,000) that can be carried forward against future taxable income.

The following table shows the expiry of tax loss carry-forwards which have not been used for the recognition of deferred income tax assets. The applicable tax rate in case of realisation would be at 21% in the 2010 and 2009 financial years.

tax loss carry-forwards not recognised in the balance sheet
in CHF '000 at 31 December
 2010 2009
Due within 12 months
 68 285
Due between 1 and 2 years
 11 68
Due between 2 and 3 years
 311 11
Due between 3 and 4 years
 – 311
Due between 4 and 5 years
 – 52
Later than 5 years
 – –
Total tax loss carry-forwards not recognised in the balance sheet
 390 727

4.30 share capital

The number of approved ordinary shares is 1,960,000 (2009: 1,960,000). They are exclusively registered shares with a par value of CHF 1 per share (2009: CHF 1 per share). All shares are fully paid.

4.31 retained earnings
in CHF '000
Balance
2010 gross		 Exchange
differences		 Balance
2010 net		 Balance
2009 gross		 Exchange
differences		 Balance
2009 net
Retained earnings at 1 January
 169,515 –5,409 164,106 170,496 –5,776 164,720
Change
 –483 –3,227 –3,710 –981 367 –614
Retained earnings at 31 December
 169,032 –8,636 160,396 169,515 –5,409 164,106

The exchange differences relate to the translation of the separate financial statements of the Group’s subsidiaries into Swiss Francs. All associated companies prepare their financial statements in Swiss Francs.