Concessions, covenants, leases and the dividend

I keep a register of every lift, railway and building we own, showing its concession or permit date, the engineers' rating of its condition and the cost of replacing it at today's prices. The register looks fifteen years ahead and is reviewed with the technical director each spring, after the winter has shown what wore out. Finance does not decide whether an installation is safe to run; the technical team and the Federal Office of Transport do. My task is to make sure that a renewal falling due in 2031 shapes the borrowing, pricing and dividend decisions we take in 2026. The register also records the operating days each sector achieved over ten winters, so the board sees an asset's earning record beside the bill for keeping it. That pairing decided our lower-sector question.

Most of our operating cash arrives between December and April, with a smaller peak in July and August. Payroll, maintenance and construction payments continue through the autumn, when cash is lowest. I plan borrowing around that trough rather than around the year-end balance sheet, which flatters us because it is drawn up at the end of April. Our lenders test an equity ratio of at least 35 per cent and net debt of no more than 5.25 times EBITDA at the year end. I report headroom on both every month and show the board what a winter of sixty operating days would do to them. A SARON-based revolving facility covers the seasonal trough. Long-lived assets are funded with fixed-rate debt, and since 2024 I spread its fixing dates rather than bunch them.

Mountain assets are difficult to value because their earnings depend on conditions that are changing. We report under Swiss GAAP FER, and when there are signs of impairment I test each sector as a group of assets that earn together, not each lift alone. I build the operating-day assumptions from our own records rather than from regional averages that are easier to defend. I discuss the method with our auditors well before the year end, while there is still time to change it. I keep the accounting question apart from the operating one. An impairment records what an asset is worth to us; it does not decide whether we keep running it, and I do not want a write-down presented to the municipality or the hotels as if it had settled that question.

Property provides about a tenth of our revenue and much of our stability. The shops and practices at the valley station are let on terms of at least five years with rents linked to the Swiss consumer price index, so I track index movements, notice dates and tenants' trading in the same report. When inflation rose in 2022 and 2023, I asked whether full indexation would push our sports-retail tenants out of a village that needs them. We applied it in full to two leases and agreed a phased increase with a third. Staff apartments are let below market because they help us recruit seasonal workers, and I report that subsidy openly rather than leave it inside hotel costs. Holiday flats are judged on occupancy across both seasons.

About 5,200 shareholders own our company, and many hold only a few shares because they live or keep a flat in the valley. They value the shareholder benefits on ski passes as much as the dividend. I treat both as distributions: the forgone ticket revenue from those benefits, around CHF 0.9 million a year, appears in the same board paper as the cash dividend. Since 2025 our published policy pays out 30 to 40 per cent of free cash flow after maintenance investment, provided the equity ratio stays above 40 per cent. The policy exists because suspending the dividend in 2024 without one was harder to explain than it needed to be. I would rather shareholders learn the rule in a good year than discover it through a suspension in a difficult one.