Information about this report

Aduno Holding AG is a company domiciled in Zurich (Switzerland) which, together with its subsidiaries (together the Group), offer financial services in the business field of cashless payment solutions, consumer finance and leasing.

Subsidiary Services

Viseca Card Services SA (Viseca)

Viseca offers services for cashless payments. Viseca issues payments cards (Issuing) under the brands of the credit card organisations (schemes) Mastercard and Visa. These are issued to personal and corporate customers, for Swiss retail banks, for a number of co-branding partners and in Viseca’s own name. It provides all associated customer services.

Aduno Finance AG (Aduno Finance)

Aduno Finance acts as the central treasury unit for the entire Group.

Accarda AG (Accarda)

Accarda operates in the business of customer cards with a payment function.

cashgate AG (cashgate)

cashgate provides personal credit and leasing finance to personal and corporate customers and offers rental guarantees for its customers in the Swiss market. This company was sold on 2 September 2019.

Contovista AG (Contovista)

Contovista develops software for finance management and analytics and makes this available to banks.

As a result of the bonds issued (Bonds CHF domestic), Aduno Holding AG is listed in Switzerland on the Swiss Reporting Standard of SIX Swiss Exchange with ISIN number CH0246921537.

The consolidated financial statements were approved by the Board of Directors on 23 April 2020 and will be submitted to the General Meeting scheduled for 16 June 2020 for final approval.

Key accounting policies

These consolidated financial statements give a true and fair view of the Aduno Group’s financial performance and financial position. They have been prepared in accordance with all existing accounting guidelines (Swiss GAAP FER). The consolidated financial statements are based on the financial statements of the Group companies prepared in accordance with uniform accounting principles as at 31 December. They follow the principle of historical cost unless a standard prescribes a different measurement basis for a financial statement item or a different measurement basis is applied if this is provided as an option. The relevant accounting policies for understanding the consolidated financial statements are set out in the specific notes to the financial statements.

Assets are reviewed each year for indications of impairment. If there are any indications, the recoverable amount is determined and if this exceeds the carrying amount, an appropriate posting is made in the income statement.

The consolidated financial statements are presented in Swiss francs, the Company’s functional currency. Unless noted otherwise, all financial data in Swiss francs have been rounded to the nearest thousand. This may result in rounding differences.

Consolidation principles

Group companies include those companies that are directly or indirectly controlled by Aduno Holding AG. Control is defined as the power to govern the financial and operating policies of an entity so as to benefit from them. This is usually the case when the Group holds more than half of the voting rights in an entity’s share capital. Group companies are consolidated from the date on which control is transferred to the Group. Subsidiaries held for sale are excluded from the scope of consolidation from the date on which control ceases.

Capital consolidation is based on the purchase method. This means that the purchase price or carrying amount of the interests is offset against the Group’s share in the revalued equity of the consolidated companies at the time of acquisition or first-time consolidation. Any goodwill from the purchase of interests is capitalised and amortised over five years. All intercompany transactions, balances and unrealised gains and losses from transactions between Group companies are eliminated in full.

Non-controlling interests in equity and the Group's profit for the period are shown separately in the balance sheet and income statement. Changes in ownership interests in subsidiaries are booked as equity transactions with non-controlling interests, provided that control is retained. In the case of a direct buyout of non-controlling interests, Swiss GAAP FER 24 (equity and transactions with shareholders) is applied, i.e. the transaction is valued at net market value and booked in equity with no impact on profit or loss.

Changes in the scope of consolidation during 2019

The following changes to the scope of consolidation took place in the reporting year:

 

 

Share 2019

Share 2018

cashgate AG, Zurich (ZH)

Sale

0%

100%

Contovista AG, Schlieren (ZH)

Purchase

100%

70%

SwissWallet AG, Zurich (ZH) 1)

Sale

0%

33%

 

 

 

 

Subsidiaries of Accarda AG

 

 

 

Loyalty Gift Card AG

Sales

0%

100%

Loyalty Gift Card GmbH, Austria

Sales

0%

100%

Loyalty Gift Card GmbH, Germany

Sales

0%

100%

Loyalty Services AG 1)

Sales

0%

20%

Paycoach AG

Sales

0%

60%

Sanavena GmbH

Sales

0%

100%

Zaala AG

Sales

0%

55%

1) Associates

The detailed information can be found under section 4.2.

Foreign currency translation

Foreign currency transactions in Group companies

The foreign currency transactions and items contained in the separate financial statements of the consolidated companies are translated as follows Foreign currency transactions are translated into the posting currency at the exchange rate as at the transaction date (spot rate). At year-end, monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate on the reporting date and booked to the income statement.

Translation of financial statements to be consolidated

The consolidated financial statements are presented in Swiss francs. Assets and liabilities of Group companies with a different currency are translated at year-end rates (closing rates), equity at historical rates, and the income statement and cash flow statement at average rates for the year. The translation differences that arise are booked to equity instead of being recognised in profit or loss. If a foreign Group company is sold, the associated cumulative foreign currency differences are transferred to the income statement.

The following principal exchange rates have been used:

 

Average 2019

Average 2018

Balance at 31.12.2019

Balance at 31.12.2018

EUR 1

1.1223

1.1619

1.0960

1.1373

USD 1

1.0026

0.9869

0.9778

0.9943

GBP 1

1.2811

1.3105

1.2835

1.2616

Effects of the switch to Swiss GAAP FER

As at 1 January 2019, the Aduno Group switched its financial reporting from IFRS to Swiss GAAP FER. In past years the International Financial Reporting Standards (IFRS) were applied. In view of the increasing complexity and ongoing adjustments of the IFRS and the associated reporting workload, the Group decided to switch its financial reporting.

The date of the switch was 1 January 2019. Accordingly, in its first consolidated financial statements under Swiss GAAP FER the Group presents the two balance sheets as at 31 December 2019 and as at 31 December 2018 and the two income statements for the 2019 and 2018 half-years in accordance with Swiss GAAP FER. All provisions of the standards in force at the time of the switch have been applied in full and retroactively.

Reconciliation for equity

In 1,000 CHF

01.01.2018 Opening amount

31.12.2018 Closing amount

Equity in accordance with IFRS

804,346

769,919

 

 

 

Adjustment of goodwill

(105,853)

(114,181)

Adjustment of intangible assets

(42,084)

(50,609)

Adjustment of employee pension benefit obligations

37,651

43,586

Effect of adjustments on deferred tax items

1,143

1,573

Total Adjustments

(109,143)

(119,631)

 

 

 

Equity in accordance with Swiss GAAP FER

695,203

650,288

Reconciliation for profit and income

In 1,000 CHF

2018 Profit for the period

2018 Other comprehensive income

Result in accordance with IFRS

106,393

8,502

Adjustment of goodwill

(8,328)

 

Adjustment of intangible assets

(8,525)

 

Adjustment of financial assets

4,282

(4,282)

Adjustment of employee pension benefit obligations

12,217

(6,417)

Adjustment of foreign currency translation differences

 

42

Adjustment of fair value of cash flow hedges

 

(57)

Effect of adjustments on deferred tax items

(1,640)

2,212

Result in accordance with Swiss GAAP FER

104,399

0

Adjustment Description

Goodwill

According to the options available under FER 30 “Consolidated financial statements”, goodwill from acquisitions is capitalised at the time of the acquisition and amortised over the useful life of five years. Under IFRS goodwill recognised as part of an acquisition was capitalised without being amortised. The goodwill was reviewed annually for any impairment in value at the level of the cash generating unit. Useful lives and residual values are reviewed annually on the reporting date and any impairment losses recognised in the income statement.

Intangible assets from acquisitions

Under Swiss GAAP FER any intangible assets from acquisitions, including customer relationships, are capitalised and amortised. They are carried at cost less accumulated amortisation and impairment losses. Under IFRS the customer relationships that came with an acquisition were amortised over a period of 7 to 15 years in line with an average “customer lifespan” depending on the business area involved using the digital degressive method. The switch has no effect on profit for 2018 and 2019.

Intangible assets generated internally

Intangible assets generated internally are not capitalised under Swiss GAAP FER. Intangible assets generated internally as a result of acquisitions are classified as assets acquired from third parties and as such are valued as part of the purchase price allocation, capitalised and amortised over their expected useful life.

Financial assets

Under Swiss GAAP FER equity instruments shown in financial investments are measured at fair value; changes in value are recognised in the income statement. Under IFRS they were measured at fair value. However, changes in the fair value were booked to other comprehensive income. The switch has no effect on the balance sheet item “financial investments” or on total equity. The switch leads to a reclassification within equity from the “financial investments at fair value through other comprehensive income” reserves to retained earnings, and to a shift from other comprehensive income to the income statement. The IFRS “financial investments at fair value through other comprehensive income” reserves amounting to CHF 4.2 million and the reclassification to retained earnings have not been set out separately in the consolidated statement of changes in equity and have no effect on the amount of equity.

Financial assets,  classification

The structure of the balance sheet according to FER 3 envisages among other things that securities, deferred income tax assets, associates and employer contribution reserves can be recognised as financial investments. The Aduno Group now shows these items in aggregated form as financial investments. Under IFRS these were shown as individual items in the balance sheet, with the exception of employer contribution reserves.

Employee pension benefit obligations

Under FER 16 “Pension benefit obligations”, the real economic impact (obligation or benefit) for the Group is established on the basis of the financial statements of the Swiss pension institutions, which are prepared in accordance with FER 26 “Accounting of pension plans”. On this basis it is assessed whether there is an economic obligation or an economic benefit. An economic benefit is capitalised if it is permitted and intended to use the surplus to reduce the employer contributions. If there are freely available employer contribution reserves these are also capitalised. Under IFRS defined benefit plans were valued with the aid of the Projected Unit Credit Method and recognised in accordance with IAS 19.

Provisions

The basic structure in accordance with FER 3 envisages that tax liabilities be disclosed as part of provisions. Under IFRS tax liabilities were shown separately. This switch is merely a reallocation and has no effect on the balance sheet or equity.

Foreign currency translation differences

Differences from currency translation for foreign entities are recognised directly in equity under Swiss GAAP FER. Under IFRS they were recognised in other comprehensive income. The switch has no effect on the equity total.

Fair value of cash flow hedges

The changes in the fair value of cash flow hedges recognised in other comprehensive income under IFRS were reclassified to equity in the restatement.  Under Swiss GAAP FER they are booked directly to the income statement.

Assumptions and estimations of the management

In order to prepare the consolidated financial statements in accordance with Swiss GAAP FER, the management must make estimations, evaluations and assumptions that have an impact on the application of accounting and valuation methods and on the amounts shown for assets, liabilities, income and expenses. The estimations and associated assumptions are based on previous experience and various other factors deemed useful. The actual results may differ from these estimations.

The estimations and underlying assumptions are regularly reviewed. Changes in estimations relating to the financial reporting are recognised in the periods currently under review and future periods affected.

Assessments made by management when applying Swiss GAAP FER that have a significant effect on the financial statements, and estimates with a high risk of being adjusted in the following year, are presented in the notes.

1 Performance

This section describes the operational performance of the Aduno Group. The segment reporting sets out the segment results used at the most senior level of management to guide the Company.

1.1 Segment reporting

External segment reporting is based on the internal reporting that is used by the Executive Board to guide the Company. The Executive Board is comprised of the CEO (Chief Executive Officer) of the Group, the CFO (Chief Financial Officer), the CMO (Chief Marketing Officer) and the COO (Chief Operations Officer).

For the purposes of financial reporting and organisation, the management has divided the Group’s business activities into three segments:

Segment
Activity

Payment

The business unit Payment provides services for cashless payments via credit, prepaid, debit and customer cards to private and corporate customers, and also the associated transaction and customer services in this area. The majority of the business is linked to the Mastercard and Visa brands. The Payment division consists of Viseca, Accarda and Contovista. The business unit’s main revenue streams come from interchange fees and commission, annual fees for cards, services, income from card transactions in foreign currencies and interest income. Contovista provides software solutions for banks and generates revenues from this business through projects and licences.

Consumer Finance

The Consumer Finance business offers leasing contracts and loans for consumer goods to personal and corporate customers. The business unit Consumer Finance is operated by cashgate. The main revenue streams are interest income, commission income and fees for chargeable services. This business was sold in 2019.

Corporate Functions

The result of Aduno Holding and the treasury services of Aduno Finance, which include the handling of payments and the processing of foreign currency transactions, are reported in this segment. The income from the sale of Group companies as well as cross-company consolidation items and reclassifications are also shown in this segment.

The following table contains information about the business segments that are based on the management’s evaluation and the internal reporting structure as at 31 December in each case.

 

Payment

Consumer Finance

Corporate Functions

Consolidated

In 1,000 CHF

2019

2018

2019

2018

2019

2018

2019

2018

Operating income

473,411

396,036

67,455

97,503

3,344

22,606

544,210

516,146

Operating expenses

535,631

309,591

51,467

77,218

16,689

40,522

603,786

427,330

Operating profit

(62,220)

86,446

15,988

20,285

(13,345)

(17,916)

(59,576)

88,816

Ordinary profit

(43,907)

84,966

14,892

19,307

(18,299)

(8,391)

(47,314)

95,883

Non-operating profit

(5,126)

(7,234)

(7,867)

(1,551)

167,472

36,620

154,478

27,834

Income taxes

(37,113)

(8,297)

(1,851)

(1,497)

(9,874)

(9,524)

(48,838)

(19,318)

Profit for the period

(86,146)

69,435

5,174

16,259

139,298

18,705

58,326

104,399

1.2 Further information on selected income statement items

Additional information on commission income

In 1,000 CHF

2019

2018

Interchange revenue and related revenue

93,136

79,195

Currency exchange commissions

68,606

65,514

Other commission revenue

31,138

27,306

 

 

 

Commission income

192,880

172,015

Additional information on other income

In 1,000 CHF

2019

2018

Foreign exchange gains or losses

56,011

53,283

Income from services

59,086

39,684

Other income

16,968

22,990

 

 

 

Other operating income

132,065

115,957

Accounting principles

Category
Accounting principle

Commission income

Commission income consists of transaction-based fees charged net to clients in all business segments. They are recorded on a transaction basis and already adjusted for fees at the time of the transaction. 

Annual fees

Annual fees are recognised on a straight-line basis over the term of the service contract and deferred accordingly.

Interest income

Interest income is comprised of interest on short-term credit for credit card holders. In the cards business, credit card holders can convert the balance on their credit card to personal credit, for which the Group charges interest over its short-term duration. In addition, interest income includes interest on leasing finance granted to personal and corporate customers.

Other operating income

Other income is chiefly comprised of net foreign currency gains, income from services and other income. Foreign exchange gains and losses are recognised on a transaction basis at the time of the transaction. Customers in the Group’s cards business are billed based on a typical exchange rate close to the spot rate, whereas the Group is billed near the interbank rate (interbank rate plus Group,s credit spread). Most of the income from services originates from Accarda AG’s card business. The revenues from Contovista AG’s software business are shown in other income.

1.3 Operating expenses

In 1,000 CHF

Note

2019

2018

Card processing expenses

 

46,826

36,249

Service expenses

 

34,083

27,305

Material expenses

 

0

165

Processing and service expenses

 

80,909

63,719

 

 

 

 

Distribution channel remuneration

 

83,190

83,738

Expenses for customer retention

 

10,278

8,924

Advertising expenses

 

15,006

18,670

Distribution expenses

 

102

152

Distribution, advertising and promotion expenses

 

108,577

111,484

 

 

 

 

Interest expenses

 

11,794

11,649

 

 

 

 

Expected credit losses in the Payment business, credit cards

 

1,322

4,188

Expected credit losses in the Payment business, other payment cards

 

3,485

0

Expected credit losses in Consumer Finance

 

6,487

10,777

Impairment losses on commission income

 

1,600

1,458

Expected credit losses and impairment losses

 

12,895

16,424

 

 

 

 

Wages and salaries

 

99,399

87,816

Social insurance expenses

 

10,031

9,131

Employee pension benefit expenses

 

7,418

6,326

Other personnel expenses

 

9,384

10,485

Personnel expenses

 

126,232

113,759

 

 

 

 

Audit and professional services

 

55,737

42,018

Information technology expenses

 

27,435

23,518

Telephone and postage

 

2,212

2,219

Premises expenses

 

10,119

8,662

Travel and representation expenses

 

662

833

Loss on sale of property and equipment and intangible assets

 

500

383

Other administration expenses

 

9,511

6,959

Other operating expenses

 

106,177

84,593

 

 

 

 

Depreciation of property and equipment

2.3

5,137

3,732

Amortisation of intangible assets

2.4

29,022

13,643

Amortisation of goodwill

2.4

16,752

8,328

Impairment of intangible assets

2.4

106,293

0

 

 

 

 

Operating expenses

 

603,786

427,330

Accounting principles

Expenses are recognised on an accrual basis, i.e. at the time they are incurred. The table below provides information on selected expense items.

Category
Accounting principle

Processing and service expenses

Processing and service expenses comprise processing fees for service partners, fees for the use of the global network of card organisations and other service fees.

Distribution, advertising and promotion expenses

The Group offers a customer loyalty programme in which customers collect points through their card transactions that are credited to special points accounts. Customers can exchange the points for gifts, vouchers and annual fee credits. The estimated future expense increases accrued expenses and deferred income. In cases in which bonus programmes are run by third parties, the associated costs are recognised directly in the income statement.

Interest expenses

Interest expenses consist of the expense of refinancing the areas of business that generate interest income. Interest expenses are recognised using the effective interest method.

Expected credit losses on financial assets

The expected credit losses on financial assets arise principally from defaults on receivables and from the increase in expected credit losses in the Payment business and the Consumer Finance business.

Impairement losses on commission income

The impairment losses on commission income consist of impairments on fraudulent and chargeback transactions that do not represent a credit loss.

1.4 Earnings per share

In 1,000 CHF or as indicated

2019

2018

Profit attributable to equity holders of the Company

58,616

104,489

Weighted average number of ordinary shares

25,000

25,000

Diluted earnings per share in CHF

2,344.64

4,179.56

As there are no convertible bonds, subscription rights or other potential shares outstanding, the shares are not diluted.

2 Operational assets and liabilities

The following section sets out the items in current and non-current assets of relevance to the business activity of the Aduno Group. The notes on the assets are focused on the receivables of the Payment and Consumer Finance businesses, goodwill and intangible assets. This section also contains a presentation of the changes in provisions and off-balance sheet transactions and notes on selected, operationally relevant items.

2.1 Receivables from the business unit Payment

In 1,000 CHF

31.12.2019

31.12.2018

Receivables within the scope of the ECL calculation*

 

 

Receivables from cardholders, credit card business

447,660

424,280

Receivables from debt collection, credit card business

4,105

3,483

Other receivables in the Payment business, credit card business

0

4,960

 

 

 

Receivables from cardholders, other payment cards

221,873

239,913

Receivables from debt collection, other payment cards

9,816

7,636

Other receivables in the Payment business, other payment cards

2,019

8,783

 

 

 

Impairments

(11,529)

(8,498)

 

 

 

Receivables outside the scope of the ECL calculation*

 

 

Receivables from fraud and chargeback

403

419

Impairments

(81)

(86)

Total receivables in the Payment business

674,265

680,889

*Allowances for doubtful accounts are calculated on the basis of the expected credit loss (ECL) model.  

Receivables Payment Description

Receivables from the business unit Payment – credit cards

Receivables from credit cardholders (credit card business) comprise open balances on credit card accounts and debit accounts. Open cardholder balances that have been past due for more than 90–120 days are transferred to a dedicated collection portfolio, which is reported under “Receivables from debt collection – credit cards”.

Receivables from the Payment business – other payment cards

Receivables from cardholders consists of open balances on other payment card accounts. The vast majority of these other payment cards is a homogeneous retail card portfolio with a long tracking history. A small part of the other payment card accounts comprises a heterogeneous corporate portfolio and a retailcard portfolio with a short tracking history. Open cardholder balances that fulfil the transfer criteria are transferred to a dedicated collection portfolio, which is included under “Receivables from debt collection, other payment cards”. The portfolio shrank in size due to the sale of some subsidiaries.

Receivables from fraud and chargeback

If a cardholder is suspected of making a fraudulent transaction or claims a chargeback, the balance is transferred to a dedicated portfolio until the case is settled. Suitable allowances are set aside for all receivables in the portfolio, although these are not subject to the expected credit loss model. The balance of all currently investigated fraudulent and chargeback transactions is shown under “Receivables from fraud and chargeback”.

Management of credit risk in the Payment business

It is in the nature of the credit card business that customers get temporarily into debt with the credit card company.

The credit counterparty in the issuing business is a private or corporate consumer using a credit card for purchases or cash transactions. All credit card customers, when applying for a credit card, are assigned an individual credit rating before a credit card is issued. If a customer does not meet the stringent customer credit rating criteria, no credit card is issued.

Risk and credit management is a core process in the credit card business and the Group therefore runs sophisticated risk assessment tools and delinquency reports to monitor and assess risk exposure. All incoming payments of customers are closely monitored.

The Group issues credit cards on behalf of various distribution partners. The Group has entered into agreements with some of its partners, so that the partner bears the risk of default for any receivable outstanding from cardholders. If a cardholder becomes delinquent, the outstanding amount is paid in full by the partner.

If a cardholder has a direct relationship with the Group and not via a partner, the Group bears the default risk.

Accounting principles

Receivables from cardholders and others are measured at fair value. The effective interest rate method is used for customers with an instalment facility or customers in default.

Impairment losses are booked to the allowance accounts for receivables unless the Group is of the view that the amount owed is not recoverable. In this case the amount deemed uncollectible is written off directly against the receivable.

Expected credit loss model

Allowances for doubtful accounts are calculated on the basis of the expected credit loss (ECL) model. Receivables are placed into one of the three stages on the basis of which the ECL is calculated.

At each reporting date, credit risk is assessed to see whether it has increased significantly. The assessment considers both quantitative and qualitative factors. Where the impairment has not already been identified, a receivable from the Payment business is allocated to Stage 2 when it is 60 days past due. Receivables are transferred from Stage 2 back to Stage 1 if their credit risk is no longer considered to be significantly increased. The Group allocates a customer to Stage 3 after debt management reminders have proved unsuccessful and the customer has had to be transferred to the pre-collection and legal collection processes. The transfer decision is made on a case-by-case basis for each customer and generally occurs when payments are 90–120 days past due. Contracts of customers in the collection process are terminated, so that the customer can no longer be improved from Stage 3. Receivables in Stage 3 that are older than 2 years are written off. Based on past experience, the Group forecasts that the receivables will not generate any further significant cash flow.

The loss allowance is adjusted based on management’s judgement as to whether actual losses are likely to fall above or below historical trends given current economic and loan conditions. Management deems the loss allowance for doubtful debts for the business unit Payment to be adequate.

2.2. Receivables from the business unit Consumer Finance

The receivables from the business unit Consumer Finance set out below ceased to be included in the consolidated balance sheet as at 31 December 2019 due to the sale of cashgate AG.

In 1,000 CHF

31.12.2019

31.12.2018

Receivables from personal credit

0

782,445

Receivables from finance leases

0

707,374

Impairments

0

(29,885)

Total receivables in the Consumer Finance business, net

0

1,459,934

- of which short-term

0

467,826

- of which long-term

0

992,108

In the business unit Consumer Finance, the Group granted its customers cash loans or financed vehicles via finance leases. The counterparty to a loan was a private customer in the case of cash loans and a private or corporate customer in the case of leasing transactions.

Finance lease receivables were collateralised by the vehicles being financed; no security was held for consumer loans.

The allowance for doubtful debts from the business unit Consumer Finance was composed of impairments on receivables that were already past due plus a group of receivables that were not yet past due, but which had been collectively assessed and were expected to generate an impairment.

Accounting principles

Receivables from Consumer Finance customers were calculated using the effective interest method and valued at amortised cost after impairment losses.

Impairment losses were booked to the allowance accounts for receivables unless the Group is of the view that the amount owed was not recoverable. In this case the amount deemed uncollectible was written off directly against the receivable.

Expected credit loss model

Allowances for doubtful accounts were calculated on the basis of the expected credit loss (ECL) model. Receivables were placed into one of the three stages on the basis of which the ECL was calculated (see section 2.1 for a full explanation).

2.3 Property and equipment

In 1,000 CHF

Furniture

IT & office equipment

Cars

Leasehold improvement

Buildings

Total

Costs

 

 

 

 

 

 

Balance at 1 January 2019

3,793

12,219

916

10,241

1,939

29,108

Change of scope in consolidation

(167)

(299)

(809)

(567)

(1,940)

(3,781)

Acquisitions

307

207

0

388

0

903

Transfers

(1,097)

302

0

795

0

0

Disposals and other changes

(1,112)

(273)

(107)

(9)

0

(1,500)

Balance at 31 December 2019

1,724

12,156

0

10,849

(0)

24,730

 

 

 

 

 

 

 

Depreciation and impairment losses

 

 

 

 

 

 

Balance at 1 January 2019

(1,659)

(8,595)

(372)

(5,360)

(448)

(16,433)

Change of scope in consolidation

122

190

427

212

490

1,442

Depreciation charge for the year

(386)

(1,761)

(104)

(2,845)

(42)

(5,137)

Disposals and other changes

984

277

49

1

0

1,311

Balance at 31 December 2019

(938)

(9,888)

0

(7,992)

0

(18,817)

 

 

 

 

 

 

 

Carrying amount

 

 

 

 

 

 

At 1 January 2019

2,134

3,624

544

4,881

1,492

12,675

At 31 December 2019

786

2,268

0

2,857

0

5,912

In 1,000 CHF

Furniture

IT & office equipment

Cars

Leasehold improvement

Buildings

Total

Costs

 

 

 

 

 

 

Balance at 1 January 2018

3,328

10,820

892

9,072

1,939

26,052

Change of scope in consolidation

181

1,639

(13)

1,471

0

3,277

Acquisitions

839

1,017

389

176

0

2,421

Disposals and other changes

(555)

(1,256)

(352)

(478)

0

(2,641)

Effect of movements in foreign exchange

0

(1)

0

0

0

(1)

Balance at 31 December 2018

3,793

12,219

916

10,241

1,939

29,108

 

 

 

 

 

 

 

Depreciation and impairment losses

 

 

 

 

 

 

Balance at 1 January 2018

(1,922)

(7,395)

(449)

(4,700)

(384)

(14,850)

Change of scope in consolidation

6

24

13

0

0

44

Depreciation charge for the year

(298)

(2,176)

(165)

(1,029)

(64)

(3,732)

Disposals and other changes

555

952

228

369

0

2,104

Effect of movements in exchange rates

0

1

0

0

0

1

Balance at 31 December 2018

(1,659)

(8,595)

(372)

(5,360)

(448)

(16,433)

 

 

 

 

 

 

 

Carrying amount

 

 

 

 

 

 

At 1 January 2018

1,407

3,425

444

4,372

1,555

11,202

At 31 December 2018

2,134

3,624

544

4,881

1,492

12,675

Accounting principles

Property and equipment are carried at cost less accumulated amortisation and impairment losses. Depreciation is calculated using the straight-line method over the estimated useful life. The estimated useful lives are as follows:

Categorie
Estimated useful life

Furniture

5 to 10 years

IT & office equipment

2 to 5 years

Cars

4 to 5 years

Leasehold improvement

4 to 10 years, depending on rental period

Useful lives and residual values are reviewed annually on the reporting date and any impairment losses recognised in the income statement.

2.4 Goodwill and intangible assets

In 1,000 CHF

Goodwill

Software

Licences

Client relationships

Total intangible assets

Costs

 

 

 

 

 

Balance at 1 January 2019

85,708

26,195

9,325

158,592

194,113

Change of scope in consolidation

(920)

(1,320)

(944)

(32,296)

(34,560)

Acquisitions

0

1,646

36

0

1,682

Disposals and other changes

0

(33)

0

0

(33)

Balance at 31 December 2019

84,788

26,489

8,417

126,296

161,202

 

 

 

 

 

 

Amortisation and impairment losses

 

 

 

 

 

Balance at 1 January 2019

(12,714)

(4,796)

(446)

(29,501)

(34,743)

Change of scope in consolidation

0

1,019

937

25,306

27,262

Amortisation charges for the period

(16,752)

(3,963)

(1,335)

(23,724)

(29,022)

Impairment loss

0

(14,634)

(2,019)

(89,639)

(106,293)

Disposals and other changes

0

0

0

0

0

Balance at 31 December 2019

(29,467)

(22,374)

(2,863)

(117,558)

(142,795)

 

 

 

 

 

 

Carrying amounts

 

 

 

 

 

At 1 January 2019

72,994

21,399

8,879

129,091

159,369

At 31 December 2019

55,321

4,115

5,554

8,738

18,407

In 1,000 CHF

Goodwill

Software

Licences

Client relationships

Total intangible assets

Costs

 

 

 

 

 

Balance at 1 January 2018

26,967

33,165

2,992

40,940

77,098

Change of scope in consolidation

58,741

1,955

9,181

125,316

136,453

Acquisitions

0

2,646

0

0

2,646

Disposals and other changes

0

(11,572)

(2,848)

(7,664)

(22,084)

Balance at 31 December 2018

85,708

26,195

9,325

158,592

194,113

 

 

 

 

 

 

Amortisation and impairment losses

 

 

 

 

 

Balance at 1 January 2018

(4,386)

(3,733)

(1,587)

(28,521)

(33,841)

Change of scope in consolidation

0

0

0

0

0

Amortisation charges for the period

(8,328)

(3,292)

(1,708)

(8,644)

(13,643)

Disposals and other changes

0

2,229

2,848

7,664

12,742

Balance at 31 December 2018

(12,714)

(4,796)

(446)

(29,501)

(34,743)

 

 

 

 

 

 

Carrying amounts

 

 

 

 

 

At 1 January 2018

22,581

29,432

1,405

12,419

43,256

At 31 December 2018

72,994

21,399

8,879

129,091

159,369

In the case of software of Contovista AG, a new code was developed in the course of 2019 as part of the modularisation and the change in the programming language used, replaced the old code capitalised when the acquisition was made. This means the old code is no longer in use and had to be written down, resulting in an additional write-off of CHF 14.6 million.

As part of the annual impairment test of the intangible assets license agreement, customer relationship and co-branding agreement, a one-time individual value adjustment of CHF 91.7 million was necessary. The intangible assets were assessed using the same methodology as that used for capitalisation from the purchase price allocation of Accarda AG. The basis of calculation was lower than when the assets were originally capitalized, due to market developments in the retail business and growth prospects.

Accounting principles

Goodwill

Net assets acquired in an acquisition are measured at current values. The excess of the cost of acquisition over the revalued net assets is recognised as goodwill. Goodwill is amortised over a period of five years. 

Intangible assets

Intangible assets are carried at cost less accumulated amortisation and impairment losses.

Internally generated intangible assets are not capitalised.

Intangible assets acquired as part of an acquisition that were already recognised in the acquired company are classified and reported as acquired intangible assets. The customer relationships acquired in an acquisition are measured at current values and recognised as intangible assets from sales price allocation.

Intangible assets are amortised on a straight-line basis over their estimated useful lives. Customer relationships are amortised using the arithmetic declining balance method. The ordinary amortisation rates are as follows:

Category
Estimated useful life

Software

as a rule 3 years

Client relationships

7 to 15 years

Licences

5 to 7 years

Useful lives and residual values are reviewed annually on the reporting date and any impairment losses recognised in the income statement.

Impairment

Goodwill and intangible assets are tested for impairment at each reporting date. If there are indications that goodwill or intangible assets may be impaired in value, the recoverable amount is calculated. If the carrying amount of the asset exceeds the recoverable amount, an impairment loss is recognised in the income statement.

If the asset does not generate independent cash flows on its own, the recoverable amount is determined for the smallest possible group of assets (cash-generating unit; CGU) to which the asset belongs. If impairments have to recognised, they are first charged to the goodwill associated with the CGU. The remainder of the impairment loss is allocated pro rata to other assets based on their carrying amounts.

Additions as a result of the reversal impairment losses on intangible assets other than goodwill are recognised in the income statement. A reversal of an impairment loss on goodwill is not added back.

2.5 Financial assets 

In 1,000 CHF

Note

31.12.2019

31.12.2018

Securities

 

42,579

30,413

Investments in associates

 

0

1,427

Employer contribution reserve

5.1

1,234

1,233

Total finacial asset

 

43,813

33,073

Financial assets
Description and accounting principles

Securities

The Group holds preference shares in Visa Inc. which are reported under financial investments. These shares are measured at fair value. Changes in fair value are recognised in financial income. 

Investments in associates

The entire 33.3% stake in SwissWallet AG was sold in mid-December. Investments in associated companies were valued according to the equity method.

Employer contribution reserve

Existing employer contribution reserves, which can be used as contributions at any time and have been withdrawn by the pension fund as employer contribution reserves, must be recognised as an asset under financial assets to the extent of the economic benefit.

2.6 Provisions

In 1,000 CHF

Tax

Onerous contracts

Removal obligations

Legal

Other

Total Provisions

Balance at 1 Januar 2019

90,009

4,901

1,690

840

7,111

104,551

Change of scope in consolidation

(1,451)

0

0

(120)

(2)

(1,573)

Additions

72,388

2,708

50

626

3,133

78,905

Utilisations

(28,227)

(104)

0

(25)

(2,758)

(31,114)

Releases

(94)

(2,134)

0

(13)

(2,779)

(5,020)

Balance at 31 December 2019

132,625

5,371

1,740

1,307

4,705

145,748

- of which short-term

132,625

2,824

0

1,011

4,562

141,023

- of which long-term

0

2,547

1,740

297

142

4,725

In 1,000 CHF

Tax

Onerous contracts

Removal obligations

Legal

Other

Total Provisions

Balance at 1 Januar 2018

79,543

7,717

1,640

126

302

89,328

Change of scope in consolidation

1,725

0

0

0

3,899

5,624

Additions

26,792

266

50

714

6,903

34,725

Utilisations

(18,052)

0

0

0

(2,617)

(20,669)

Releases

0

(3,082)

0

0

(1,376)

(4,458)

Balance at 31 December 2018

90,009

4,901

1,690

840

7,111

104,551

- of which short-term

90,009

2,125

0

543

4,507

97,184

- of which long-term

0

2,777

1,690

297

2,604

7,367

Categorie
Description

Taxes

In 2011, the Aduno Group transferred the areas of cash management, payment transactions, financing, foreign currency management and brand management to the newly incorporated Aduno Finance AG, which is headquartered in Stans (Nidwalden), with offices in Freienbach (Schwyz). During the ordinary tax inspections for 2011 and 2012, the cantonal tax authorities in Zurich questioned the transfer prices applied. Based on the development of the tax appeal submitted by Aduno, an estimate adjustment of CHF 53.3 million was made in 2019 and booked as an additional tax provision.

Onerous Contracts

Provisions for loss-making contracts were made because the Group has undertaken to provide transitional services to the buyers in connection with the sale of Aduno SA and cashgate AG and the costs of the services to be provided, including rental expenses, exceed expected income.

Provisions for the leasehold restoration obligation

In accordance with the lease and applicable constructive requirements / legal obligation, a provision for the leasehold restoration obligation in respect of reinstatement of the original condition of the premises is made when the Group enters into a contractual agreement. A related payment is recognised when the obligation event to restore the premises to the specified condition occurs. The expenses are recorded over the lifetime of the lease.

Legal proceedings

The Group establishes provisions for pending legal cases where management believes that the Group is likely to be required to make payments and where the payment amounts can be reasonably estimated. The legal cases for which provisions have been set aside are for a breach of the share purchase agreement in connection with the sale of cashgate AG, for disputes with a construction project for the use of ground water for cooling and heating and an investigation by the Competition Commission (WEKO) into a boycott of mobile payment solutions by international providers.

Other provisions

Other provisions mainly include provisions for the dividend from Accarda’s collection business. As the amount and the timing of payments are estimated, they are reported as provisions. 

Accounting principles

A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

2.7 Other operative assets and liabilities

Prepaid expenses

In 1,000 CHF

31.12.2019

31.12.2018

Prepaid expenses to partners

10,295

30,884

Other

10,643

33,493

Total prepaid expenses

20,938

64,378

In the Payment segment, the Group pays commissions to its distribution partners (mainly the shareholder banks). The commission contains a reimbursement for annual charges for credit cards. The share paid to the partner but not yet consumed is recognised as a prepaid expense to partners.

Other includes prepaid vendor invoices for licences and software maintenance contracts, and the input tax credit from the FTA. Prepaid expenses for unbilled service revenues are also included.

Accrued expenses and deferred income

In 1,000 CHF

31.12.2019

31.12.2018

Deferred annual fees

36,299

36,774

Commission payable to partners

37,897

39,446

Accrued expenses arising from loyalty programs

19,488

19,597

Accrued interest expenses

1,431

1,552

Other

16,930

24,157

Total accrued expenses and deferred income

112,045

121,526

In the annual fees, the fees charged to customers once a year are deferred pro rata temporis.

The commission liabilities include accrued compensation which is paid to the distribution partners in January.

The accrual from loyalty programs includes the liability from the surprize programme, in which points are collected when the credit or pre-paid card is used, which can then be redeemed at a later date using vouchers or through discounts.

Other includes outstanding vendor invoices for projects and accruals for payments to banks.

Payables to counterparties

In 1,000 CHF

31.12.2019

31.12.2018

Advances received

68,729

115,117

Payables to merchants

47,445

59,617

Payables to schemes

86,886

66,765

Total payables to counterparties

203,060

241,498

The Group receives advance payments from customers with issued prepaid credit cards. In the previous year 2018, the advance payments included the cashgate-advance payments.

Accounting principles

The purpose of accruals and deferrals of assets and liabilities is to book expenses and income at the time they arise. This also means that all expenses used to generate a certain level of income are recognised according to when income is incurred.

2.8 Off-balance liabilities

In 1,000 CHF

2019

2018

Guarantees to 3rd parties

83,925

83,535

Total sureties, guarantee obligations and pledges

83,925

83,535

Total contingent liabilities

83,925

83,535

 

 

 

Investment obligations from contracts already concluded

38,764

46,630

Obligation from long-term rental agreements

15,737

7,572

Total other obligations not recognised in the balance sheet

54,501

54,202

The guarantees to 3rd parties are bank guarantees. The leases are mainly for offices and parking spaces. The liabilities from long-term rental agreements were extended by five years at the end of 2019. The change from 2018 to 2019 is due to this extension. Investment obligations are primarily contracts with suppliers in the Payment segment. Investment obligations from contracts already concluded fell. This was mainly due to the fact that the remaining term of the contracts was shortened by one year.

Accounting principles

Contingent liabilities and other obligations not to be reported in the balance sheet are measured and disclosed on each reporting date. The measurement is based on the amount of the future, unilateral irrevocable payments and costs, less any promised consideration.

3 Financing and risk management

The following describes the guidelines and procedures that are applied in managing the capital structure and financial risks. The Aduno Group seeks to ensure that it has an appropriate equity base in order to retain the trust of investors, creditors and the market and to continue the Group’s expansion.

3.1. Interest-bearing liabilities

In 1,000 CHF

31.12.2019

31.12.2018

Other bank liabilities

144

202,652

Current portion of syndicated loan

0

390,000

Current portion of unsecured bond issues

0

525,269

Short-term interest-bearing liabilities

144

1,117,921

 

 

 

Unsecured bond issues

274,575

274,299

Other long-term liabilities

0

468

Long-term interest-bearing liabilities

274,575

274,767

 

 

 

Total interest-bearing liabilities

274,719

1,392,688

Changes in interest-bearing liabilities are mainly changes to cash flows from financing activities and are disclosed in the consolidated cash flow statement.

Terms and debt repayment schedule

 

Currency

Nominal interest rate

Year of maturity

Nominal value

Carrying amount

Nominal value

Carrying amount

In 1,000 CHF

 

 

 

31.12.2019

31.12.2019

31.12.2018

31.12.2018

Syndicated loan

CHF

0.68%

2019

0

0

390,000

390,000

 

 

 

 

 

 

 

 

Unsecured bond issue

CHF

0.00%

2019

0

0

175,000

175,082

Unsecured bond issue

CHF

1.125%

2021

275,000

274,575

275,000

274,299

Unsecured bond issue

CHF

3 M Libor

2019

0

0

100,000

100,022

Unsecured bond issue

CHF

3 M Libor

2019

0

0

100,000

100,000

Unsecured bond issue

CHF

0.00%

2019

0

0

150,000

150,165

 

 

 

 

 

 

 

 

Other bank liabilities

CHF

0.78%

2019

0

0

7,170

7,170

Other bank liabilities

CHF

0.20%

2019

0

0

195,469

195,469

Other bank liabilities

CHF

various

current account

144

144

13

13

Other long-term liabilities

CHF

0.00%

2019

0

0

468

468

Total

 

 

 

275,144

274,719

1,393,120

1,392,688

Syndicated loan

With the sale of cashgate AG, the syndicated loan agreement for CHF 600 million under Zürcher Kantonalbank was also repaid.

Other bank liabilities

As at 31 December 2019, the Group had access to a bilateral credit line with Zürcher Kantonalbank of CHF 800 million (31 December 2018: CHF 800 million). The interest rate for the credit facility is set at the market interest rate plus a fixed credit margin. As at 31 December 2019, CHF 0.0 million (31 December 2018: CHF 7.6 million) of this credit line had been utilised.

Accounting principles

Interest-bearing financial liabilities are generally recorded at nominal value. Non-current financial liabilities (bonds) are recognized at amortized cost.

3.2 Share capital and reserves

Share capital

As at 31 December 2019 the share capital of parent company Aduno Holding consisted of 25,000 registered shares with a par value of CHF 1,000 each (31 December 2018: 25,000 registered shares with a par value of CHF 1,000 each). Shareholders are entitled to receive the declared dividends and to exercise one vote per share at the Company’s Annual General Meeting.

Reserves

The statutory reserves not available for distribution amounted to CHF 5.0 million as at 31 December 2019 (31. December 2018: CHF 5.0 million).

Dividends

The following dividends were declared and paid by the Group:

In 1,000 CHF or as indicated

2019

2018

Number of registered shares eligible for dividends (number)

25,000

25,000

Ordinary dividend per registered share (in CHF)

1,600

6,000

Dividends paid

40,000

150,000

After 31 December 2019, the Board of Directors proposed dividends of CHF 4,800 per registered share, making a total of CHF 120.0 million for 2019. The proposed dividend will be submitted for approval to the General Meeting to be held in June 2020.

Capital management

The Board’s policy is to maintain an adequate equity base so as to maintain the confidence of investors, creditors and the market and to sustain the future development of the business. The Board of Directors monitors the return on capital, which the Group defines as the total shareholders, equity and the development of dividends paid to shareholders.

3.3 Risk management

As a financial services provider the Aduno Group is subject to constant change and thus confronted with opportunities and risks that can have a decisive influence on its ability to achieve its strategies and goals.

Overall responsibility for risk management lies with the Board of Directors, which approves the principles for risk management. The Board of Directors receives regular reports about the risk situation of the Group and the status of measures implemented. The Board of Directors monitors the effective implementation of the risk policy and risk strategies as well as the adopted measures. The Audit and Risk Committee and the internal auditors support the Board of Directors in the execution of its responsibilities.

The Executive Board is responsible for the implementation of the risk management standards defined in the risk management regulations and the design, implementation and continuous review of the Internal Control System (ICS). A risk board has been set up at the Executive Board level that meets quarterly to discuss the structure and effectiveness of the risk management system, the design and monitoring of the risk policy and the management of the Group’s risks. In order to support the Executive Board expert committees have been set up to prepare requests for approval, proposals and recommendations as a decision-making basis for the Excutive Board.

A central risk control function is responsible for identifying and monitoring risks at an aggregated portfolio level, monitoring compliance with the risk policy and ensuring integrated risk reporting to the Board of Directors and the Executive Board. Risk control is responsible for risk measurement methodologies, risk-based approval processes for new business activities, model validation and quality assurance of the implemented risk measurement processes If required, risk control can propose directives for approval by the Executive Board. Central risk control is responsible for monitoring compliance with the policies and their supporting directives and providing reports or information as requested.

The following risks have been identified as significant risks for the Aduno Group:

Overall risks

The overall risks include environmental, business and operational risks, which are systematically identified and either accepted or mitigated using suitable measures within the scope of risk affinity. These measures are reported as controls in the Aduno Group’s ICS.

Financial risks: Credit risk

The Aduno Group is exposed to the risk of counterparty default as a result of its operating activities. This risk exists mainly in relation to receivables from customers of the Group and depends primarily on the individual characteristics of each customer. Geographically, credit risk is concentrated in Switzerland where the Group mainly operates.

The default risk is limited to the carrying amount of the financial assets. The maximum credit risk, to which the Group is theoretically exposed at 31 December 2019 and 2018 respectively, is represented by the carrying amounts stated for financial assets in the balance sheet. Additionally, credit risk can occur from debt collection and from fraud in the Payment business as shown in note 2.1.

Financial risks: Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. Liquidity risk arises if the Group is unable to obtain under economic conditions the funds needed to carry out its operations. The Group closely monitors its liquidity needs and also maintains liquidity forecasts and validates its validation models.

Management ensures that cash funds and credit lines currently available and funds that will be generated from operating activities enable the Group to satisfy its requirements resulting from its operating activities and to fulfil its obligations to repay its debts at their natural due date.

Financial risks: Market risk

Market risk is the risk of losses arising from movements in market prices in on-balance and off-balance sheet items. The definition includes risks from interest rate instruments and equities, and foreign currency risks.

The Group uses derivative financial instruments to hedge its exposure to foreign exchange and interest rate risks arising from operational and financing activities.

In 1,000 CHF

Assets

31.12.2019 Liabilities

Assets

31.12.2018 Liabilities

Foreign currency derivatives

94

(78)

93

(495)

The positive and negative values of derivatives are recognised in other receivables and other liabilities.

The Group has a permanent requirement to refinance outstanding receivables due from cardholders and consumer finance customers. The refinancing need is fulfilled with bank loans with durations from one to 90 days and is aligned to Libor conditions. In addition, the Group can enter into interest rate swaps and thereby exchange Libor-based interest payments for fixed-rate ones to hedge against fluctuating interest rates. As at 31 December 2019 no receivables were hedged with interest rate swaps (31 December 2018: CHF 0.0 million).

Risks in the preparation of the financial statements

To ensure that the consolidated financial statements comply with the applicable accounting standards and that reporting is correct, the Aduno Group has set up effective internal control and management systems which are regularly reviewed. When accounting and measuring, estimates and assumptions are made about the future. These are based on the knowledge of the respective employees and are critically reviewed on a regular basis. If there is a material measurement uncertainty for an item that could lead to a material adjustment of the carrying amounts, this measurement uncertainty must be revealed in the notes. As at the reporting date, the Company was unaware of any such risks that could lead to a significant correction of the financial performance and financial position presented in the annual financial statements.

4 Group structure

This section sets out the structure of the Aduno Group including significant changes and resulting effects on the consolidated financial statements. It also contains disclosures on related party transactions.

4.1 Change in scope of consolidation

Acquisition of subsidiaries

As at 24 July 2019, on the basis of the sale announcement by minority shareholders on 20 June 2019, the Group acquired the remaining 30% of Contovista AG for CHF 12.4 million and now has full ownership of Contovista AG. The buy-out of non-controlling interests is shown in the statement of changes in equity. The surcharge of CHF 7.5 million was booked to equity, as the net assets of Contovista AG were not remeasured and this is equivalent to a transaction with shareholders in their capacity as shareholders and can therefore be recognised with no impact on profit.

Sale of subsidiaries

The 100% investment in the Loyalty Group including Sanavena GmbH was sold on 30 October 2019. The sale produced a loss of CHF 1.0 million.

As at 27 September 2019 the Group sold its 55% investment in Zaala AG. The sale resulted in a gain of CHF 0.1 million, which was recognised in non-operating profit.

As at 4 March 2019 the Group sold its 60% investment in Paycoach AG. The sale resulted in a gain of CHF 1.2 million.

The following table shows the consolidated balance sheet as at the date of sale of the Loyalty Group, including Sanavena GmbH, Zaala AG and Paycoach AG.

Effect of disposal on the financial position of the Group

In 1,000 CHF

Paycoach AG

Zaala AG

Sanavena GmbH

Loyalty Gift Card AG

Loyalty Gift Card Germany

Loyalty Gift Card Austria

Total current assets

2,984

4,704

26

241

903

98

Total non-current assets

186

113

0

144

0

0

Total assets

3,171

4,817

26

385

903

98

Total current liabilities

2,454

711

1

224

674

25

Total non-current liabilities

0

4,000

0

8

0

0

Total liabilities

2,454

4,711

1

231

674

25

Total equity

717

106

25

154

229

73

Total liabilities and equity

3,171

4,817

26

385

903

98

Discontinued business units

The Consumer Finance business unit, which included cashgate AG, was sold, which means that cashgate AG was sold to Cembra Money Bank AG on 2 September 2019. The sales price amounted to CHF 275 million.

The gain on disposal of CHF 155.5 million, which is calculated from the sales price less shareholders' equity of CHF 120 million, was booked to the non-operating income.

The income statement for the first eight months of 2019 and the balance sheet as at 31 August 2019 of cashgate AG is shown below.

Income statement for the first 8 months

In 1,000 CHF

2019

Operating income

67,926

Operating expenses

60,692

Operating result

7,235

Profit before income tax

7,203

Profit for the period

5,210

Balance sheet as at 31.08.2019

In 1,000 CHF

31.08.2019

Assets

 

Receivables from business unit Consumer Finance

449,784

Remaining current assets

43,472

Total current assets

493,255

Receivables from business unit Consumer Finance

1,086,286

Remaining non-current assets

10,516

Total non-current assets

1,096,802

Total assets

1,590,057

 

 

Liabilities

 

Accrued expenses and deferred income

1,418,574

Remaining current liabilities

51,205

Total current liabilities

1,469,778

Total liabilities

1,469,778

Total Equity

120,279

Total Liabilities and Equity

1,590,057

Sale of at-equity companies

On 13 December 2019 the 33% investment in SwissWallet AG was sold. This sale produced a loss of CHF 1.2 million, which is reported in non-operating profit.

On 9 May 2019 the Group sold its 20% investment in Loyalty Services AG. The sale resulted in a loss of CHF 0.1 million.

4.2 Group companies

In 1,000

Country of incorporation

Currency

Share capital 31.12.2019

Share capital 31.12.2018

Ownership interest 31.12.2019

Ownership interest 31.12.2018

Aduno Holding AG, Zurich (ZH), parent company

Switzerland

CHF

25,000

25,000

-

-

Accarda AG, Brüttisellen (ZH)

Switzerland

CHF

18,500

18,500

100%

100%

Aduno Finance AG, Stans (NW)

Switzerland

CHF

1,000

1,000

100%

100%

cashgate AG, Zurich (ZH)

Switzerland

CHF

n/a

35,000

n/a

100%

Contovista AG, Schlieren (ZH)

Switzerland

CHF

140

140

100%

70%

SwissWallet AG, Zurich (ZH) 1)

Switzerland

CHF

n/a

105

n/a

33.3%

Viseca Card Services SA, Zurich (ZH)

Switzerland

CHF

20,000

20,000

100%

100%

 

 

 

 

 

 

 

Subsidiaries of Accarda AG

 

 

 

 

 

 

Loyalty Gift Card AG

Switzerland

CHF

n/a

500

n/a

100%

Loyalty Gift Card GmbH

Austria

EUR

n/a

35

n/a

100%

Loyalty Gift Card GmbH

Germany

EUR

n/a

100

n/a

100%

Loyalty Services AG 1)

Switzerland

CHF

n/a

100

n/a

20%

Paycoach AG

Switzerland

CHF

n/a

300

n/a

60%

Sanavena GmbH

Switzerland

CHF

n/a

336

n/a

100%

Zaala AG

Switzerland

CHF

n/a

500

n/a

55%

1) Associates

Accounting principles

Consolidation of subsidiaries

The consolidated financial statements are based on individual financial statements of all subsidiaries prepared in accordance with uniform principles. Subsidiaries are entities controlled by the Group. Control is assumed to exist if the Group holds more than half of the voting rights in the subsidiary or it has control in another way. Consolidation is based on the purchase method. Group-internal balance sheet assets and liabilities and unrealised gains and losses or income and expenses from Group-internal transactions are eliminated when preparing the consolidated financial statements.

Investments in associates

Associates are recognised in the balance sheet using the equity method and initially at fair value. Associates are those entities in which the Group has significant influence on their financial and business policy but does not control them. The Group’s share in the profit or loss of the associate is included in the income statement.

4.3 Related parties

Related parties are defined as parties that can exercise significant influence, directly or indirectly, over the Group’s financial or operating decisions. They include shareholders with significant influence, members of the Group’s Board of Directors and the members of the Executive Committee. Organisations which are directly or indirectly controlled by the same related parties are also considered to be related.

Entities in which the Group has a significant equity interest are also deemed to be related parties. In the two reporting periods these are the associates SwissWallet AG (2019: up to and including 13 December 2019) and Loyalty Services AG (2019: up to and including 9 May 2019).

The following shareholders are regarded as related parties:

Part of share capital in % held at 31 December

2019

2018

Raiffeisen Group

25.5%

25.5%

Zürcher Kantonalbank

14.7%

14.7%

Entris Banking AG

14.0%

14.0%

Migros Bank AG

7.0%

7.0%

Banque Cantonale Vaudoise BCV

4.8%

4.8%

EFG Bank AG

3.6%

3.6%

Zuger Kantonalbank

1.4%

1.4%

Valiant Bank AG

n/a

n/a

Total related parties

71.0%

71.0%

All transactions between the Group and its related parties as well as its associates are entered into at market rates.

Transactions with related parties (excluding associates)

The Group does extensive business with its shareholders and other related parties, especially within financing activities and card distribution in the Payment business.

Income and expenses with related parties as stated in the following table is included in the Group’s consolidated statement of comprehensive income.

In 1,000 CHF

2019

2018

Interest income

0

27

Interest expenses

3,697

3,715

Other income

19

0

Distribution, advertising and promotion expenses

17,737

17,608

Total income (–) and expenses (+) with related parties (without associated parties)

21,414

21,295

At the closing date, the Group had the following balance sheet exposure with its related parties:

In 1,000 CHF

2019

2018

Cash and cash equivalents

568,344

33,394

Other receivables

94

93

Prepaid expenses and accrued income

5,678

6,701

Short-term interest-bearing liabilities

51

155,772

Other payables

78

189

Accrued expenses and deferred income1)

20,901

18,766

Total exposure to related parties (without associated parties)

595,145

214,914

1) In the previous year's figure, a correction of CHF 17.9 million was made concerning the transaction "Remuneration to banks" in the position Distribution, advertising and promotion expenses.

The Group’s balance sheet does not contain provisions for doubtful debts from related parties, nor does the consolidated statement of comprehensive income recognise any expenses in respect of bad or doubtful debts due from related parties.

Transactions with associates

The transactions with associates mainly comprise processing expenses for services provided by SwissWallet AG to the Group (up to 13 December 2019).

The income and expenses relating to associates shown in the following table are included in the Group’s consolidated income statement.

In 1,000 CHF

2019

2018

Other income

11

16

Processing and service expenses

802

745

Total income (–) and expenses (+) with associated parties

791

729

At the closing date, there were no transactions by the Group with associates in the balance sheet.

Transactions with key management personnel

Viseca issues credit cards to key management personnel. It is in the nature of the credit card business for customers to have temporary liabilities with Viseca. In the normal course of business, employees and key management personnel may also request these services. They are granted normal terms and conditions that are also applied to other third parties.

5 Other information

This section presents information that has not been disclosed in previous sections of the report. This includes, for example, notes on employee benefits and income taxes.

5.1 Employee benefits

The Group is affiliated with Sammelstiftung der Kantonalbanken, which is a collective foundation of cantonal banks. The collective foundation is a separate legal entity. The foundation is responsible for managing the pension plan; its board of trustees comprises an equal number of employer and employee representatives from all affiliated companies.

The Swisscanto Sammelstiftung is not the only risk carrier, since Swisscanto is not a foundation with a full insurance guarantee. However, the payment of special contributions to finance a deficit is only applied if other measures do not promise success.

Economic benefit/economic obligation and pension expense

As at 31 December 2019, the collective foundation’s coverage ratio was 107.5% (2018: 101.1%). The following table shows the economic benefit and the economic obligation and the corresponding changes in the pension expense.

 

Economic portion of the Aduno Group

 

 

Economic portion of personnel expenses

In 1,000 CHF

Surplus/deficit 31.12.2019

31.12.2019

31.12.2018

Change from previous year (expense in 2019))

Contributions accrued for the period

2019

2018

Pension plans with no surplus/deficit

-

-

-

-

7,854

7,854

6,699

Total

 

 

 

 

7,854

7,854

6,699

Employer contribution reserve

Accarda AG holds employer contribution reserves:

 

 

 

 

Expense (+) / income (-) from the employer contribution reserve in personnel expenses

In 1,000 CHF

Nominal value 31.12.2019

Utilisation waiver 31.12.2019

Carrying value 31.12.2019

Change from previous year (expense in 2019)

Carried value 31.12.2018

2019

2018

Pension schemes

1,234

0

1,234

0

1,233

0

0

Total

1,234

0

1,234

0

1,233

0

0

Summary of pension costs

In 1,000 CHF

2019

2018

Contributions to pension plans charged to Group companies

7,854

6,699

Contributions to pension plans paid from employer contributions reserve

0

0

Total contributions

7,854

6,699

Change of employer contributions reserve from evolution of fortune, impairments, discounting, etc.1)

1

0

Contributions and change in employer contributions reserve

1

0

1) Interest income 

Accounting principles

The economic impact of the employee benefit plans on the Aduno Group is evaluated annually. Surpluses and deficits are calculated on the basis of the annual financial statements of the corresponding pension funds, which are based on Swiss GAAP FER 26. An economic benefit is capitalised if it is eligible and it is the intention to use the surplus of the pension plan assets to reduce the Group’s future pension expense. In the event of a deficit, an economic obligation must be recognised if the conditions for the recognition of a provision are met.

Existing employer contribution reserves, which can be used as contributions at any time and have been withdrawn by the pension fund as employer contribution reserves, must be recognised as an asset under financial assets to the extent of the economic benefit, freely available reserves on the other hand are not activated. If the Group has granted the pension fund a conditional waiver of use, the asset will be impaired.

Changes in the value of recognised economic benefits or obligations from pension plans and employer contribution reserves are recognised in the income statement under personnel expenses.

5.2 Income taxes

Income taxes recognised in the income statement

Income taxes comprise:

In 1,000 CHF

2019

2018

Current income tax expenses

70,784

22,695

Deferred tax expenses

(21,946)

(3,378)

Total income tax expenses

48,838

19,318

In 1,000 CHF

2019

2018

Profit before income tax

107,164

123,717

Expected tax rate

18.39%

23.02%

Expected income tax

19,707

28,478

 

 

 

Use of non-actived looses

0

(2,053)

Additional incomes / non-deductable expenses

7,733

6,551

Non-taxable income

(27,982)

(13,796)

Tax rate changes

(331)

0

Change of provisions from last year

51,450

0

Various effects

(1,738)

138

Total income tax expenses

48,838

19,318

Effective income tax rate

45.57%

15.61%

Analysis of the income tax burden

The Group operates throughout Switzerland and is therefore taxed in many different tax jurisdictions. The Group’s expected tax rate is calculated as a weighted average of the tax rates of the relevant tax jurisdictions.

Tax losses carried forward

As at 31 December 2019, deferred tax assets of CHF 0.1 million were recognised on tax loss carryforwards of CHF 0.7 million.

Accounting principles

Income taxes comprise all profit-related current and deferred income taxes. Current income taxes are calculated on the taxable gain or loss. Deferred income taxes are calculated on the basis of a balance sheet-oriented perspective of temporary differences between the figures determined in accordance with Swiss GAAP FER and the figures in the tax balance sheets. No deferred taxes are recognised when goodwill is initially recognised. Furthermore, no deferred taxes are recognised for temporary differences relating to interests if the timing of the temporary differences is controlled by the Group and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred taxes are calculated on the basis of the tax rates expected to be applicable which have been legally agreed on the reporting date or for which the decision process has essentially been concluded.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profit will allow the asset to be recovered. Deferred tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable for the respective tax benefit to be realised.

Deferred tax assets and liabilities are offset within the legal entities if there is a legally enforceable right to offset current tax assets and liabilities and if the deferred taxes relate to the same tax authority.

6. Events after the reporting date

Since the extensive spread of COVID-19 and its international implications did not happen until 2020, it is deemed a non-bookable event after the reporting date of 31 December 2019.

However, in the weeks ahead to the publication of the report, the Aduno Group recorded a significant decline in transaction volumes in various areas - especially in the restaurant and tourism sectors. At present, it is not yet possible to foresee the overall extent of these declines, but a noticeable drop in sales is expected in 2020.

Zurich, 23 April 2020

Pascal Niquille
Chairman of the Board of Directors

Max Schönholzer 
Chief Executive Officer

Markus Bertini 
Chief Financial Officer a.i.