Information about this report

This section describes what makes up the Aduno Group, explains the basis on which the financial statements have been prepared, and provides an overview of the key assumptions and estimations made by the management. In addition, it gives an insight into significant events in the financial year that affect the financial report.

The Aduno Group

Aduno Holding AG (Aduno Holding or Company) is a company domiciled in Zurich (Switzerland). The Company's condensed consolidated interim financial statements as at 30 June 2019 set out the financial condition, position and performance of Aduno Holding and its subsidiaries (together referred to as the Group).

Aduno Holding and its subsidiaries provide financial services in cashless payments, personal credit 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.

Contovista AG (Contovista)

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

The condensed interim financial statements from 1 January to 30 June were approved on 21 August 2019.

Accounting basis

These consolidated financial statements comprise unaudited half-year accounts for the six months ending on 30 June 2019. Since the beginning of 2019, the consolidated financial statements have been prepared in accordance with Swiss GAAP FER accounting standards. The 2019 consolidated interim financial statements have been prepared in accordance with FER 31 “Complementary recommendation for listed companies”.

These interim financial statements do not include all information and disclosures that are required in the annual financial statements. They should therefore be read in conjunction with the consolidated financial statements as at 31 December 2018, which were prepared in accordance with the International Financial Reporting Standards (IFRS).

The consolidated interim 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.

The consolidated interim financial statements have been prepared on the assumption that business activities will continue. The basis for valuation for the consolidated interim financial statements is historical cost, unless a standard stipulates a different basis for valuation for an accounting item or the option of selecting a different basis for valuation has been utilised. In this event, this is explicitly mentioned in the accounting principles.

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 30 June 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

806,852

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

 

 

 

Equity in accordance with Swiss GAAP FER

697,709

650,288

Reconciliation for earnings

In 1,000 CHF

First half year 2018 Profit for the period

Full year 2018 Profit for the period

First half year 2018 Other comprehensive income

Full year 2018 Other comprehensive income

Result in accordance with IFRS

49,391

106,393

10,805

8,502

Adjustment of goodwill

(2,697)

(8,328)

 

 

Adjustment of intangible assets

(8,361)

(8,525)

 

 

Adjustment of financial assets

4,525

4,282

(4,525)

(4,282)

Adjustment of employee pension benefit obligations

1,117

12,217

(9,110)

(6,417)

Adjustment of foreign currency translation differences

 

 

0

42

Adjustment of fair value of cash flow hedges

 

 

(22)

(57)

Effect of adjustments on deferred tax items

579

(1,640)

2,853

2,212

 

 

 

 

 

Result in accordance with Swiss GAAP FER

44,555

104,399

0

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 its useful life. 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.

Intangible assets from acquisitions

Under Swiss GAAP FER any intangible assets from acquisitions, including customer relationships, are capitalised and amortised. Amortisation takes place over the same period as amortisation of the associated goodwill – so over five years, or up to 20 years in justified cases. Under IFRS the customer relationships that came with an acquisition were amortised over a period of 10 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 assets are measured at fair value; changes in value are recognised in the income statement. Under IFRS they were likewise 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 assets” or on total equity. The switch leads to a reclassification within equity from the “financial assets 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 assets 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 assets. The Aduno Group now shows these items in aggregated form as financial assets. Under IFRS these were shown as individual items in the statement of financial position, 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 can 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 are recognised directly in equity under Swiss GAAP FER. The switch has no effect on the equity total.

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. In the first half of 2019 the existing assumptions and estimations were not adjusted. Changes from the switch from IFRS to Swiss GAAP FER are set out in the previous section.

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. In addition, details are provided on selected income and expense items.

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 CSO (Chief Sales 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 provides the associated transaction and customer services in this area. Most of its business activity is based on the Mastercard and Visa brands.
The business unit Payment is operated through 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. AdunoKaution and SmartCaution merged into cashgate in 2018 and were subsequently transferred to the Consumer Finance segment.

Consumer Finance

The business unit Consumer Finance sells and operates leasing contracts and credit facilities for consumer goods to private and corporate clients. The business unit Consumer Finance is operated by cashgate. The main revenue streams are interest income, commission income and fees for chargeable services.

Internal Financing

As the Group’s central treasury unit (Aduno Finance AG), the Internal Financing business provides financial services to the other Group companies. Treasury services comprise the handling of payments, the processing of foreign currency transactions and the management of the Group’s brand assets. The main revenue streams are income from foreign currency business and interest income.

The financial result of Aduno Holding AG and intercompany consolidation items are shown in the “Corporate Functions / Consolidation” column.

The following table includes certain items of information about the business segments that are based on the management’s evaluation and the internal reporting structure as at 30 June in each case (unaudited).

 

Payment

Consumer Finance

Internal Financing

Corporate Functions / Consolidation

Consolidated

In 1,000 CHF

2019

2018 restated1)

2019

2018 restated1)

2019

2018 restated

2019

2018 restated

2019

2018 restated

Commission income

81,966

72,128

0

0

9,773

9,512

0

0

91,739

81,640

Annual fees

59,629

54,930

1,772

1,756

0

0

0

0

61,400

56,686

Interest income

20,344

6,420

44,109

42,920

9,137

10,500

(9,630)

(11,135)

63,960

48,706

Other operating income

47,464

25,900

4,572

4,835

25,071

32,957

(11,814)

(13,819)

65,292

49,873

Operating income

209,402

159,378

50,452

49,511

43,982

52,969

(21,444)

(24,954)

282,391

236,905

 

 

 

 

 

 

 

 

 

 

 

Processing and service expenses

38,960

28,164

1,518

1,368

0

0

(75)

0

40,402

29,532

Distribution, advertising and promotion expenses

51,152

47,278

9,649

11,716

0

0

(4,620)

(6,869)

56,181

52,125

Interest expenses

3,882

3,800

5,379

6,559

9,957

9,829

(12,712)

(14,877)

6,507

5,310

Expected credit and impairement losses

3,498

1,130

4,601

3,925

0

0

0

0

8,099

5,055

Personnel expenses

56,614

42,644

9,188

9,008

352

377

18

108

66,173

52,135

Other operating expenses

38,212

30,351

7,118

6,882

2,734

2,605

(5,496)

(4,730)

42,568

35,107

Depreciation of property and equipment

1,287

1,185

155

185

2

2

386

386

1,830

1,758

Amortisation of goodwill and intangible assets

21,642

3,648

1,844

2,449

0

0

0

2

23,486

6,099

Operating expenses

215,247

158,199

39,453

42,091

13,046

12,813

(22,499)

(25,981)

245,247

187,122

 

 

 

 

 

 

 

 

 

 

 

Operating result

(5,845)

1,179

10,999

7,421

30,936

40,156

1,055

1,028

37,145

49,783

 

 

 

 

 

 

 

 

 

 

 

Financial income

9,227

4,525

0

0

0

0

0

0

9,227

4,525

Income from associates

99

1,718

0

0

0

0

0

0

99

1,718

Ordinary result

3,482

7,422

10,999

7,421

30,936

40,156

1,055

1,028

46,471

56,027

 

 

 

 

 

 

 

 

 

 

 

Non-operating result

8

6

(32)

(2)

0

0

0

0

(24)

5

Profit before income tax

3,489

7,429

10,967

7,419

30,936

40,156

1,055

1,028

46,448

56,032

 

 

 

 

 

 

 

 

 

 

 

Income taxes

5,856

5,168

2,431

1,663

3,336

4,340

520

306

12,143

11,477

Profit for the period

(2,367)

2,261

8,536

5,756

27,600

35,816

535

722

34,305

44,555

1)The rental deposit business of the AdunoKaution and SmartCaution entities recorded within the Payment business in the 2018 half-year has been restated within Consumer Finance for better comparability.

1.2 Further information on selected income statement items

Additional information on commission income

In 1,000 CHF

First half year 2019

First half year 2018

Interchange revenue and related revenue

44,177

37,777

Currency exchange commissions

32,586

31,363

Other commission revenue

14,977

12,500

 

 

 

Commission income

91,739

81,640

Additional information on other income

In 1,000 CHF

First half year 2019

First half year 2018

Foreign exchange gains or losses, net

25,810

24,768

Income from services

31,448

14,377

Other income

8,034

10,728

 

 

 

Other operating income

65,292

49,873

Accounting principles

Category
Accounting principle

Commission income

Commission income refers to transaction-based fees that are charged to customers in all areas of business. They are recognised gross on a transaction basis 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 longer-term personal credit granted to personal customers and from leasing finance granted to personal and corporate customers. Interest income is recognised using the effective interest method.

Other operating income

Other income is chiefly comprised of net foreign currency gains, income from services and other income. It is 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).

1.3 Operating expenses

In 1,000 CHF

First half year 2019

First half year 2018 restated

Card processing expenses

22,890

17,442

Service expenses

17,512

11,937

Material expenses

0

153

Processing and service expenses

40,402

29,532

 

 

 

Distribution channel compensation

43,096

37,389

Rewards and redemption expenses

5,568

6,095

Advertising and promotion expenses

7,463

8,598

Costs for distribution

53

42

Distribution, advertising and promotion expenses

56,181

52,125

 

 

 

Interest expenses

6,507

5,310

 

 

 

Expected credit losses in the Payment business, credit cards

763

442

Expected credit losses in the Payment business, other payment cards

1,985

0

Expected credit losses in Consumer Finance

4,601

3,925

Impairment losses on commission income

750

689

Expected credit and impairement losses

8,099

5,055

 

 

 

Wages and salaries

53,147

42,234

Social security contributions

5,112

4,268

Employee pension benefit expenses

3,742

2,655

Other personnel expenses

4,171

2,978

Personnel expenses

66,173

52,135

 

 

 

Audit and professional services

20,385

16,511

IT expenses

12,515

10,635

Telephone and postage

1,135

1,030

Premises expenses

4,828

3,808

Travel and representation expenses

330

359

Other administration expenses

3,375

2,764

Other operating expenses

42,568

35,107

 

 

 

Depreciation of property and equipment

1,830

1,758

Amortisation of goodwill and intangible assets

23,486

6,099

 

 

 

Operating expenses

245,247

187,122

Accounting principles

Expenses are recognised on an accrual basis at the time when 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. They are recognised when they are incurred.

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, of losses on derivative financial instruments, of bank charges and of expenses for bank guarantees. 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.

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.

2.1 Receivables from the business unit Payment

In 1,000 CHF

30.06.2019

31.12.2018

Receivables within the scope of the ECL calculation

 

 

Receivables from cardholders, credit cards*

668,743

424,280

Receivables from debt collection, credit cards

3,674

3,483

Other receivables from Payment business, credit cards

285

4,960

 

 

 

Receivables from cardholders, other payment cards

243,397

239,913

Receivables from debt collection, other payment cards

9,337

7,636

Other receivables from Payment business, other payment cards

7,082

8,783

 

 

 

Loss allowance

(10,188)

(8,498)

 

 

 

Receivables outside the scope of the ECL calculation

 

 

Receivables from fraud and chargeback

450

419

Allowance for doubtful debts

(93)

(86)

Total receivables from business unit Payment

922,688

680,889

* This position also contains receivables from debit and prepaid business. 

The total receivables from cardholders in the credit card business fluctuate depending on the applicable date. A customer pays its credit card bill once a month. The time of payment varies from month to month and depends among other things on when the banks process their direct debit collections. If a direct debit collection is completed after the end of the month, a higher receivables total may result. This fluctuation does not correlate with customers’ creditworthiness or payment habits.

Accounting principles

Receivables from cardholders and others are calculated using the effective interest method and valued at amortised cost after impairment losses.

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.

The switch from IFRS to Swiss GAAP FER had no effect on the recognition and valuation of receivables in the business unit Payment.

2.2. Receivables from the business unit Consumer Finance

The receivables from the business unit Consumer Finance set out below are classified in the consolidated statement of financial position as at 30 June 2019 as part of "assets held for sale".

In 1,000 CHF

30.06.2019

31.12.2018

Receivables from consumer loans

806,893

782,445

Receivables from finance leases

751,196

707,374

Allowance for doubtful debts

(29,497)

(29,885)

 

 

 

Total receivables from business unit Consumer Finance, net

1,528,592

1,459,934

 

 

 

- of which short-term

455,245

467,826

- of which long-term

1,073,348

992,108

Additional information on receivables from finance leases

The due dates of the non-discounted lease payments are indicated in the table below.

In 1,000 CHF

30.06.2019

31.12.2018

 

 

 

Due within up to 1 year

223,095

251,981

Due within 1–5 years

586,206

511,612

 

 

 

Total non-discounted lease payments

809,301

763,594

On the reporting date, the financial income from finance leases not yet claimed and not recognised in the balance sheet totalled CHF 58.1 million (31 December 2018: CHF 56.2 million), of which CHF 25.4 million (31 December 2018: 24.8 million) is due in the next 12 months.

Accounting principles

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

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.

The switch from IFRS to Swiss GAAP FER had no effect on the recognition and valuation of receivables in the business unit Consumer Finance.

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

30.06.2019

31.12.2018

Other bank liabilities

727,220

202,652

Current portion of syndicated loan

540,000

390,000

Current portion of unsecured bond issues

175,035

525,269

Short-term interest-bearing liabilities

1,442,255

1,117,921

 

 

 

Unsecured bond issues

274,436

274,299

Other long-term liabilities

267

468

Long-term interest-bearing liabilities

274,704

274,767

 

 

 

Total interest-bearing liabilities

1,716,959

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

 

 

 

30.06.2019

30.06.2019

31.12.2018

31.12.2018

Syndicated loan

CHF

0.68%

2019

540,000

540,000

390,000

390,000

 

 

 

 

 

 

 

 

Unsecured bond issue

CHF

0.00%

2019

175,000

175,035

175,000

175,082

Unsecured bond issue

CHF

1.125%

2021

275,000

274,436

275,000

274,299

Unsecured bond issue

CHF

3 M Libor1)

2019

0

0

100,000

100,022

Unsecured bond issue

CHF

3 M Libor1)

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

371,741

371,741

7,170

7,170

Other bank liabilities

CHF

0.20%

2019

195,469

195,469

195,469

195,469

Other bank liabilities

CHF

0.25%

2019

160,000

160,000

0

0

Other bank liabilities

CHF

0.78%

current account

10

10

13

13

Other long-term liabilities

CHF

0.00%

2021

267

267

468

468

 

 

 

 

 

 

 

 

Total

 

 

 

1,717,487

1,716,959

1,393,120

1,392,688

1)Floor at 0.0% and cap at 0.05%

Syndicated loan

As at 30 June 2019 the Group had a syndicated loan facility of CHF 600 million headed by Zürcher Kantonalbank (ZKB) (31 December 2018: CHF 600 million) at its disposal. The interest conditions of the facility are quoted by ZKB at market conditions at the fixing date according to the maturity plus a margin, depending on the Company’s credit rating.

Other bank liabilities

As at 30 June 2019 the Group had access to a bilateral credit facility 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 30 June 2019 CHF 371.7 million (31 December 2018: CHF 7.6 million) of this credit facility had been utilised.

In addition to the credit facility with Zürcher Kantonalbank, the Group has two short-term credit facilities with Commerzbank: one for CHF 195 million, which was fully utilised as at 30 June 2019 (31 December 2018: CHF 195 million), and another for CHF 160 million, of which CHF 160 million was utilised as at 30 June 2019 (31 December 2018: CHF 0.0 million). The interest rate for the credit facilities is set at the market interest rate plus a fixed credit margin. In addition, as of the balance-sheet date, the Group has an unused Credit Suisse credit limit of CHF 200 million (31 December 2018: none).

Accounting principles

Interest-bearing liabilities are initially recognised at fair value minus allocable transaction costs. Following their initial recognition they are calculated using the effective interest method and recognised at amortised cost.

3.2 Share capital and reserves

Share capital

As at 30 June 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 30 June 2019 (previous year: 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

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.

The Aduno Group defines risk as the uncertainties that apply to strategic and operational objectives and are inherent in any business activity. These uncertainties mean that goals may be missed or assets lost. The different types of risk are systematically and actively managed. Risk management at the Aduno Group is based on a standardised model, from the determination of risk policy to the management and monitoring of risk in business activities and risk reporting.

For the general principles of risk management, please refer to the 2018 Annual Report. In the first half of 2019 no significant changes were made.

Derivates

The Group makes use of derivative financial instruments to hedge against foreign currency and interest rate risks that arise in operational and financing business.

In 1,000 CHF

Assets

30.06.2019 Liabilities

Assets

31.12.2018 Liabilities

Foreign currency derivatives

166

(300)

93

(495)

Interest rate derivatives

0

0

0

0

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

The Group has to refinance outstanding receivables from cardholders and customers in Consumer Finance on a constant basis. They are refinanced using Libor-based bank loans with a term of 1 day to 90 days. 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 30 June 2019 no receivables were hedged with interest rate swaps (31 December 2018: CHF 0.0 million).

Accounting principles

Derivative financial instruments are recognised at fair value. Allocable transaction costs are recognised in the income statement when they are incurred. Following their initial recognition, derivative financial instruments are measured at fair value. The gain or loss on revaluation of the fair value is recognised in the income statement.

4 Group structure

This section sets out the structure of the Aduno Group including significant changes and resulting effects on the consolidated financial statements.

4.1 Change in the scope of consolidation

Acquisition of subsidiaries

As at 1 October 2018 Aduno Holding acquired an additional 70% of the shares in Accarda AG in Brüttisellen, Canton Zurich. Added to its stake of 30% Aduno Holding now has full ownership of Accarda AG. The company operates in the business of customer cards with a payment function. The purchase price for the 70% share was CHF 195.5 million, which was paid in cash. Revaluation of the existing 30% resulted in a valuation gain of CHF 27.4 million. The revaluation gain was recognised in “Income from associates”.

The transaction resulted in goodwill of CHF 58.7 million. This was allocated to the cash generating unit Issuing. Increasing the equity interest in Accarda will allow future business models to be pursued and generate synergies with the existing issuing business, while increasing income through existing Accarda customers.

The final purchase price allocation is disclosed in the 2018 Annual Report.

Sale of subsidiaries

As at 4 March 2019 the Group sold its 60% interest in Paycoach AG. The sale resulted in a gain of CHF 1.2 million, which was recognised in other operating income.

As at 9 May 2019 the Group sold its 20% interest in Loyalty Services AG. The sale resulted in a loss of CHF 0.1 million, which was recognised in other operating expenses.

As at 5 December 2018 the Aduno Group sold its 67% interest in Vibbek AG for CHF 3.3 million. The sale of Vibbek AG brought a gain of CHF 0.4 million, which was recognised in the second half of 2018 in other operating income.

Discontinued operations

On 30 June 2019 the Group signed an agreement with Cembra Money Bank AG to sell its wholly owned subsidiary cashgate. The sale price is set at CHF 277 million. The sale will take place in the third quarter of 2019. Below are the income statement and balance sheet for cashgate for the first half of 2019.

Income statement, first half year 2019

In 1,000 CHF

 

 

First half year 2019

Annual fees

 

 

1,772

Interest income

 

 

44,109

Other operating income

 

 

4,572

Operating income

 

 

50,452

 

 

 

 

Processing and service expenses

 

 

1,518

Distribution, advertising and promotion expenses

 

 

9,649

Interest expenses

 

 

5,379

Expected credit and impairement losses

 

 

4,601

Personnel expenses

 

 

9,188

Other operating expenses

 

 

7,118

Depreciation of property and equipment

 

 

155

Amortisation of goodwill and intangible assets

 

 

1,844

Operating expenses

 

 

39,453

 

 

 

 

Operating result

 

 

10,999

 

 

 

 

Non-operating result

 

 

(32)

Profit before income tax

 

 

10,967

 

 

 

 

Income taxes

 

 

2,431

Profit for the period

 

 

8,536

Balance sheet as at 30.06.2019

In 1,000 CHF

 

 

30.06.2019

Assets

 

 

 

Cash and cash equivalents

 

 

930

Receivables from business unit Consumer Finance

 

 

455,245

Other receivables

 

 

2,334

Prepaid expenses

 

 

15,344

Total current assets

 

 

473,852

Receivables from business unit Consumer Finance

 

 

1,073,348

Property and equipment

 

 

2,237

Financial assets

 

 

1,694

Intangible assets

 

 

7,372

Total non-current assets

 

 

1,084,650

Total assets held for sale

 

 

1,558,503

 

 

 

 

Liabilities

 

 

 

Payables to counterparties

 

 

35,165

Other payables

 

 

9,949

Provisions

 

 

2,461

Accrued expenses and deferred income

 

 

8,335

Intercompany obligations

 

 

1,060,447

Total current liabilities

 

 

1,116,358

Intercompany obligations

 

 

325,000

Total non-current liabilities

 

 

325,000

Total liabilities held for sale*

 

 

55,911

Net assets

 

 

117,144

 

 

 

 

Net cash from / (used in) operating activities

 

 

(68,557)

Net cash from / (used in) investing activities

 

 

68

Net cash from / (used in) financing activities

 

 

64,387

Net (decrease) / increase in cash and cash equivalents

 

 

(4,102)

* The balance sheet item "Liabilities held for sale" totalling TCHF 55,911 doesn't contain any intercompany obligations. 

The intercompany obligations relate to the refinancing of cashgate at a sister company.

4.2 Group companies

In 1,000

Country of incorpo- ration

Currency

Share capital 30.06.2019

Share capital 31.12.2018

Ownership interest 30.06.2019

Ownership interest 31.12.2018

Aduno Holding AG, Zurich (ZH), parent company

Switzerland

CHF

25,000

25,000

-

-

Accarda AG, Brüttisellen (ZH) 1)

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

35,000

35,000

100%

100%

Contovista AG, Schlieren (ZH)

Switzerland

CHF

140

140

70%

70%

SwissWallet AG, Zurich (ZH) 2)

Switzerland

CHF

105

105

33.3%

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

500

500

100%

100%

Loyalty Gift Card GmbH

Austria

EUR

35

35

100%

100%

Loyalty Gift Card GmbH

Germany

EUR

100

100

100%

100%

Loyalty Services AG 2) 3)

Switzerland

CHF

n/a

100

n/a

20%

Paycoach AG 3)

Switzerland

CHF

n/a

300

n/a

60%

Sanavena GmbH

Switzerland

CHF

336

336

100%

100%

Zaala AG

Switzerland

CHF

500

500

55%

55%

1) Prior to the acquisition in 2018 the Group had significant influence.  

2) Associates, the Group has significant influence. 

3) Paycoach AG and Loyalty Services AG were sold in 2019. 

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. The consolidated financial statements include the financial statements of the subsidiaries from the beginning to the end of control.

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. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no indication of an impairment in value.

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.

5. Other accounting principles

Fair value estimation

Assets and liabilities are valued at the amount at which an asset could be sold or a liability settled in an ordinary transaction between market participants on the valuation date (exit price).

Impairement

The recoverable amount for non-current assets is reviewed at least once a year. If there is an indication of an impairment in value (triggering event), the possibility of recognising an impairment is examined. If the carrying value of an asset or of its cash generating unit exceeds the recoverable amount, an impairment loss is recognised in the consolidated income statement.

A cash generating unit is the smallest identifiable group of assets that produces cash flows that are largely independent of other assets and groups of assets. Impairment losses recognised for cash generating units are deducted first from the carrying value of the allocated goodwill and thereafter on a pro rata basis from the carrying value of the other assets in the unit (group of assets).

Foreign currency translation

The individual Group companies prepare their financial statements in their functional currency. Assets and liabilities held in a foreign currency are converted at the rate on the reporting date.

The foreign currency gains and losses resulting from transactions and from the conversion of balance sheet items in a foreign currency are recognised in the income statement. The consolidated financial statements are established and presented in Swiss francs. The foreign currency financial statements of foreign Group companies are converted to Swiss francs for consolidation purposes as follows: balance sheet at exchange rates on the reporting date; income statement and cash flow statement at the average rate for the financial year. Translation differences resulting from the differing conversion of balance sheets and income statements are recognised in equity. 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

Average

Reporting date as at

Reporting date as at

CHF

First HY 2019

First HY 2018

30.06.2019

31.12.2018

EUR 1

1.1392

1.1771

1.1202

1.1373

USD 1

1.0083

0.9774

0.9856

0.9943

GBP 1

1.3061

1.3391

1.2484

1.2616

6. Subsequent events

As at 24 July 2019, on the basis of the sale announcement by minority shareholders as at 20 June 2019, the Group acquired the remaining 30% of Contovista AG for CHF 12.4 million and now has full ownership of Contovista.

Zurich, 21 August 2019

Pascal Niquille
Chairman of the Board of Directors

Max Schönholzer 
Chief Executive Officer

Dr. Christian Lazar 
Chief Financial Officer