1. Significant accounting policies

Aduno Holding AG (Aduno Holding or Company) is a company domiciled in Zurich (Switzerland). The consolidated financial statements of the Company for the year ended 31 December 2017 comprise Aduno Holding and its subsidiaries (together referred to as the Group).

Aduno Holding and its subsidiaries offer financial services in the business field of cashless payment solutions and consumer finance services.

The subsidiary Viseca Card Services SA (Viseca) operates services for cashless payments. Viseca issues credit cards (card issuing) under the brand of the card schemes (schemes) Mastercard and Visa to private and business consumers for Swiss retail banks, several co-branding partners and on its own account, and operates all relevant customer service activities. The subsidiary cashgate AG (cashgate) offers consumer finance facilities to private and corporate customers in the Swiss marketplace. The subsidiary Aduno Finance AG (Aduno Finance) acts as centralised treasury operator. The subsidiaries Vibbek AG as well as Vibbek GmbH are developing software solutions for card terminals. The subsidiary AdunoKaution AG (AdunoKaution) and the subsidiary SmartCaution SA (SmartCaution) offer rental guarantees to their customers and the subsidiary Contovista AG (Contovista) is developing software for Finance Management as well as Analystics and distributing it to banks.

The consolidated financial statements were approved by the Board of Directors on 19 April 2018 and will be submitted for final approval by the general meeting on 29 May 2018.

Basis of preparation

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and comply with Swiss law. The consolidated financial statements are presented in Swiss francs, which is the Company’s functional currency. All financial information presented in Swiss francs has been rounded to the nearest thousand, except when otherwise indicated. As a result, rounding differences may appear.

The consolidated financial statements are prepared on the historical cost basis, except for derivative financial instruments that are stated at their fair value. Methods to determine fair values are further discussed in Note 32 “Financial risk management”.

Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests, even if the results in the non-controlling interests have a deficit balance.

Fair value measurements

The basis for the measurement of assets and liabilities is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction (exit price) between market participants at the measurement date.

Use of estimates and judgements

The preparation of the consolidated financial statements in accordance with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

Judgements made by management in the application of IFRS that have a significant effect on the financial statements and estimates with a significant risk of material adjustment in the next year are discussed in the following notes:

  • Note 12 – Income tax expenses
  • Note 15 – Receivables from Payment business and Consumer Finance (e.g. recoverability)
  • Note 20 – Goodwill and other intangible assets (e.g. measurement of recoverable amounts of CGUs)
  • Note 30 – Contingent liabilities (e.g. counterparty credit risk of internet transactions) 

Change in accounting estimate

The group has reassessed the amortisation period for other intangible assets and estimates the general useful life of software prospectively to five years (until 2016 the general amortisation period was three years).

Consolidation of subsidiaries

Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of the subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases.

For each business combination, the Group elects to measure any non-controlling interests in the acquiree at acquisition date at their proportionate share of the acquiree’s identifiable net assets, which are generally at fair value.

Investments in associates

Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies. Investments in associates are accounted for using the equity method and are recognised initially at cost.

The Group’s share of the net income or loss of the associates is reflected in profit or loss.

Eliminations

Intra-group balances and any unrealised gains and losses or income and expenses arising from intra-group transactions are eliminated in 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 evidence of impairment.

Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of Group entities at the exchange rate at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency using the exchange rate at that date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency using the exchange rate at the date that the fair value was determined. Foreign currency differences arising on retranslation of monetary items are recognised in profit and loss. Foreign currency effects on non-monetary items are recognised according to the fair value changes.

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated into CHF using exchange rates at year end. The income and expenses of foreign operations are translated to CHF using average exchange rates.

The following significant exchange rates applied:

CHF

Average 2017

Average 2016

Year end 2017

Year end 2016

EUR 1

1.1269

1.1017

1.1808

1.0866

USD 1

0.9926

0.9988

0.9883

1.0309

GBP 1

1.2884

1.3297

1.3298

1.2658

Revenue

Revenue comprises commission income, annual fee income, interest income and other income. Commission income and other income are recognised transaction-based as they occur. Annual fees are recognised on a straight-line basis over the duration of the service commitment and deferred accordingly. The commission income consists of transaction-based charges billed to customers of all business segments. Interest income includes interest earned from short-term loans granted to credit cardholders, long-term consumer credit loans granted to private customers, and leasing facilities to private and corporate clients. Interest income is recognised using the effective interest method.

Processing and service expenses

Processing and service expenses comprise transaction-based interchange expenses to card issuers, processing expenses to services partners, card schemes expenses for the usage of the worldwide card scheme environment, and other operational service expenses. Processing and service expenses are recognised as occurred.

Distribution, advertising and promotion expenses

The Group offers a variety of reward programmes to its customers in its Payment business. These programmes are partly run by third parties, in which case the incurred loyalty costs are directly accounted as expenses.

The Group offers a loyalty programme where customers collect points based on card spending, which are accounted in designated loyalty point accounts. Customers can spend their points by converting them into gifts, annual fee rebates as well as to rebate vouchers within the programme. The estimated upcoming expenses increase the accrued expenses. In addition, the Group offers a yearly fee rebate based on the volume of transactions of the customer. According to IFRIC 13, the estimated upcoming expenses are accounted as a reduction of the underlying income, and increase the accrued expenses.

The amount allocated to the annual fee rebates is recognised when the rebates are redeemed in the following year and, thus, the Company has fulfilled its obligation.

Financial expenses

Interest expenses consist of the refinancing expenses to finance the interest income-generating businesses, losses on derivative financial instruments that are recognised in profit or loss, bank charges and expenses for bank guarantees. Interest expenses are recognised using the effective interest method.

Impairment losses from Payment business and Consumer Finance

Impairment losses from the Payment business contain losses arising from bad debts, fraud and chargebacks. Impairment losses in the Consumer Finance business represent mainly the build-up of accruals for incurred but not reported losses.

Other expenses

Other expenses are recognised as they are incurred. The expenses are recognised on an accrual basis.

Depreciation and amortisation

Depreciation and amortisation comprises the depreciation of property and equipment and the amortisation of intangible assets. Depreciation and amortisation are recognised in profit or loss following the depreciation and amortisation policy outlined in the respective section for property and equipment or other intangible assets. 

Income tax expenses

Income tax expenses comprise current and deferred income tax. Income tax expenses are recognised in profit or loss, except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantially enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognised using the balance sheet liability method, providing the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences, based on the laws that have been enacted or substantively enacted by the reporting date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Earnings per share

The Group presents basic earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to the equity holders of the Company by the weighted average number of ordinary shares outstanding during the period, adjusted for treasury shares.

As there are neither convertible bonds nor options or other potential shares outstanding, there is no dilutive impact for the shares.

Segment reporting

An operating segment is a component of the Group that engages in business activities from which it earns revenues and incurs expenses. The results of the business activities are regularly reviewed by the Group’s chief operating decision maker to decide on resources to be allocated to the segments and assess their performance, for which separate financial information is available.

Cash and cash equivalents

Cash and cash equivalents include cash on hand, postal and bank accounts, and fixed-term deposits with an original maturity of less than 90 days from the date of acquisition. They are stated at amortised cost, which equals the nominal value.

Receivables Payment business / receivables Consumer Finance

Receivables from cardholders, from merchant activities, from Consumer Finance customers and from others are stated at their amortised cost using the effective interest method less impairment losses.

The allowance accounts in respect of receivables are used to record impairment losses unless the Group is satisfied or unless no recovery of the amount owing is possible, at which point the amount considered irrecoverable is written off against the receivable directly.

When assets are leased out under a finance lease, the present value of the future lease payments is recognised as a receivable. Future interest receivables from the financial lease are not considered in the receivables.

Derivative financial instruments, including hedge accounting

The Group uses derivative financial instruments to hedge its exposure to foreign exchange and interest rate risks arising from operational and financing activities. In accordance with its treasury policy, the Group does hold or issue derivative financial instruments either for hedge accounting or for economic hedging without applying hedge accounting.  

Derivative financial instruments are recognised initially at fair value. Attributable transaction costs are recognised in profit or loss when incurred. Subsequent to initial recognition, derivative financial instruments are measured at fair value. The gain or loss on remeasurement to fair value is recognised immediately in profit or loss.

Currency swaps used by the Group do not qualify for hedge accounting; therefore they are accounted for as trading instruments.

The Group designates interest rate swaps as hedging instruments in a hedge of the variability in the interest payments related to variable interest-bearing financial liabilities (cash flow hedge).

The effective portion of changes in the fair value of the derivative is recognised in other comprehensive income and presented in the hedging reserve in equity. The amount recognised in other comprehensive income is removed and included in profit or loss in the same period as the hedged cash flows affect profit or loss in the same line item as the underlying transaction.

If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, or the designation is revoked, hedge accounting is discontinued prospectively. The cumulative gain or loss previously recognised in other comprehensive income remains there until the forecast transaction affects profit or loss.

Financial investments available for sale

Security positions which are not held for trading purposes are reported as debt and equity securities available for sale and are measured at fair value. Unrealised gains and losses are recognised in other comprehensive income and reported in other components of equity until the security is sold or an impairment loss is recognised, at which point the cumulative gain or loss previously recorded in other components of equity is recognised in the income statement in other income.

Equity securities are deemed impaired if there has been a significant or prolonged decline of fair value below the initial cost. A debt instrument is deemed impaired if the creditworthiness of the issuer significantly deteriorates or if there are other indications that an event has a negative impact on the future estimated cash flows related to the debt instrument, i.e. if it is likely that the amount due according to the contractual terms cannot be entirely collected.

Inventories

Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on the first-in-first-out principle. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and selling expenses.

Property and equipment

Items of property and equipment are stated at cost less accumulated depreciation and impairment losses.

Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property and equipment. The estimated useful lives are as follows:

 

2017

2016

Furniture

5–10 years

5–10 years

IT & office equipment

3–5 years

3–5 years

Cars

4–5 years

4–5 years

Leasehold improvement

shorter of the useful life or the lease term

shorter of the useful life or the lease term

Buildings

25 years

25 years

Terminals

3 years

3 years

Useful lives and residual values are reviewed annually at the balance sheet date and any adjustments are recognised in profit or loss. Gains or losses arising from the disposal of items of property and equipment are recognised in profit or loss.

Goodwill

The Group measures goodwill at the acquisition date as the excess of the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed and the sum of the fair value of the consideration transferred plus the recognised amount of any non-controlling interests in the acquiree. When the excess is negative (negative goodwill), it is recognised immediately in profit or loss.

Goodwill is stated at cost less any accumulated impairment losses. Goodwill is tested for impairment annually at the level of the cash-generating unit.

Other intangible assets

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

Intangible assets consist of capitalised software costs, capitalised licences and client relationships, all of which have finite lives. The following intangible assets are amortised on a straight-line basis over their estimated useful lives:

 

2017

2016

Software

generally 5 years specific software 2 to 10 years according to the useful life

generally 3 years specific software 2 to 10 years according to the useful life

Licences

3 years

3 years

Client relationships are amortised according to an average customer lifetime depending on the underlying business. The current recognised client relationships are amortised for 10–15 years, using the digital digressive method according to their useful life.

Amortisation methods, useful lives and residual values are reassessed at the reporting date and adjusted if appropriate.

Capitalised software includes external costs incurred when externally developing or purchasing computer software for internal use. The expenditure capitalised includes mainly external development and consultancy costs that are directly attributable to the external development of implementing and customising software.

Expenditures on internally generated goodwill and brands are recognised in profit or loss as incurred.

Impairment

The recoverable amounts of non-current assets are reviewed for impairment at least once a year. If there is any indication of impairment (triggering event), an impairment test is performed. Goodwill is tested for impairment on an annual basis. If the carrying amount of an asset or its cash-generating unit exceeds the recoverable amount, an impairment loss is recognised in profit or loss.

A cash-generating unit is the smallest identifiable asset group that generates cash flows that are largely independent from other assets and groups. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis.

Payables

Payables to counterparties, other trade payables and other payables are stated at amortised cost.

Interest-bearing liabilities

They are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, they are measured at amortised cost using the effective interest method.

Provisions

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.

Leasehold restoration provisions

In accordance with the lease agreement and applicable constructive requirements / legal obligation, a provision for leasehold restoration 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 agreement.

Employee benefits

The post-employment plans qualify as defined benefit plans. The Group’s net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair value of any plan asset is deducted.

The calculation is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a benefit to the Group, the recognised asset is limited to the total of any unrecognised past service costs and the present value of any future refunds from the plan or reductions in future contributions to the plan.

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised immediately in comprehensive income. The Group determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit liability (asset), taking into account any changes in the net defined benefit liability (asset) during the period as a result of contributions and benefit payments. Net interest expense and other expenses related to defined benefit plans are recognised in profit or loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past services or the gain or loss on curtailment is recognised immediately in profit or loss. The Group recognises gains and losses on the settlement of a defined benefit plan when the settlement occurs.

Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity, net of any tax effects.

When share capital recognised as equity is repurchased, the amount of the consideration paid, which includes directly attributable costs, net of any tax effects, is recognised as a ­deduction from equity. Repurchased shares are classified as treasury shares and are presented as a deduction from total equity. When trea­sury shares are sold or reissued subsequently, the amount received is recognised as an increase in equity, and the resul­ting surplus or deficit on the transaction is transferred to / from retained earnings.

Dividends are recognised as a liability at the date they are declared.

New and revised standards and interpretations newly adopted by the Group

The Group applied the following new and revised accounting standards and interpretations for the first time:

  • Recognition of Deferred Tax Assets for Unrealised Losses (Amendments to IAS 12)
  • Disclosure Initiative (Amendments to IAS 7)

Except additional disclosure (Amendments to IAS 7) the above-mentioned standards had no or no significant impact on the financial statements.

New and revised standards and interpretations

The following new and revised standards and interpretations have been issued, but are not yet effective and have not been applied early in these consolidated financial statements. Their impact on the consolidated financial statements of the Group has not yet been systematically analysed. The table reflects a first assessment conducted by the Group's management and the expected effects

 

 

Effective date

Planned application by the Group

IFRS 9 Financial Instruments

 

1 January 2018

Reporting year 2018

IFRS 15 Revenue from Contracts with Customers

 

1 January 2018

Reporting year 2018

IFRS 16 Leases

 

1 January 2019

Reporting year 2019

IFRIC 23 Uncertainty over Income Tax Treatments

*

1 January 2019

Reporting year 2019

 

 

 

 

Revisions and amendments of Standards and Interpretations

 

 

 

 

 

 

 

Amendments to IAS 19, Employee Benefits

*

1 January 2019

Reporting year 2019

Annual Improvements to IFRS Standards 2015 - 2017 Cycle

*

1 January 2019

Reporting year 2019

* No or no significant impacts are expected on the consolidated financial statements of the Group.

IFRS 9 Financial Instruments (effective 1 January 2018)

In July 2014 the IASB issued the final version of IFRS 9 Financial Instruments, which replaces IAS 39 Financial Instruments: Recognition and Measurement and all previous versions of IFRS 9. IFRS 9 brings together all three aspects of the accounting for financial instruments project: classification and measurement, impairment and hedge accounting. IFRS 9 is effective for annual periods beginning on or after 1 January 2018. Except for hedge accounting, retrospective application is required but providing comparative information is not compulsory. For hedge accounting, the requirements are generally applied prospectively, with some limited exceptions.

The Group adopts the new standard on the required effective date and will not restate comparative information. During 2017 the Group performed a detailed assessment of all three aspects of IFRS 9. This assessment is based on currently available information and may be subject to changes arising from further reasonable and supportable information being made available to the Group in 2018. Overall, there is no significant impact on the statement of financial position and equity of the Group, except for the effect of applying the impairment requirements of IFRS 9. The Group will recognise an increase in the loss allowance resulting in a negative impact on equity as discussed below. In addition, the Group will implement changes in classification of certain financial instruments.

(a) Classification and measurement
The Group is not affected by a significant impact on its statement of financial position or equity on applying the classification and measurement requirements of IFRS 9. It will continue measuring at fair value all financial assets currently held at fair value. Equity shares currently held as available for sale with gains and losses recorded in other comprehensive income (OCI) are intended to be held for the foreseeable future. No impairment losses were recognised in profit or loss during prior periods for these investments. The Group will apply the option to present fair value changes in OCI. Therefore the application of IFRS 9 will not have a significant impact.

Receivables from business unit Payment, receivables from business unit Consumer Finance, as well as other receivables are held to collect contractual cash flows and are expected to give rise to cash flows representing solely payments of principal and interest. The Group analysed the contractual cash flow characteristics of those instruments and concluded that they meet the criteria for amortised cost measurement under IFRS 9. Therefore, reclassification for these instruments is not required.

(b) Impairment
The new impairment model requires the recognition of impairment provisions based on expected credit losses (ECL), either on a 12-month or lifetime basis rather than only incurred credit losses as is the case under IAS 39. It applies to financial assets classified at amortised cost, debt instruments measured at fair value through OCI, contract assets under IFRS 15 Revenue from Contracts with Customers, lease receivables, loan commitments and certain financial guarantee contracts. The Group will apply the simplified approach and record lifetime expected losses on trade receivables.

The Group has defined new impairment models for the credit card, consumer loans and leasing portfolios. The models are based on a collective assessment and the relevant input factors are probability of default, exposure at default and loss given default. The respective input factors are determined on the basis both of empirical data and forward-looking information. In general, comparable models are used for the credit card, consumer loan and leasing portfolios, while taking into account the different features and characteristics of the individual portfolios.

The approach for determining a significant increase in credit risk considers both quantitative factors (e.g. past due information) as well as qualitative indicators (e.g. individual assessment of the customer’s ability to meet its obligations). The resulting expected credit loss will mainly be driven by receivables in Stage 3 and the respective assumptions on the expected future cash flows (recoveries).

Based on the assessments undertaken to date, the Group expects a total increases in loss allowances of CHF 1.0 million up to CHF 3.0 million, which reflects a decrease in the financial instruments as well as in retained earnings.

(c) Hedge accounting
The Group determined that all existing hedge relationships that are currently designated in effective hedging relationships will continue to qualify for hedge accounting under IFRS 9. As IFRS 9 does not change the general principles of how an entity accounts for effective hedges, applying the hedging requirements of IFRS 9 will not have a significant impact on the Group’s financial statements.

IFRS 15 Revenue from Contracts with Customers (effective 1 January 2018)

In May 2014 the IASB issued the new standard which specifies how and when revenue is recognised. IFRS 15 replaces several other IFRS standards and interpretations that currently govern revenue recognition under IFRS, and provides a single, principles-based five-step model to be applied to all contracts with customers. The five-step cover: identifying the contract(s) with a customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations in the contract, and recognising revenue when (or as) the Group satisfies a performance obligation. The standard also requires entities to provide users of financial statements with more informative and relevant disclosures. The application of the new standard has no material impact except for additional disclosures.

IFRS 16 Leases

IFRS 16 was issued in January 2016 and replaces IAS 17 Leases, IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases-Incentivesand SIC-27 Evaluating the Substandce of Transactions Involving the Legal Form of a Lease. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under IAS 17. The standard includes two recognition exemptions for lessees – leases of ’low-value’ assets (e.g. personal computers) and short-term leases (i.e. leases with a lease term of 12 months or less). At the commencement date of a lease, a lessee will recognise a liability to make lease payments (i.e. the lease liability) and an asset representing the right to use the underlying asset during the lease term (i.e. the right-of-use asset). Lessees will be required to separately recognise the interest expense on the lease liability and the depreciation expense on the right-of-use asset.

Lessees will be also required to remeasure the lease liability upon the occurrence of certain events (e.g. a change in the lease term, a change in future lease payments resulting from a change in an index or rate used to determine those payments). The lessee will generally recognise the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset.

Lessor accounting of IFRS 16 is expected to be unchanged from today’s accounting under IAS 17. Lessors will continue to classify all leases using the same classification principle as in IAS 17 and distinguish between two types of leases: operating and finance leases.

IFRS 16 also requires lessees and lessors to make more extensive disclosures than under IAS 17.

IFRS 16 is effective for annual periods beginning on or after 1 January 2019. Early application is permitted, but not before an entity applies IFRS 15. A lessee can choose to apply the standard using either a full retrospective or a modified retrospective approach. The standard’s transition provisions permit certain reliefs.

In 2018 the Group will continue to assess the potential effect of IFRS 16 on its consolidated financial statements.

2. Segment reporting

For reporting and managerial purposes, management has divided the Group’s business into four segments. The external segment reporting is based on the internal reporting to the chief operating decision maker, who is responsible for allocating resources, and assesses the financial performance of the business. The Executive Board has been identified as the chief operating decision maker, as it is responsible for the operational management of the entire Group and reviews the management reporting of each business segment on a monthly basis. The Executive Board consists of the Group’s Chief Executive Officer (CEO) as well as Chief Officers for Finance (CFO), Sales (CSO), Marketing (CMO) and Operations (COO).

Payment

The business unit Payment provides services for cashless payments via credit, debit and customer cards to private and corporate customers, and runs the relevant transaction and customer services relating to the business. The major part of the business is run through the brands of Mastercard and Visa.

The business unit Payment is operated through Viseca as well as through Accarda AG (Accarda), Vibbek AG, Vibbek GmbH, AdunoKaution, SmartCaution and the newly acquired Contovista. The major revenue streams in the business result from interchange fees and commissions, annual fees for cards and services, income from card transactions in foreign currency and interest income. Until its sale in 2017, Aduno SA was part of the business unit Payment. The Acquiring and Terminal business is therefore classified as discontinued operations and the prior-year figures have been restated accordingly.

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 major income streams are interest income, commission income and fees for chargeable services.

Internal Financing

As the central treasury centre of the Group (Aduno Finance), Internal Financing provides financial services to the other members of the Group. The treasury services include the treatment of payments, the handling of foreign exchange transactions as well as the management of the Group’s brand assets. The major income streams result from foreign currency transactions and interest income.

Corporate Functions

The business unit Corporate Functions contains intercompany con­solidation items as well as the financial result of Aduno Holding.

Segments’ assets and liabilities

The assets and liabilities, revenue and expenses are measured in accordance with the relevant IFRS Standards.

Information about major customers

There is no major customer in any of the business segments ­who­se revenues amount to 10% or more of the segment’s revenues (2016: none).

The following table presents certain information regarding the operating segments, based on management’s evaluation and internal reporting structure, at 31 December 2017 and 2016 and for each of the years ended.

 

Payment

 

Consumer Finance

 

Internal Financing

 

Total operating segments

 

Corporate Functions/ Consolidation

Consolidated

In 1,000 CHF

2017

2016 restated

2017

2016

2017

2016

 

2017

2016 restated

 

2017

2016 restated

2017

2016 restated

Commission income

142,132

127,753

0

0

18,777

16,602

 

160,909

144,355

 

0

0

160,909

144,355

Annual fees

116,668

112,973

0

0

0

0

 

116,668

112,973

 

0

0

116,668

112,973

Interest income

12,156

12,631

85,799

88,406

26,500

27,711

 

124,455

128,748

 

(27,654)

(28,862)

96,802

99,886

Other income

42,436

85,320

8,798

7,797

59,598

54,089

 

110,832

147,206

 

(25,618)

(26,258)

85,214

120,949

Total revenue

313,392

338,678

94,597

96,203

104,875

98,402

 

512,864

533,283

 

(53,272)

(55,120)

459,593

478,163

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Processing and service expenses

55,373

51,219

1,323

1,270

0

0

 

56,696

52,489

 

0

(2)

56,696

52,487

Distribution, advertising and promotion expenses

89,943

86,942

18,069

19,292

1

1

 

108,012

106,235

 

(9,607)

(9,760)

98,405

96,475

Interest expenses

11,115

11,684

15,720

16,702

26,786

30,093

 

53,622

58,479

 

(34,191)

(35,940)

19,431

22,539

Impairment losses

2,702

2,321

11,999

10,893

0

0

 

14,701

13,214

 

0

0

14,701

13,214

Personnel expenses

76,510

63,663

18,112

18,150

778

699

 

95,400

82,512

 

0

0

95,400

82,512

Other expenses 1)

61,342

40,543

12,869

12,440

4,857

4,245

 

79,068

57,228

 

(22,776)

(20,873)

56,291

36,355

Depreciation

2,656

2,720

528

625

71

408

 

3,255

3,752

 

773

773

4,028

4,525

Amortisation

6,753

4,272

3,894

4,416

1,198

7,189

 

11,845

15,877

 

3

127

11,849

16,004

Total expenses

306,394

263,364

82,515

83,788

33,691

42,636

 

422,600

389,788

 

(65,799)

(65,676)

356,801

324,112

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit from continuing operations before income tax

6,998

75,313

12,082

12,416

71,185

55,766

 

90,265

143,495

 

12,527

10,556

102,791

154,051

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from associates

7,386

3,393

0

0

0

0

 

7,386

3,393

 

0

0

7,386

3,393

Profit before income tax

14,383

78,706

12,082

12,416

71,185

55,766

 

97,650

146,888

 

12,527

10,556

110,177

157,444

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expenses 1)

22,801

32,366

2,554

2,623

7,804

6,066

 

33,158

41,055

 

1,655

3

34,813

41,058

Profit / (loss) from continuing operations

(8,418)

46,340

9,529

9,793

63,381

49,700

 

64,492

105,833

 

10,872

10,553

75,364

116,385

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit / (loss) from discontinued operations

120,482

9,058

0

0

0

0

 

120,482

9,058

 

(4,215)

(6,950)

116,267

2,109

Profit for the period

112,065

55,398

9,529

9,793

63,381

49,700

 

184,974

114,891

 

6,656

3,603

191,631

118,493

1)To provide better comparability and accurate presentation, the accrual booked under “Other expenses” in 2016 to reflect an expected agreement with the tax authorities regarding transfer pricing has been reclassified in the tax result. See note 12.

3. Change in scope of consolidation

Acquisition of Contovista AG

Effective 1 August 2017 Aduno Holding purchased an additional 55.7% of the shares of Contovista in Schlieren, canton of Zurich. Together with the holding of 14.3%, Aduno Holding now has a stake of 70% in Contovista. The company develops software for Finance Management as well as Analytics and distributes it to banks. The purchase price for the 55.7% was CHF 27.3 million, which was paid in full in cash. The revaluation of the existing 14.3% resulted in a valuation gain of CHF 4.0 million. The revaluation gain is recorded in “Income from associates”.

The following purchase price allocation is final. Goodwill of CHF 21.1 million has been identified and is allocated to the cash-generating unit Payment Issuing. The increased stake in Contovista strengthens the Group’s relationship to its shareholder banks, will pave the way for future business models within the Group and will increase revenue from exisiting customers.

In 1,000 CHF

 

 

Recognised values on acquisition fair value

Cash and cash equivalents

 

 

4,269

Other receivables and other assets

 

 

560

Prepaid expenses and accrued income

 

 

7

Property and equipment

 

 

42

Intangible assets

 

 

20,278

 

 

 

 

Total assets

 

 

25,156

 

 

 

 

Other trade payables

 

 

128

Accrued expenses and deferred income

 

 

245

Provisions

 

 

1,618

Employee benefit obligations

 

 

66

Deferred tax liabilities

 

 

4,258

 

 

 

 

Total liabilities

 

 

6,315

Net identifiable assets and liabilities

 

 

18,841

 

 

 

 

Contribution for the existing 14.3% holding at fair value

 

 

7,009

Considerations transferred

 

 

27,300

Non-controlling interest

 

 

5,653

Goodwill arising from acquisition

 

 

21,120

 

 

 

 

Considerations paid in cash

 

 

27,300

Cash acquired

 

 

4,269

Net cash outflow

 

 

23,031

Included in the Group’s revenues for 2017 are CHF 1.9 million arising from the additional business from Contovista. A profit of CHF 0.1 million is included in the profit for the year. If the acquisition of Contovista had occurred on 1 January 2017, the Group’s consolidated revenue would have been CHF 460.9 million and its consolidated profit from continuing operations CHF 75.2 million. The acquisition incurred acquisition costs for the Group of CHF 0.1 million, which are included in the profit and loss statement under “Other expenses”.

Acquisition of SmartCaution

As per 1 July 2016 Aduno Holding AG purchased 100% of the shares of SmartCaution in Geneva, canton of Geneva. The company’s field of activity is to provide rental guarantees to its customers and is integrated in the Group’s Payment segment. The purchase price was set to CHF 9.0 million of which 7.0 million have been paid in cash. The remaining CHF 2.0 million is a contingent purchase price consideration.

The following purchase price allocation is final. A goodwill of CHF 1.9 million has been identified and is allocated to the cash generating unit Payment Issuing. This transaction strengthens the rental guarantee portfolio of the Group in the western part of Switzerland and creates synergy effects.

In 1,000 CHF

 

 

Recognised values on acquisition fair value

Cash and cash equivalents

 

 

1,975

Other receivables and other assets

 

 

96

Prepaid expenses and accrued income

 

 

200

Property and equipment

 

 

21

Intangible assets

 

 

7,738

 

 

 

 

Total assets

 

 

10,031

 

 

 

 

Other trade payables

 

 

7

Accrued expense and deferred income

 

 

938

Provisions

 

 

51

Employee benefit obligations

 

 

125

Deferred tax liabilities

 

 

1,824

 

 

 

 

Total liabilities

 

 

2,945

Net identifiable assets and liabilities

 

 

7,086

 

 

 

 

Considerations transferred

 

 

9,000

Goodwill arising from acquisition

 

 

1,914

 

 

 

 

Considerations paid in cash

 

 

7,000

Cash acquired

 

 

1,975

Net cash outflow

 

 

5,025

Included in the Group’s revenues for the year 2016 are CHF 1.0 million arising from the additional business from SmartCaution. A loss of CHF 0.1 million is included in the profit for the year. If the acquisition of SmartCaution had occurred on 1 January 2016, the Group’s consolidated revenue would have been CHF 583.9 million and its consolidated profit after tax of CHF 118.1 million would have arisen (both based on continuing and discontinuing operations). The acquisition incurred acquisition costs for the Group of CHF 0.1 million, which are included in the profit and loss statement under “Other expenses”.

4. Commission income

In 1,000 CHF

2017

2016 restated

Interchange revenue

77,002

74,760

Currency exchange commissions

59,849

47,181

Other commission revenue

24,058

22,414

 

 

 

Commission income

160,909

144,355

5. Interest income and interest expenses

In 1,000 CHF

2017

2016 restated

Interest income

96,802

99,886

Interest expenses

(19,431)

(22,539)

 

 

 

Interest income, net

77,370

77,347

Interest income contains income from the Group’s Consumer Finance activities and also from credit lines granted to clients in the Payment business.

In the Payment business, credit cardholders are eligible to convert their debit on the credit card into a consumer credit for which the Group then charges interest for the period of the short-term loan.

Interest expenses are the refinancing expenses to finance the open credit lines of the Payment and Consumer Finance businesses.

6. Other income

In 1,000 CHF

2017

2016 restated

Foreign exchange gains or losses, net

48,805

43,374

Income from services

26,549

23,556

Other income

9,860

54,020

 

 

 

Other income

85,214

120,949

Foreign exchange gains and losses arise on transactions which are not settled in Swiss francs. Customers in the Group’s Payment business are billed based on a typical exchange rate close to spot rates, whereas the Group is billed near the interbank rate (interbank rate plus Group’s credit spread).

As a former member of Visa Europe Ltd., the business unit Payment benefited in 2016 from selling Visa Europe Ltd. to Visa Inc. The Group received contributions at a total value of CHF 71.7 million, including preferential Visa Inc. shares at a value of CHF 17.3 million as at transaction date, as well as an entitlement to a deferred cash payment of CHF 4.3 million. The contribution of CHF 71.7 million has been recorded as “Other income”, of which CHF 20.5 million has been allocated to Aduno SA and is therefore disclosed as part of discontinued operations.

7. Processing and service expenses

In 1,000 CHF

2017

2016 restated

Cards processing expenses

32,462

28,386

Service expenses

24,227

24,079

Material expenses

7

22

 

 

 

Processing and service expenses

56,696

52,487

8. Distribution, advertising and promotion expenses

In 1,000 CHF

2017

2016 restated

Acquisition expenses

73,556

68,367

Rewards and redemption expenses

7,150

10,712

Advertising and promotion expenses

17,571

17,254

Costs for distribution

128

142

 

 

 

Distribution, advertising and promotion expenses

98,405

96,475

9. Personnel expenses

In 1,000 CHF

2017

2016 restated

Wages and salaries

73,700

65,930

Social security contributions

7,810

6,940

Expenses related to defined benefit plans

3,556

4,145

Other personnel expenses

10,333

5,498

 

 

 

Personnel expenses

95,400

82,512

10. Other expenses

In 1,000 CHF

2017

2016 restated

Audit and professional services

20,689

11,020

IT expenses

16,650

12,979

Telephone and postage

1,551

970

Premises expenses

7,339

6,312

Travel and representation

746

637

Loss on sale of property and equipment and intangible assets

1,441

0

Other administration expenses 1)

7,876

4,439

 

 

 

Other expenses

56,291

36,355

1)To provide better comparability and accurate presentation, the accrual booked under “Other expenses” in 2016 to reflect an expected agreement with the tax authorities regarding transfer pricing has been reclassified in the tax result. See note 12.

11. Impairment losses from Payment and Consumer Finance

In 1,000 CHF

2017

2016 restated

Impairment losses on commission income

2,702

2,321

Impairment losses on interest income

11,999

10,893

 

 

 

Impairment losses

14,701

13,214

The impairment losses on commission income are attributable to losses arising from bad debts, fraud and chargebacks in the Payment business, whereas the impairment losses on interest income mainly represent incurred but not reported losses in the Consumer Finance business.

12. Income tax expenses

Expenses recognised in consolidated income statement 

In 1,000 CHF

2017

2016 restated

Current income tax expenses 1)

33,358

40,490

Deferred tax expenses (+) / income (–) 1)

1,456

568

 

 

 

Total income tax expenses

34,813

41,058

1)To provide better comparability and accurate presentation, the accrual booked under “Other expenses” in 2016 to reflect an expected agreement with the tax authorities regarding transfer pricing has been reclassified in the tax result.

Average applicable tax rate

The Group calculated an average applicable income tax rate of 14.9% in 2017 and 16.2% in 2016, which represents the weighted average income tax rate calculated on the basis of the Group’s operating subsidiaries in Switzerland.

Reconciliation of effective tax rate

The average effective income tax rate for 2017 was 31.6% and 26.1% for 2016. It was derived as shown in the following table.

In 1,000 CHF

2017

2016 restated

Profit before income tax

110,177

157,444

Income tax expenses at the average applicable tax rate 1)

16,416

25,506

Changes in estimates related to prior years 1)

23,734

18,000

Income tax expenses related to transfer price adjustements 1)

7,330

3,487

Effect from non-taxable income

(285)

(335)

Tax effect on income at different rates

(12,382)

(5,600)

 

 

 

Effective income tax expenses

34,813

41,058

1)To provide better comparability and accurate presentation, the accrual booked under “Other expenses” in 2016 to reflect an expected agreement with the tax authorities regarding transfer pricing has been reclassified in the tax result.

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 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. At the end of the 2016 financial year, the Aduno Group was still working under the assumption that an agreement with the Zurich tax authorities would be reached, and it accrued a total of CHF 21.5 million under “Other expenses”.

This agreement proved to be unrealistic. Following this, in March 2018, the Aduno Group lodged an appeal with the Zurich tax appeals court. The time horizon for a definitive settlement has therefore lengthened materially.

Due to the reassessment, in 2017, the Aduno Group recognised additional tax provisions amounting to CHF 23.7 million for financial years 2011 to 2016, and CHF 7.3 million for the 2017 financial year. To provide better comparability and accurate presentation, the accrual booked in 2016 was also reclassified in the tax result.

Deferred tax assets and liabilities

The following table shows in which lines of the Group’s balance sheet tax assets and liabilities were recognised on temporary differences between the tax base and IFRS carrying amounts.

 

 

 

2017

 

 

2016

In 1,000 CHF

Assets

Liabilities

Net

Assets

Liabilities

Net

Receivables

2,180

(6,422)

(4,242)

2,064

(6,188)

(4,124)

Prepaid expenses

305

(2,135)

(1,830)

141

(2,742)

(2,601)

Property and equipment

0

(344)

(344)

0

(370)

(370)

Intangible assets

1,790

(6,920)

(5,130)

2,671

(23,373)

(20,702)

Financial investments available for sale

0

(2,390)

(2,390)

0

(295)

(295)

Interest-bearing liabilities

148

(8)

140

25

(28)

(3)

Accrued expenses and deferred income

7,306

(1,312)

5,994

7,961

3,780

11,741

Provisions

63

(83)

(20)

67

(106)

(39)

Employee benefit obligations

10,163

0

10,163

8,867

0

8,867

Tax value of loss carry-forwards recognised

3,686

0

3,686

2,964

0

2,964

Tax assets / (liabilities)

25,641

(19,614)

6,026

24,761

(29,321)

(4,560)

Set-off of tax

(11,704)

11,704

0

(17,205)

17,205

0

Net tax assets / (liabilities)

13,937

(7,911)

6,026

7,556

(12,116)

(4,560)

Temporary differences of associates, on which no deferred income taxes were recognised as at 31 December 2017, amounted to CHF 22.7 million (2016: CHF 20.9 million).

Tax loss carry-forwards

The Group had total tax loss carry-forwards of CHF 15.8 million as at 31 December 2017 (2016: CHF 14.1 million). There are no unrecognised tax losses carry-forwards.

Income taxes directly recognised in other comprehensive income

A decrease in employee benefit obligations of CHF 2.4 million was recognised in other comprehensive income in 2017 (2016: increase of CHF 2.9 million). The Group recognised CHF 0.5 million of deferred tax liabilities in other comprehensive income (2016: CHF 0.7 million of deferred tax assets).

A positive change in fair value of financial investments available for sale of CHF 7.4 million was recognised in other comprehensive income in 2017 (2016: CHF 1.5 million). The Group recognised CHF 1.6 million of deferred tax liabilities in other comprehensive income (2016: CHF 0.3 million). A gain of 1.4 million was recycled to profit or loss (2016: none). The Group recognised CHF 0.3 million of deferred tax income.

A positive change in fair value of cash flow hedges of CHF 0.3 million was recognised as a reduction in liability in 2017 (2016: positive change of CHF 1.8 million). The Group recognised deferred tax liabilities of less than CHF 0.1 million in other comprehensive income (2016: tax liabilities of CHF 0.2 million).

Movement in deferred tax assets and liabilities during the year

In 1,000 CHF

Balance at 31.12.2016

Recognised in income statement

Recognised in other comprehensive Income

Change in scope of consolidation

Balance at 31.12.2017

Receivables

(4,124)

(130)

(27)

39

(4,242)

Prepaid expenses

(2,601)

771

0

0

(1,830)

Property and equipment

(370)

23

0

2

(344)

Intangible assets

(20,702)

549

0

15,023

(5,130)

Financial investments available for sale

(295)

0

(1,333)

(763)

(2,390)

Interest-bearing liabilities

(3)

142

0

0

140

Accrued expenses and deferred income

11,741

(5,794)

0

47

5,994

Provisions

(39)

37

0

(17)

(20)

Employee benefit obligations

8,867

2,224

(511)

(418)

10,163

Tax value of loss carry-forwards recognised

2,964

721

0

0

3,686

Tax assets / (liabilities)

(4,560)

(1,456)

(1,871)

13,914

6,026

In 1,000 CHF

Balance at 31.12.2015

Recognised in income statement restated

Recognised in other comprehensive Income

Change in scope of consolidation restated

Balance at 31.12.2016

Receivables

(4,191)

224

(210)

54

(4,124)

Prepaid expenses

(2,338)

(263)

0

0

(2,601)

Property and equipment

(351)

(36)

0

17

(370)

Intangible assets

(19,203)

(927)

0

(572)

(20,702)

Financial investments available for sale

0

0

(295)

0

(295)

Interest-bearing liabilities

177

(180)

0

0

(3)

Accrued expenses and deferred income

8,195

3,209

0

337

11,741

Provisions

49

(105)

0

17

(39)

Employee benefit obligations

8,211

(2,273)

661

2,268

8,867

Tax value of loss carry-forwards recognised

3,181

(217)

0

0

2,964

Tax assets / (liabilities)

(6,269)

(568)

156

2,120

(4,560)

13. Earnings per share

In 1,000 CHF

2017

2016 restated

Profit attributable to owners of the company

191,684

118,564

Profit from continuing operations attributable to owners of the company

75,417

116,457

Profit from discontinued operation attributable to owners of the company

116,267

2,109

 

 

 

Issued ordinary shares at 1 January

25,000

25,000

Weighted average number of ordinary shares at 31 December

25,000

25,000

 

 

 

Earnings per share in CHF

7,667.37

4,742.57

Earnings per share in CHF, from continuing operations

3,016.69

4,658.27

Earnings per share in CHF, from discontinued operation

4,650.68

84.35

Diluted earnings per share

There are neither convertible bonds nor options or other potential shares outstanding and therefore there is no dilutive impact on earnings.

14. Cash and cash equivalents

In 1,000 CHF

2017

2016

Cash

16

12

Post bank

11,428

113

Bank

10,702

41,364

 

 

 

Cash and cash equivalents

22,146

41,489

Cash and cash equivalents are mainly held in CHF, EUR and USD. The percentage of these currencies of the total cash and cash equivalents held is shown in the table below.

In 1,000 CHF

2017

2016

CHF

93.2%

97.4%

EUR

3.8%

0.9%

USD

2.9%

0.0%

Other

0.1%

1.7%

 

 

 

Total

100.0%

100.0%

15. Receivables from Payment business and Consumer Finance

 

 

 

In 1,000 CHF

2017

2016

Receivables from cardholders

446,987

452,704

Receivables from card schemes

0

85,439

Receivables from debt collection

3,744

3,604

Receivables for which fraud is assumed

216

223

Other receivables from business unit Payment

5,801

8,163

Allowances for doubtful debts

(1,195)

(921)

 

 

 

Total receivables from business unit Payment

455,552

549,213

In 1,000 CHF

2017

2016

Short-term receivables from business unit Consumer Finance

474,714

467,674

Short-term allowances for doubtful debts

(9,477)

(8,818)

Short-term receivables from business unit Consumer Finance

465,238

458,856

 

 

 

Long-term receivables from business unit Consumer Finance

909,425

826,625

Long-term allowances for doubtful debts

(18,281)

(15,963)

Long-term receivables from business unit Consumer Finance

891,144

810,662

 

 

 

Total receivables from business unit Consumer Finance

1,356,382

1,269,519

The sold Aduno SA had mainly receivables form card schemes and other receivables from the Payment business.

The aging of the receivables contained in the balance sheet that are not individually impaired as at the reporting date is as follows:

 

Gross amount

Allowance

Gross amount

Allowance

In 1,000 CHF

2017

2017

2016

2016

Receivables from cardholders

 

 

 

 

Not past due

443,927

0

449,127

0

Past due 1–30 days

2,017

0

2,561

0

Past due 31–60 days

723

0

619

0

Past due 61–90 days

260

0

279

0

Past due for more than 90 days

61

0

117

0

Total

446,987

0

452,704

0

 

 

 

 

 

Receivables from debt collection

 

 

 

 

Past due for more than 90 days

3,744

(949)

3,604

(656)

Total

3,744

(949)

3,604

(656)

 

 

 

 

 

Receivables for which fraud is assumed

 

 

 

 

Past due 1–30 days

186

(68)

213

(91)

Past due 31–60 days

25

(25)

11

(11)

Past due 61–90 days

5

(5)

0

0

Past due for more than 90 days

0

0

0

0

Total

216

(98)

223

(102)

 

 

 

 

 

Receivables from card schemes and others

 

 

 

 

Past due

199

(68)

870

(163)

Due on sight

826

(81)

88,422

0

Due within 1–3 years

4,775

0

4,311

0

Total

5,801

(148)

93,603

(163)

 

 

 

 

 

Receivables from business unit Consumer Finance

 

 

 

 

Past due

35,086

(974)

28,440

(736)

Due on sight

13,725

(390)

14,297

(373)

Due within up to 3 months

135,901

(2,350)

130,775

(2,217)

Due within 4–12 months

290,003

(5,763)

294,162

(5,492)

Total current receivables

474,714

(9,477)

467,674

(8,818)

 

 

 

 

 

Due within 1–3 years

634,681

(12,939)

614,775

(11,859)

Due after more than 3 years

274,744

(5,342)

211,850

(4,104)

Total non-current receivables

909,425

(18,281)

826,625

(15,963)

 

 

 

 

 

Total

1,384,139

(27,758)

1,294,299

(24,780)

Receivables from Payment business

Receivables from cardholders consist of regular open balances on the credit card accounts of credit cardholders. Open balances from cardholders due for more than 90 days are transferred to a dedicated and monitored collection portfolio. The balance of the collection portfolio amounts to CHF 3.7 million (2016: CHF 3.6 million) and is shown under “Receivables from debt collection”.

If a cardholder transaction shows signs of being fraudulent, the respective balance is transferred to a dedicated fraud portfolio until the case is settled. This portfolio amounted to CHF 0.2 million as at 31 December 2017 (2016: CHF 0.2 million). An adequate allowance is set up for all receivables for which fraud is assumed. The respective balance of all fraudulent transactions under clarification is shown under “Receivables for which fraud is assumed”.

The open settlement balance to the card schemes in 2016 of CHF 85.4 million reflects the transmitted merchant transactions on the last days before closing. Due to the sale of Aduno SA there were no balances as at year end 2017. The open settlement balances to the card schemes are settled daily. In the history of the Company all daily balances to the schemes were settled as announced by the card schemes. Therefore no allowances for doubtful debts were built.

Due to the sale of Aduno SA there were no receivables from terminal sales in 2017. In 2016 receivables from terminal sales were open balances to customers totalling CHF 1.7 million and were contained in the other receivables from the Payment business. This amounted to 0.3% of the total receivables of the Payment business. Allowances for doubtful debts are built according to the aging of the overdue receivables, and receivables overdue for more than 12 months are provided for 100%.

In 2016 other receivables from the Payment business also contained receivables related to the currency conversion amounting to CHF 1.9 million. Such receivables were usually settled within less than one week. Due to the sale of Aduno SA there were no such receivables in 2017.

Receivables from Consumer Finance activities

These receivables consist of consumer loans and finance lease receivables from the car leasing business. Finance lease receivables are collateralised by the financed cars while consumer loans are not collateralised.

Open balances from the Consumer Finance segment due for more than 90 days are transferred to a dedicated and monitored collection portfolio. Allowances for doubtful debts are built using sophisticated analytical and statistical methods as described below. The total balance is shown as “Allowance for doubtful debts”.

In 1,000 CHF

2017

2016

Receivables from consumer loans

738,885

700,772

Receivables from finance leases

645,255

593,527

 

 

 

Total receivables from business unit Consumer Finance

1,384,139

1,294,299

Receivables from finance lease

In 1,000 CHF

2017

2016

Current receivables from finance leases

 

 

Gross investment in finance leases

289,728

287,851

Unearned finance income

66,458

66,224

 

 

 

Present value of minimum lease payments

223,270

221,627

 

 

 

Non-current receivables from finance leases

 

 

Gross investment in finance leases

464,227

408,070

Unearned finance income

42,243

36,171

 

 

 

Present value of minimum lease payments

421,984

371,899

 

 

 

Gross receivables from finance leases

 

 

Due within up to 1 year

289,728

287,851

Due within 1–5 years

464,227

408,070

Unearned finance income

108,701

102,395

 

 

 

Present value of minimum lease payments

645,255

593,527

Allowances for doubtful debts

Recognised allowances for doubtful debts for the business segments at the reporting date are shown in the following tables.

In 1,000 CHF

2017

2016

Allowances for doubtful debts, business unit Payment

 

 

Balance at 1 January

(921)

(1,516)

(Increase) / decrease

(274)

594

 

 

 

Balance at 31 December

(1,195)

(921)

Allowances for doubtful debts on receivables from cardholders are composed of impairments on receivables due to late payment, fraudulent payments and non-recoverable chargeback at both specific and collective levels. All individually significant receivables from cardholders are assessed for specific impairment. Those found not to be specifically impaired are then collectively assessed for any impairment that has been incurred but not yet identified. The allowance for all three categories is determined according to historical data based on sophisticated analytical methods and evaluation models. The allowance is adjusted in line with management’s judgement as to whether current economic and credit conditions are such that the actual losses are likely to be greater or less than those suggested by historical trends. Management qualifies the allowance for doubtful debts in the Payment segment as adequate.

In 1,000 CHF

2017

2016

Allowances for doubtful debts, business unit Consumer Finance

 

 

Balance at 1 January

(24,780)

(24,904)

(Increase) / decrease

(2,977)

124

 

 

 

Balance at 31 December

(27,758)

(24,780)

Allowances for doubtful debts on receivables from Consumer Finance is composed of impairments on receivables due to late payment and also comprise a portion of those found not to be specifically impaired but which are then collectively assessed for any impairment that has been incurred but not yet identified. The Group recognises allowances in its Consumer Finance business at the time the credit facility or the leasing contract is paid out to the customer.

The collective allowance is determined for clusters of customers by combining historical data based on sophisticated analytical methods and evaluation models considering the particular risks of each cluster. The allowance is adjusted in line with management’s judgement as to whether current economic and credit conditions are such that the actual losses are likely to be greater or less than those suggested by historical trends. Currently, no specific allowances that are individually significant are recognised on receivables in the Consumer Finance segment. Management qualifies the allowance for doubtful debts in the Consumer Finance segment as adequate.

Except for allowances for fraudulent transactions in the Payment business, all impairments of receivables are due to late payment by customers or those that have been incurred but not yet identified. Based on the Group’s experience, impairments are calculated as a percentage of the overdue balance by customers, including the estimated amount of receivables becoming overdue in the near future.

In the Payment and Consumer Finance businesses, on average about 99% (2016: 98%) of the receivables outstanding are not past due. Based on past experience, the Group includes the impairment allowance for these receivables in the allowance calculated on the basis of the default risk of the total debts.

16. Inventories

In 1,000 CHF

2017

2016

Raw materials

2,540

2,306

Terminals – new

0

1,651

Terminals – used

0

74

 

 

 

Total inventories

2,540

4,031

In 2017 inventory costs of CHF 5.6 million were recognised as an expense (2016: CHF 6.2 million). No write-downs  were recognised on inventories to net realisable value in 2017 (2016: CHF 1.5 million). As Aduno SA was sold, there are no longer terminals on stock.

17. Other receivables

In 1,000 CHF

2017

2016

Other receivables from VAT, withholding tax and salary benefits

1,515

2,720

Other receivables from partners

140

1,410

Deposits and prepayments

188

80,549

Derivative financial instruments, held for trading

75

49

Other

12,171

4,846

 

 

 

Total other receivables

14,090

89,572

Until 2016 the deposits on prepaid credit cards were deposited at a specific bank account and disclosed as deposits under “Other receivables”. During 2017 the group released the prepayments from this separate and distinct bank account and included those funds in the general cash management pool. At year-end 2017 the balance was TCHF 188. Accounts receivables are disclosed in the line item “Other”. 

Foreign exchange contracts – trading

In 1,000 CHF

2017

2016

Notional amount

27,356

26,856

Positive fair value

75

49

Negative fair value

(186)

(255)

Interest rate swaps – cash flow hedges

In 1,000 CHF

2017

2016

Notional amount

6,000

41,000

Positive fair value

0

0

Negative fair value

(57)

(289)

Derivative financial instruments

The Group uses only foreign exchange contracts to hedge its foreign exchange risk exposure. As the Group does not comply with all documentation requirements under IAS 39, these derivatives do not qualify for hedge accounting and are therefore classified as “held for trading”.

Cash flow hedges

The Group also uses interest rate swaps to hedge its exposure to interest changes arising from the Payment and Consumer Finance businesses. These instruments qualify for hedge accounting.

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. The Group enters into interest rate swaps to hedge its exposure to fluctuating interest rates on its refinancing. It swaps Libor interest payments into fixed interest payments. The total underlying amount of the contracted swaps as at 31 December 2017 amounted to CHF 6.0 million (2016: CHF 41.0 million).

All cash flow hedges of the IRS were assessed to be highly effective as at 31 December 2017 and as at 31 December 2016. A net unrealised gain of CHF 0.3 million (2016: net unrealised gain of CHF 1.8 million) with a related deferred tax liability of less than CHF 0.1 million (2016: related deferred tax liability of CHF 0.2 million) was included in other comprehensive income in respect of these contracts.

Cash flows from hedges occurring in the future are disclosed in Note 31, the profit and loss effect being the same as the related cash flow of the underlying hedged item.

    18. Prepaid expenses

    In 1,000 CHF

    2017

    2016

    Prepaid expenses to partners

    22,750

    23,801

    Other

    29,380

    15,416

     

     

     

    Total prepaid expenses

    52,129

    39,218

    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.

    Concerning the Consumer Finance activities, the Group recog­nises commissions paid to its sellers and distribution partners. The commission is periodically allocated to the expected duration of the contract.

    19. Property and equipment

    In 1,000 CHF

    Furniture

    IT & office equipment

    Cars

    Leasehold improvement

    Buildings

    Terminals

    Total

    Costs

     

     

     

     

     

     

     

    Balance at 1 January 2017

    2,740

    19,806

    1,096

    13,266

    1,939

    6,075

    44,919

    Acquisitions through business combinations (see Note 3)

    9

    33

    0

    0

    0

    0

    42

    Disposals due to sale of major business line

    (909)

    (3,549)

    0

    (4,188)

    0

    (6,075)

    (14,720)

    Acquisitions

    1,492

    3,357

    168

    140

    0

    0

    5,157

    Disposals and other changes

    (3)

    (8,830)

    (371)

    (146)

    0

    0

    (9,350)

    Effect of movements in foreign exchange

    0

    2

    0

    0

    0

    0

    2

    Balance at 31 December 2017

    3,328

    10,820

    892

    9,072

    1,939

    0

    26,052

     

     

     

     

     

     

     

     

    Depreciation and impairment losses

     

     

     

     

     

     

     

    Balance at 1 January 2017

    (1,639)

    (5,702)

    (526)

    (5,897)

    (321)

    (3,937)

    (18,022)

    Disposals due to sale of major business line

    8

    407

    0

    2,035

    0

    3,937

    6,386

    Depreciation charge for the year

    (322)

    (2,513)

    (171)

    (959)

    (64)

    0

    (4,028)

    Disposals and other changes

    32

    415

    247

    122

    0

    0

    815

    Effect of movements in exchange rates

    0

    (2)

    0

    0

    0

    0

    (2)

    Balance at 31 December 2017

    (1,922)

    (7,395)

    (449)

    (4,700)

    (384)

    0

    (14,850)

     

     

     

     

     

     

     

     

    Carrying amount

     

     

     

     

     

     

     

    At 1 January 2017

    1,101

    14,104

    570

    7,369

    1,618

    2,138

    26,897

    At 31 December 2017

    1,407

    3,425

    444

    4,372

    1,555

    0

    11,202

    In 1,000 CHF

    Furniture

    IT & office equipment

    Cars

    Leasehold improvement

    Buildings

    Terminals

    Total

    Costs

     

     

     

     

     

     

     

    Balance at 1 January 2016

    3,629

    19,949

    1,237

    12,482

    1,933

    5,926

    45,156

    Acquisitions through business combinations (see Note 3)

    0

    21

    0

    0

    0

    0

    21

    Acquisitions

    122

    5,206

    103

    1,233

    7

    148

    6,820

    Disposals and other changes

    (1,012)

    (5,371)

    (244)

    (450)

    0

    0

    (7,078)

    Effect of movements in foreign exchange

    0

    0

    0

    0

    0

    0

    0

    Balance at 31 December 2016

    2,740

    19,806

    1,096

    13,266

    1,939

    6,075

    44,919

     

     

     

     

     

     

     

     

    Depreciation and impairment losses

     

     

     

     

     

     

     

    Balance at 1 January 2016

    (2,497)

    (7,050)

    (454)

    (4,736)

    (258)

    (3,658)

    (18,653)

    Depreciation charge for the year *

    (325)

    (3,679)

    (235)

    (1,400)

    (63)

    (279)

    (5,983)

    Disposals and other changes

    1,183

    5,027

    163

    239

    0

    0

    6,613

    Effect of movements in exchange rates

    0

    0

    0

    0

    0

    0

    0

    Balance at 31 December 2016

    (1,639)

    (5,702)

    (526)

    (5,897)

    (321)

    (3,937)

    (18,022)

     

     

     

     

     

     

     

     

    Carrying amount

     

     

     

     

     

     

     

    At 1 January 2016

    1,132

    12,899

    783

    7,746

    1,675

    2,268

    26,503

    At 31 December 2016

    1,101

    14,104

    570

    7,369

    1,618

    2,138

    26,897

    * The amount consists of continued and discontinued depreciation. 

    Non-cancellable operating lease rentals are payable as follows:

    In 1,000 CHF

    2017

    2016

    Less than one year

    7,055

    4,271

    Between one and five years

    11,542

    13,339

     

     

     

    Total

    18,597

    17,609

    Operating leases include the Group’s offices in the cantons Zurich, St. Gallen, Ticino, Vaud, Neuchâtel and Geneva.

    During the year ended 31 December 2017, CHF 4.9 million was recognised as an expense in the consolidated income statement  in respect of operating leases (2016: CHF 4.8 million).

    20. Goodwill and other intangible assets

    In 1,000 CHF

    Goodwill

    Software

    Licences

    Client relationships

    Total other intangible assets

    Costs

     

     

     

     

     

    Balance at 1 January 2017

    136,043

    70,923

    2,992

    136,200

    210,115

    Acquisitions through business combinations (see Note 3)

    21,120

    19,298

    0

    980

    20,278

    Disposals due to sale of major business line

    (28,729)

    (18,690)

    0

    (96,239)

    (114,929)

    Acquisitions

    0

    22,249

    0

    0

    22,249

    Disposals and other changes

    0

    8,458

    0

    0

    8,458

    Balance at 31 December 2017

    128,434

    102,238

    2,992

    40,941

    146,171

     

     

     

     

     

     

    Amortisation and impairment losses

     

     

     

     

     

    Balance at 1 January 2017

    0

    (29,091)

    (1,081)

    (115,180)

    (145,352)

    Disposals due to sale of major business line

    0

    5,591

    0

    90,802

    96,393

    Amortisation charges for the period

    0

    (7,199)

    (505)

    (4,144)

    (11,849)

    Disposals and other changes

    0

    (22)

    0

    0

    (22)

    Balance at 31 December 2017

    0

    (30,721)

    (1,587)

    (28,522)

    (60,830)

     

     

     

     

     

     

    Carrying amounts

     

     

     

     

     

    At 1 January 2017

    136,043

    41,831

    1,911

    21,020

    64,762

    At 31 December 2017

    128,434

    71,516

    1,405

    12,418

    85,341

    In 1,000 CHF

    Goodwill

    Software

    Licences

    Client relationships

    Total other intangible assets

    Costs

     

     

     

     

     

    Balance at 1 January 2016

    134,129

    52,295

    2,992

    128,474

    183,761

    Acquisitions through business combinations (see Note 3)

    1,914

    13

    0

    7,726

    7,738

    Acquisitions

    0

    21,085

    0

    0

    21,085

    Disposals and other changes

    0

    (2,470)

    0

    0

    (2,470)

    Balance at 31 December 2016

    136,043

    70,923

    2,992

    136,200

    210,115

     

     

     

     

     

     

    Amortisation and impairment losses

     

     

     

     

     

    Balance at 1 January 2016

    0

    (18,590)

    (576)

    (107,864)

    (127,030)

    Amortisation charges for the period *

    0

    (13,353)

    (506)

    (7,317)

    (21,176)

    Disposals and other changes

    0

    2,853

    1

    0

    2,854

    Balance at 31 December 2016

    0

    (29,091)

    (1,081)

    (115,180)

    (145,352)

     

     

     

     

     

     

    Carrying amounts

     

     

     

     

     

    At 1 January 2016

    134,129

    33,705

    2,416

    20,610

    56,731

    At 31 December 2016

    136,043

    41,831

    1,911

    21,020

    64,762

    * The amount consists of continued and discontinued amortisation. 

    Client relationships

    The acquisitions of the BCV portfolio and Raiffeisen Finanzierungs AG in 2008 resulted in a further increase in the client relationships recognised in the Group’s balance sheet, which is depreciated using the digital degressive method over 7–10 years, ending in 2018.

    In 2012 the Group acquired client relationships amounting to CHF 9.0 million for its Consumer Finance business to strengthen its presence in the French-speaking part of Switzerland. Also in 2012 the Group acquired Revi-Lease and recognised the client relationship. These relationships are depreciated using the digital degressive method through their estimated useful life over 10 years until 2022.

    The acquisition of AdunoKaution in 2014 resulted in a further increase in client relationships by CHF 0.7 million. Also in 2014 the Group acquired the client relationship of Banque Cantonale Neuchâteloise amounting to CHF 2.3 million. These are depreciated using the digital degressive method over its estimated useful life until 2024.

    The acquisition of SmartCaution in 2016 resulted in an increase in client relationships by CHF 7.7 million. This is depreciated using the digital degressive method over its estimated useful life until 2031.

    The acquisition of Contovista in 2017 resulted in an increase in client relationships by CHF 1.0 million. This is depreciated using the digital degressive method over its estimated useful life until 2032.

    In 2017 Aduno SA was sold and the related client relationships in the amount of CHF 5.4 million were derecognised.

    Impairment tests for cash-generating units containing goodwill

    The Group performed impairment tests on goodwill as at 30 September 2017. For the purpose of impairment testing, goodwill is allocated to a cash-generating unit that is expected to benefit from the synergies of the corresponding business combination.

    For the impairment test, the recoverable amount of a cash-generating unit (the higher of the cash-generating unit’s fair value less costs to sell and its value in use) is compared to the carrying amount of the corresponding cash-generating unit.

    Future cash flows are discounted using a pre-tax rate that reflects current market assessments based on the Weighted Average Cost of Capital (WACC) and the Capital Asset Pricing Model (CAPM). The WACC is calculated based on an average of available market betas of a group of companies operating in the same businesses as the respective cash-generating unit as well as the risk-free interest rate.

    Fair value less costs to sell is normally assumed to be higher than the value in use; therefore, fair value less costs to sell is only investigated when value-in-use is lower than the carrying amount of the cash-generating unit.

    The cash flow projections are based on three-year period bud­gets. Cash flows beyond this period are extrapolated using the long-term estimated growth rates stated below.

    Key assumptions used for value-in-use calculations of goodwill amounts per cash-generating unit were as follows:

    2017 In 1,000 CHF

    Carrying amount of goodwill

    Currency

    Discount rate

    Projection period

    Long-term growth rate

    Payment business - Issuing

    43,428

    CHF

    10.9%

    2018–2020

    1%

    Consumer Finance

    27,816

    CHF

    8.6%

    2018–2020

    1%

    Internal Financing

    57,190

    CHF

    8.4%

    2018–2020

    1%

    2016 In 1,000 CHF

    Carrying amount of goodwill

    Currency

    Discount rate

    Projection period

    Long-term growth rate

    Payment business - Issuing

    22,308

    CHF

    10.0%

    2017–2019

    1%

    Payment business - Acquiring

    28,729

    CHF

    8.5%

    2017–2021

    1%

    Consumer Finance

    27,816

    CHF

    9.0%

    2017–2019

    1%

    Internal Financing

    57,190

    CHF

    7.9%

    2017–2019

    1%

    The estimated recoverable amount for the 3 (2016: 4) cash-generating units exceeds the carrying amount of the cash-generating units. No reasonably possible change in the key assumptions would cause the carrying amount of the cash-generating units to exceed the recoverable amount.

    21. Investments in associates

    Since 2007 the Group has owned a 30% stake in Accarda. Accarda has its principal place of business in Wangen‑Brüttisellen (ZH) and issues, processes and operates store cards and gift cards on behalf of corporate retail customers.

    The following table shows a summary of the full-year financial information for the associate Accarda, not adjusted for the percentage ownership held by the Group:

    In 1,000 CHF

    2017

    2016

    Total assets

    323,322

    322,149

    Total liabilities

    229,910

    235,087

    Net assets

    93,412

    87,062

     

     

     

    Revenue

    47,446

    50,325

    Profit for the period

    11,323

    10,839

    The Group’s share of the profit of Accarda for the period from 1 January to 31 December 2017 amounted to CHF 3.4 million and is accounted in the consolidated profits of the Group (2016: CHF 3.3 million). In 2017 Aduno Holding received a dividend payment of CHF 1.5 million from Accarda (2016: CHF 1.5 million).

    Since 2015 the Group has owned a 33.3% stake in SwissWallet AG, founded in 2015. SwissWallet AG has its principal place of business in Zurich. SwissWallet is a digital payment solution from the Swiss credit card industry.

    In March 2016 Aduno Holding acquired a 14.3% stake in Contovista. Contovista develops software for Finance Management as well as Analytics and distributes it to banks. The Group is represented in the Board of Directors of Contovista. In 2017 the Aduno Holding acquired an additional 55.7% and increased its stake to 70%. Consequently Contovista is now fully consolidated. Refer to Note 3 “Change in scope of consolidation”. Due to the revaluation of the current 14.3%, the group recorded a fair value gain of CHF 4.0 million in income from associates.  

     

    Contovista AG

    SwissWallet AG

    In 1,000 CHF

    2017

    2016

    2017

    2016

    Total assets

    n/a

    5,102

    2,292

    2,346

    Total liabilities

    n/a

    1,232

    68

    96

    Net assets

    n/a

    3,870

    2,224

    2,250

     

     

     

     

     

    Revenue

    n/a

    1,977

    1,023

    1,005

    Profit / (loss) for the period

    n/a

    259

    (25)

    246

    The Group’s share of the loss of SwissWallet AG for the period from 1 January to 31 December 2017 amounted to less than CHF 0.1 million and is accounted in the consolidated profits of the Group (2016: gain of CHF 0.1 million).

    22. Financial investments available for sale 

    The group holds preferential Visa Inc. shares. These shares are classified as financial investments available for sale. In 2017 the fair value increased by CHF 7.4 million (2016: 1.5 million), which was recorded as an unrealised gain on financial investments available for sale in other comprehensive income. The disposed portion of preferential Visa Inc. shares relating to Aduno SA was reacquired by Viseca subsequent to the sale of Aduno SA.

    In 1,000 CHF

    2017

    2016

    Financial investments available for sale

     

     

    Balance at 1 January

    18,732

    0

    Acquisition

    6,428

    17,280

    Disposal

    (6,428)

    0

    Unrealised gains

    7,399

    1,452

     

     

     

    Balance at 31 December

    26,131

    18,732

    23. Payables to counterparties

    In 1,000 CHF

    2017

    2016

    Advances received

    102,393

    102,992

    Payables to merchants

    0

    133,637

    Payables to schemes

    61,509

    48,426

    Other

    0

    1,843

     

     

     

    Payables to counterparties

    163,901

    286,898

    The Group receives advance payments from customers with issued prepaid credit cards as well as for downpayments for leasing contracts. In 2016 the payables to merchants as well as the others have been solely from the sold Aduno SA.

    24. Other trade payables

    “Other trade payables” contain unpaid invoices which were received before the end of the year, but for which the time limit for payment has not yet been reached. They amounted to CHF 7.1 milion as per the end of the reporting period (end of 2016: CHF 10.4 million).

    25. Other payables

    In 1,000 CHF

    2017

    2016

    Payables related to employees

    14,679

    16,473

    VAT liabilities

    1,297

    2,176

    Derivatives used for hedging

    57

    289

    Derivative financial instruments

    186

    255

    Other

    65

    297

     

     

     

    Other payables

    16,285

    19,489

    Details of derivative financial instruments are shown in Note 17 “Other receivables”.

    26. Accrued expenses and deferred income

    In 1,000 CHF

    2017

    2016

    Deferred annual fees

    35,624

    37,807

    Commission payable to partners

    28,006

    28,370

    Deferred revenues arising from loyalty programs

    21,002

    21,936

    Accrued interest expenses

    1,431

    2,469

    Other 1)

    29,673

    15,283

     

     

     

    Accrued expenses and deferred income

    115,736

    105,865

    1)To provide better comparability and accurate presentation, the accrual booked under “Other expenses” in 2016 to reflect an expected agreement with the tax authorities regarding transfer pricing has been reclassified in the tax result. See note 12.

    27. Interest-bearing liabilities

    In 1,000 CHF

    2017

    2016

    Other bank liabilities

    102,181

    8,584

    Current portion of syndicated loan

    390,000

    390,000

    Current portion of unsecured bond issues

    100,094

    449,669

    Short-term interest-bearing liabilities

    592,275

    848,253

     

     

     

    Unsecured bond issues

    374,024

    273,749

    Other long-term liabilities

    590

    1,929

    Long-term interest-bearing liabilities

    374,614

    275,678

     

     

     

    Total interest-bearing liabilities

    966,889

    1,123,930

    Changes arising from financing liabilities are mainly due to changes from financing cash flows and are disclosed in the statement of cash flows.

    Terms and debt repayment schedule

    In 1,000 CHF

    Currency

    Nominal interest rate

    Year of maturity

    2017 Nominal value

    2017 Carrying amount

    2016 Nominal value

    2016 Carrying amount

    Syndicated loan

    CHF

    0.68%

    2018

    300,000

    300,000

    300,000

    300,000

    Syndicated loan

    CHF

    0.68%

    2018

    90,000

    90,000

    90,000

    90,000

     

     

     

     

     

     

     

     

    Unsecured bond issue

    CHF

    0.00%

    2018

    100,000

    100,094

    0

    0

    Unsecured bond issue

    CHF

    3 M Libor1)

    2019

    100,000

    100,000

    0

    0

    Unsecured bond issue

    CHF

    1.125%

    2021

    275,000

    274,024

    275,000

    273,749

    Unsecured bond issue

    CHF

    3 M Libor1)

    2017

    0

    0

    100,000

    99,995

    Unsecured bond issue

    CHF

    0.00%

    2017

    0

    0

    100,000

    99,987

    Unsecured bond issue

    CHF

    2.25%

    2017

    0

    0

    250,000

    249,687

     

     

     

     

     

     

     

     

    Other bank liabilities

    CHF

    0.78%

    2018

    101,820

    101,820

    0

    0

    Other bank liabilities

    CHF

    0.78%

    current account

    301

    301

    5,536

    5,536

    Other bank liabilities

    various

    0.78%

    current account

    60

    60

    3,047

    3,047

    Other long-term liabilities

    CHF

    0%

    2021

    590

    590

    1,929

    1,929

     

     

     

     

     

     

     

     

    Total

     

     

     

    967,771

    966,889

    1,125,512

    1,123,930

    1)Floor at 0.0% and cap at 0.05%

    Syndicated loan

    As at 31 December 2017, the Group has a syndicated loan facility of CHF 600 million headed by Zürcher Kantonalbank (ZKB) (31.12.2016: CHF 1,050 million) at its disposal. The interest conditions of the facility are quoted by ZKB at market conditions as at the fixing date according to the maturity plus a margin depending on the Company’s credit rating.

    As at 31 December 2017, the syndicated loan amounted to CHF 390 million nominal (31.12.2016: CHF 390 million).

    Unsecured bond issues

    Two bonds were issued in 2017. These included a fixed rate bond of CHF 100 million with its maturity in 2018 and a coupon of 0.0% with an effective interest rate of -0.3%; and another bond of CHF 100 million disposing of a floating rate based on the Libor interest rate with a floor at 0.0% and a cap at 0.05% expiring in 2019 with an effective interest rate of 0.0%.

    A fixed rate bond of CHF 275 million issued in 2014 with its maturity in 2021 disposes of a nominal interest rate of 1.125%. Including fees, the effective interest rate amounts to 1.241%.

    Other bank liabilities

    As at 31 December 2017, the Group has access to a bilateral credit facility with ZKB of CHF 700 million (31.12.2016: CHF 700 million). The interest rate for this facility is set at the market interest rate based on the maturity plus a fixed credit margin.

    As at 31 December 2017, the total of the other bank liabilities - “current accounts” amounted to CHF 0.36 million (31.12.2016: CHF 8.6 million). In addition, the Group drew a so-called overnight facility over year-end 2017 in the amount of CHF 101.8 million (2016: none).

    Pledged assets

    No assets were pledged as at 31 December 2017 (2016: none).


    28. Provisions

    In 1,000 CHF

    Legal

    Other

    Total

    Balance at 1 January 2017

    265

    1,593

    1,858

    Provisions made during the period

    6

    8,066

    8,072

    Disposals due to sale of major business line

    (95)

    0

    (95)

    Provisions reversed during the period

    (50)

    0

    (50)

    Balance at 31 December 2017

    126

    9,659

    9,785

     

     

     

     

    Maturity of provisions

     

     

     

    Current

    126

    0

    126

    Non-current

    0

    9,659

    9,659

    Total

    126

    9,659

    9,785

    In 1,000 CHF

    Legal

    Other

    Total

    Balance at 1 January 2016

    90

    1,208

    1,298

    Provisions made during the period

    260

    485

    745

    Provisions reversed during the period

    (85)

    (100)

    (185)

    Balance at 31 December 2016

    265

    1,593

    1,858

     

     

     

     

    Maturity of provisions

     

     

     

    Current

    170

    0

    170

    Non-current

    95

    1,593

    1,688

    Total

    265

    1,593

    1,858

    The Group is involved in legal proceedings in the course of normal business operations. The Group establishes provisions for pending legal cases if management believes that the Group is more likely than not to face payments and if the amount of such payments can be reasonably estimated.

    Other provisions have been set aside for dismantling obligations for leasehold improvements in premises rented by the Group: The Group currently has no plans of abandoning these premises and therefore these provisions are considered non-current (2017: 1.6 million and 2016: 1.6 million), as well as for onerous contracts: Within the context of the sale of Aduno SA, the Aduno Group undertook to provide transitional services to the buyers. An upper limit for the fees to be paid for this was agreed in connection with the sale. As the costs for the services to be provided, including costs for rent, exceed the anticipated income and it is a loss-making contract (onerous contract), a provision of CHF 5.4 million was recognised (2016: none).

    29. Employee benefit obligations

    The pension plan of the Group is a defined benefit plan. Disability and death benefits are defined as a percentage of the insured salary.

    It provides benefits in excess of the LPP/BVG law, which stipulates the minimum requirement of the mandatory employer’s sponsored pension plan in Switzerland. In particular, annual salaries up to CHF 84,600 (2016: CHF 84,600) must be insured; financing is age-related with contribution rates calculated as a percentage of the pensionable salary increasing with age from 7% to 18%. The conversion rate to calculate the annuity based on the accrued savings capital is 6.8% at normal retirement age (65 for men and 64 for women). The calculations are based on the BVG Generation Table 2015.

    The plan must be fully funded under LPP/BVG law on a static basis at all times. In case of underfunding, recovery measures must be taken, such as additional financing from the employer or from the employer and employees, or a reduction in benefits or a combination of both.

    The Group is affiliated to the collective foundations Swisscanto Sammelstiftung der Kantonalbanken, CIEPP - Caisse Inter-Entreprises de prévoyance professionnelle and PKG Pensionskasse (PKG). The collective foundations are separate legal entities. The foundations are responsible for governance of the plans; their boards are composed of an equal number of representatives from the employers and the employees chosen from all affiliated companies.

    The foundation has set up investment guidelines, defining in particular the strategic allocation with margins.

    Additionally, there is a pension committee composed of an equal number of representatives from the Group and the employees of the Group. The pension committee is responsible for the setint up the plan benefits.

    In 2016 the collective foundation Swisscanto Sammelstiftung der Kantonalbanken decided to reduce the conversion rates on the extra-mandatory part of the savings capital over the coming years, which led to plan amendments recognised in 2016.

    This defined benefit plan exposes the Group to actuarial risks, such as longevity risk, currency risk, interest rate risk and market (investment) risk.

    In 1,000 CHF

    2017

    2016

    Present value of funded obligations

    155,053

    167,684

    Fair value of plan assets

    (117,402)

    (125,136)

     

     

     

    Recognised liability for defined benefit obligations

    37,651

    42,548

    Movements of present value of defined benefit obligations

    In 1,000 CHF

    2017

    2016

    Liability for defined benefit obligations at 1 January

    167,684

    146,578

    Current service cost

    8,892

    8,815

    Past service cost

    (5,550)

    (2,833)

    Interest expenses

    945

    1,315

    Benefit payments

    (1,637)

    2,428

    Settlement payments from plan assets

    (18,498)

    0

    Employee contributions

    4,383

    4,495

    Insurance premiums

    (1,477)

    (1,521)

    Liabilities assumed through business combinations

    310

    380

    Effect of changes in demographic assumptions

    0

    (6,669)

    Effect of changes in financial assumptions

    (3,431)

    7,906

    Effect of experience adjustments

    3,432

    6,790

     

     

     

    Liability for defined benefit obligations at 31 December

    155,053

    167,684

    Movements of fair value of plan assets

    In 1,000 CHF

    2017

    2016

    Fair value of plan assets at 1 January

    (125,136)

    (107,138)

    Interest income

    (731)

    (1,000)

    Return on plan assets (excluding interest income)

    (2,382)

    (5,110)

    Employer contributions

    (6,131)

    (6,252)

    Employee contributions

    (4,383)

    (4,495)

    Benefit payments

    1,637

    (2,428)

    Settlement payments from plan assets

    18,498

    0

    Insurance premiums

    1,477

    1,521

    Assets acquired through business combinations

    (251)

    (234)

     

     

     

    Fair value of plan assets at 31 December

    (117,402)

    (125,136)

    The plan assets include a qualifying insurance policy.

    The plan assets are invested to ensure that the return on plan assets together with the contributions should cover the long-term benefit obligations. In the short-term, however, the pension fund could suffer a shortfall as defined by Swiss law, which would eventually trigger restructuring contributions.

    Expenses recognised in the statement of comprehensive income

    In 1,000 CHF

    2017

    2016

    Current service cost

    8,892

    8,815

    Past service cost

    (5,550)

    (2,833)

    Interest on employee benefit obligations

    945

    1,315

    Interest on plan assets

    (731)

    (1,000)

     

     

     

    Total, included in “Personnel expenses” *

    3,556

    6,297

     

     

     

    Effect of changes in demographic assumptions

    0

    (6,669)

    Effect of changes in financial assumptions

    (3,431)

    7,906

    Effect of experience adjustments

    3,432

    6,790

    Return on plan assets (excluding interest income)

    (2,382)

    (5,110)

     

     

     

    Total, included in other comprehensive income

    (2,381)

    2,917

    * Total included in "Personnel expenses" 2016 includes continued and discontinued operations and is not restated.  

    Actuarial assumptions

    Significant actuarial assumptions at the reporting dates were as follows (expressed as weighted averages):

    In 1,000 CHF

    2017

    2016

    Discount rate at 31 December

    0.70%

    0.60%

    Interest rate for the projection of savings capital

    1.25%

    1.50%

    Future salary increases

    1.50%

    1.50%

    Future pension increases

    0.00%

    0.00%

    Life expectancy at age 65, insured for a now 45-year-old active member

     

     

    Males

    24.33

    24.26

    Females

    26.37

    26.29

    Life expectancy at age 65 years

     

     

    Males

    22.50

    22.38

    Females

    24.54

    24.43

    Sensitivity analysis  

    The sensitivity analysis below has been determined based on reasonably possible changes of the respective actuarial assumptions occurring at the end of the reporting period, while holding all other assumptions constant.

    • If the discount rate is 25 basis points higher (lower), the defined benefit obligations would decrease by CHF 5.3 million (increase by CHF 4.9 million). In 2016 decrease by CHF 5.4 million and an increase by CHF 5.9 million. 
    • If the expected salary growth rate increases (decreases) by 0.5%, the defined benefit obligations would increase by CHF 0.9 million (decrease by CHF 1.0 million). In 2016 an increase by CHF 1.3 million and a decrease by CHF 1.4 million.
    • If the expected pension growth rate increases by 0.25%, the defined benefit obligations would increase by CHF 4.1 million (2016: CHF 4.5 million).
    • If the life expectancy increases by one year for both men and women, the defined benefit obligations would increase by CHF 2.1 million (2016: CHF 2.4 million).

    The sensitivity analysis presented above may not be representative of the actual change in the defined benefit as it is unlikely that a change in assumptions would occur in isolation as some of the assumptions may be correlated.

    Future contributions

    The Group expects to pay CHF 5.8 million in contributions to defined benefit plans in 2018. As at 31 December 2016 the Group expected to pay CHF 6.5 million (including the disposed Aduno SA) in 2017.

    Plan assets

    In 1,000 CHF

    2017

    2016

    Asset categories

     

     

    Cash

    2.7%

    0.8%

    Mortgages

    5.4%

    0.0%

    Domestic bonds

    23.0%

    26.4%

    Foreign bonds in other currencies

    5.1%

    15.4%

    Swiss shares

    9.1%

    7.6%

    Foreign shares

    24.2%

    23.9%

    Real estate

    13.2%

    12.0%

    Alternative investments

    17.3%

    14.0%

     

     

     

    Total

    100.0%

    100.0%

    The bonds held are predominantly rated A or better.

    Cash as well as most of the investments in bonds and shares have a quoted market price in an active market. Investments in real estate and alternative investments do not typically have a quoted market price in an active market.

    The pension fund does not directly invest in the Group’s own transferable financial instruments.

    The investment strategy has been defined based on an asset-liabilities matching strategy. However, matching between assets and liabilities is only possible to a certain degree as the duration of the liabilities is relatively long compared to the available assets. Furthermore, available bonds with long durations do not generate a yield high enough to reach the necessary returns on the plan assets. Therefore, the pension fund also needs to invest in property and alternative investments.

    As at 31 December 2017 the weighted-average duration of the defined benefit obligations was 18.3 years (2016: 18.4 years).

    30. Contingent liabilities

    In the normal course of business, the Group enters into agreements pursuant to which the Group may be obliged under specified circumstances to indemnify the counterparties with respect to certain matters. Up to 2016 these indemnification obligations typically arose in the context of business arrangements where the Group has remitted payments to the merchants for card members’ purchases of goods and services that have not yet been used or delivered. This creates a potential exposure for the Group in the event that the card member is not able to obtain the goods or services due to bankruptcy of the merchant and the Group is obliged to credit the card member for the goods not received or the services not consumed. Historically, this type of exposure has not generated any significant loss for the Group.

    In some leasing contracts in the Consumer Finance business the Group confirms to the customer a minimum residual value of the leased item to the leasing partner, meaning that if the leasing customer returns the leased item to the leasing partner after the leasing period with a lower value than the minimum residual value, the Group is obliged to refund the leasing partner the difference in value.

    31. Share capital and reserves

    Share capital

    As at 31 December 2017 the share capital of the parent company Aduno Holding consisted of 25,000 shares with a nominal value of CHF 1,000 each (2016: 25,000 shares). The holders of the shares are entitled to receive dividends as declared and are entitled to one vote per share at the general meeting of the Company.

    In 1,000 CHF

    2017

    2016

    Number of issued shares 1 January

    25,000

    25,000

    Number of issued shares 31 December

    25,000

    25,000

     

     

     

    Nominal value in CHF

    1,000

    1,000

    Dividends

    The following dividends were declared and paid by the Group:

    In 1,000 CHF

    Paid in 2017

    Paid in 2016

    Total dividend

    40,000

    20,000

    Dividend per share in CHF

    1,600

    800

    After 31 December 2017 the Board of Directors proposed a dividend of CHF 6,000 per share totalling CHF 150 million for 2017. The dividend proposal will be forwarded for approval by the general meeting in May 2018.

    Hedging reserve

    As described in Note 17, the Group uses interest rate swaps to hedge its exposure to interest rate changes. The effective portion of these hedges, net of taxes, is accounted in the hedging reserve.

    In 2011 the Group entered into a forward-starting swap to fix the interest rate of the bond issue planned and executed in October 2011. The realised negative fair value was accounted in the hedging reserve and is included in the interest expense within the duration of the bond.

    In 1,000 CHF

    2017

    2016

    Positive fair value of cash flow hedges (see Note 17)

    0

    0

    Negative fair value of cash flow hedges (see Note 25)

    (57)

    (289)

    Terminated forward-starting cash flow hedges

    0

    (52)

    Tax effect

    7

    34

     

     

     

    Total hedging reserve

    (51)

    (306)

    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.

    According to the Swiss consumer finance regulations, certain consumer finance credit balances to private customers have to be underlined with 8% of equity. For the subsidiary cashgate, the Company’s target is therefore to always maintain an equity base fulfilling these legally required obligations. The level of equity is reviewed by the management of cashgate on a quarterly basis. Since the acquisition of the Consumer Finance business, this obligation was fulfilled at the end of each month, including on 31 December 2017.

    32. Risk management 

    Through its business activities, the Aduno Group is subjected to constant changes and thus also confronted with opportunities and risks that can substantially affect the achievement of its strategic goals and objectives. These opportunities and risks can arise from events, conditions and actions to which the Group is exposed and which it therefore needs to understand and actively manage.

    In recent years the Group has further enhanced its risk management programme (framework), expanding it to take into account the complexity of its business divisions and major changes in the business environment.

    Risk

    The Group defines risk as the uncertainties inherent in the achievement of strategic and operational objectives that are associated with all business activities. These uncertainties could result in a shortfall in meeting objectives or the risk of financial losses.

    Risk management

    As a financial services company, the Aduno Group is exposed to various types of risk that are managed actively and systematically.

    The Aduno Group’s risk management approach follows a standardised model that starts with the definition of the risk policy, continues with the identification, management and monitoring of the risks associated with its business activities, and culminates in risk reporting.

    Internal control system

    The internal control system (ICS) of the Group covers all control structures (including roles and responsibilities) and processes that form the basis for achieving the business objectives and ensuring appropriate business operations across all levels of the Company. The integrated ICS consists of ex-post oversight as well as planning and management activities.

    Principles of risk management

    Risk policy

    The risk policy specifies the framework for the risk management and risk profile of the Group. This in particular includes the definition of risk capacity, risk appetite, limits, suitable stress tests as well as quantification and aggregation methodologies to monitor the risk profile.

    The risk policy sets out the objectives of risk management. It involves taking risks in a controlled and deliberate manner to achieve an optimal risk-return ratio. The framework conditions are determined by the Company’s business strategy and risk capacity. To this end, the Group aligns the strategic planning process with capital planning and risk budgeting.

    Risk culture

    A risk culture geared towards responsible risk-taking to ensure a deliberate approach to risks is fostered throughout the Group. The management of the Group is expected to set an example and influence their employees to only take on risks that are compatible with the specified risk appetite. The promotion and compensation of employees also takes their compliance with the risk culture and risk policies into account.

    As the Group’s business operations involve inherent risks that require active management, the Group aims for a high degree of risk awareness.

    The Group consciously enters into risk transactions within its defined risk appetite. To this end, new business activities or changes to existing business activities are systematically evaluated with regard to their risk profile and the risk portfolio is constantly monitored. The Group avoids extreme risks that jeopardise its solvency or its very existence.

    Segregation of duties

    Risk management operates along the “Three Lines of Defence Model”. The first line of defence refers to the functions that own and manage risks consisting of the managers, experts and staff within the business divisions and ensures that the actual risk profile adheres to the approved risk appetite.

    The second line of defence comprises centralised risk control that not only defines the directives that apply to all business divisions when dealing with specified risks but also monitors compliance with these requirements. The second line of defence also provides an aggregated portfolio view to support management in the implementation of effective risk management practices for the Group and ensures regular risk reporting.

    The third line of defence provides independent assurance on the effectiveness of governance, risk management and internal controls, including the manner in which the first and second lines of defence meet risk management and control objectives. The internal and external auditors are responsible for the third line of defence.

    Standardised risk management process

    The risk management process of the Aduno Group contains the following elements: risk identification, risk assessment, risk steering and risk monitoring. All new business activities and changes to existing business activities follow the risk management process. The materiality of changes to the business model is a relevant benchmark in this process.

    Central risk control ensures that the risk management process is carried out effectively.

    Standardised valuation method

    Standardised methods appropriate to the type and scope of business activity are defined for determining the risk profile and risk capacity. Risk assessments are made at risk category, business division and Group level.

    Scenario-based risk assessments are performed to gauge the impact of environmental, business and operational risks on key objectives, whereby the realistic scenarios are based on the time horizon and objectives of the strategic business plan. The robustness of the business model is tested under various stress scenarios.

    Transparency

    Risk Control regularly informs the Board of Directors and Executive Board of the Group about the overall risk situation, any developments in the risk profile and important findings gained through its risk oversight role. In addition, an annual activity report is prepared that provides information about the maturity level of and developments in the risk management system.

    Various reports are prepared for each risk category, whereby format, frequency and recipients are tailored to the individual risk to ensure a comprehensive, objective and transparent foundation for decision-makers and oversight committees.

    Risk governance

    Board of Directors

    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.

    Executive Board

    The Executive Board (ExB) 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 ExB 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.

    Expert committees have been set up to prepare requests for approval for transactions, proposals and recommendations as a decision-making basis for the ExB.

    Risk control

    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 ExB. 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 ExB. Central risk control is responsible for monitoring compliance with the policies and their supporting directives and providing reports or information as requested.

    Control of material risks

    The Group distinguishes the following six risk categories for its business activities:

    Overall risks:

    • External/environmental risk
    • Business risk
    • Operational risk

    Financial risks:

    • Credit risk
    • Liquidity risk
    • Market risk (currency risk, interest risk and equity price risk)

    Reputational damage is not listed as a separate risk category as it generally only arises as a consequence of one of the aforementioned risks. Reputational damage is therefore considered to be consequential damage.

    Environmental, business and operational risks are systematically assessed and either deemed acceptable and within the risk appetite or undesirable and to be reduced with appropriate measures. The measures that are implemented to mitigate risks are monitored through the ICS of the Group.

    External/environmental risk

    The Group defines external/environmental risk as risk arising from the external business environment of the Group that could challenge the business model of the Group or the individual companies.

    Business risk

    The Group defines business risk as the possibility of lower than anticipated profits due to uncertainties arising from the following aspects: management and the quality of information used for taking decisions or deriving strategies.

    Operational risk

    Operational risk refers to the risk of monetary losses resulting from inadequate or failed internal processes, people and systems or from external events. This definition includes information technology risks and all legal and regulatory risks.

    Credit risk

    The key credit risk for the Group is the risk of financial loss that arises if a customer or counterparty to a financial transaction fails to meet its contractual obligations and results primarily from the Group’s receivables from customers.

    The Group’s exposure to credit risk primarily originates from the creditworthiness and credit capacity of each customer and is comprised of receivables which remain unpaid or which are paid later than at their due date.

    Geographically, credit risk is concentrated in Switzerland where the Group mainly operates.

    Receivables from cardholders

    It is in the nature of the credit card business that customers get temporarily into debt with the credit card company. This explains the considerably high volumes of receivables.

    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 client 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. If a client defaults for more than 60 days, the receivable will be transferred to a dedicated risk management department to ensure collection of the debts.

    For customers with high risk exposure, collaterals such as bank guarantees are held as security. Customers with low risk exposure are not required to deliver collaterals.

    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. In individual cases the outstanding receivable is collateralised by bank guarantees. The underlying receivables amounted to CHF 9.4 million as at 31 December 2017 (2016: CHF 10.1 million). These receivables are fully covered by the bank guarantees.

    Residual amounts overdue for more than 90 days may occur outside the debt collection portfolio, when the assessment has not been completed. The total of these residual amounts stood at CHF 0.06 million as at 31 December 2017 (2016: CHF 0.1 million).

    To avoid a total loss of the receivable, the Group renegotiates the terms of payment for customers who are not able to redeem the receivable in total. The renegotiated amounts are contained in “receivables from debt collection”. Conditions for renegotiated amounts are individually fixed depending on the individual situation of the debtor. The total portfolio with renegotiated payment terms comprises CHF 1.6 million (2016: CHF 1.7 million).

    Receivables overdue for more than 24 months are written off from the balance sheet.

    Receivables from merchant activities (up to 2016)

    In the merchant business, the Group generally transfers money to its merchants at the same time as it receives the settlement by its counterparties. The major credit counterparties are the international operating card schemes MasterCard and Visa. The receivables are settled daily. Therefore, management assesses the credit risk in the merchant business as very low and receivables are not collateralised.

    Resulting from terminal sales, the Group recognises receivables against commercial customers. To secure the receivables, the Group is able to block the customers’ terminals to ensure the payment of the customers’ debt towards the Group.

    Receivables from Consumer Finance

    In the Consumer Finance business, the Group grants cash credits or finances cars in a financial lease to its customers. The credit counterparty is a private consumer in the cash credit business and a private or corporate customer in the leasing business. The receivables are generally due on a monthly basis, which means that the credit risk steadily decreases over the life of the contract.

    In compliance with the Swiss consumer credit regulations, a solvency check is carried out for all customers on an individual basis to assess the related credit risk when they apply for a cash credit or a leasing facility.

    The solvency check is based on the customer’s historical track record with the Group and requires the customer to deliver personal data on their financial situation such as employment, family situation and personal debt situation. Additionally, a database for private consumer loans, maintained by Swiss banks, is consulted to confirm that no negative records have been recognised for the future customer.

    If a client does not meet the stringent customer credit rating criteria, no credit facility will be approved.

    Risk and credit management is a core process in the Consumer Finance business. Therefore, the Group runs sophisticated risk assessment tools and delinquency reports to monitor and assess the risk exposure. All incoming payments from customers are closely monitored. If a client defaults for more than 90 days, the overdue receivable will be actively managed to ensure the collection of the debt.

    The receivables from consumer loans are not collateralised. The finance lease receivables are collateralised by the financed cars, the Group applying a margin between the lease amount and the estimated value of the financed car to ensure that the coverage of the receivable is higher than 100%.

    Exposure to credit risk

    The carrying amount of financial assets represents the maximum credit exposure. The maximum credit risk to which the Group is theoretically exposed at 31 December 2017 and 2016 respectively is represented by the carrying amounts stated for financial assets in the balance sheet.

    The maximum exposure to credit risk for receivables from cardholders, Consumer Finance and merchant activities at the reporting date by type of customer is shown in the following tables. Additionally, credit risk can occur from debt collection and from fraud in the Payment business as shown in Note 15 and from other receivables.

    In 1,000 CHF

    2017

    2016

    Receivables from card holders

     

     

    Individuals

    405,679

    412,287

    Corporate clients

    41,309

    40,417

     

     

     

    Total

    446,987

    452,704

    In 1,000 CHF

    2017

    2016

    Receivables from card holders

     

     

    Default risk borne by partners

    243,410

    261,910

    Default risk borne by the Group, secured by bank guarantees

    9,448

    10,117

    Default risk borne by the Group

    194,129

    180,677

     

     

     

    Total

    446,987

    452,704

    The collateralisation by partners and bank guarantees is borne by those counterparties in the amount of the receivable. The estimated fair value of the collateral is estimated to be the same as the nominal value.

    In 1,000 CHF

    2017

    2016

    Receivables from card schemes

     

     

    Mastercard

    0

    66,162

    Visa

    0

    18,470

    UnionPay

    0

    807

     

     

     

    Total

    0

    85,439

    In 1,000 CHF

    2017

    2016

    Receivables from business unit Consumer Finance

     

     

    Individuals – Consumer loans

    716,083

    681,136

    Individuals – Financial lease

    433,886

    398,533

    Corporate clients – Financial lease

    206,413

    189,850

     

     

     

    Total

    1,356,382

    1,269,519

    Receivables from Financial leases are collateralised by the financed cars. In accordance with the Group’s risk policy, the Group estimates that the fair value of the collaterals is approximately the same as the nominal value of the receivable.

    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. Group closely monitors its liquidity needs and also maintains liquidity forecasts.

    Management ensures that cash funds and credit lines currently available (total credit line limit of CHF 1,300 million, 2016: CHF 1,750 million) and funds that will be generated from operating activities (in the last 12 months a monthly average of CHF 820 million, 2016: CHF 1,450 million) 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.

    Maturity of financial liabilities

    2017 In 1,000 CHF

    Carrying amount

    Contractual cash flows

    1 month or less

    2–3 months

    4–12 months

    13–24 months

    25–72 months

    Non-derivative liabilities

     

     

     

     

     

     

     

    Payables to counterparties

    163,901

    163,901

    61,509

    102,393

    0

    0

    0

    Other trade payables

    7,144

    7,144

    7,144

    0

    0

    0

    0

    Short-term interest-bearing liabilities

    592,275

    592,354

    402,000

    0

    190,354

    0

    0

    Other payables

    14,744

    14,744

    3,802

    0

    10,942

    0

    0

    Accrued expenses

    59,110

    59,110

    59,110

    0

    0

    0

    0

    Total current liabilities

    837,175

    837,254

    533,565

    102,393

    201,296

    0

    0

     

     

     

     

     

     

     

     

    Long-term interest-bearing liabilities

    374,614

    387,375

    0

    0

    3,094

    103,094

    281,188

    Total non-current liabilities

    374,614

    387,375

    0

    0

    3,094

    103,094

    281,188

     

     

     

     

     

     

     

     

    Cash inflow from derivatives

     

    (27,356)

    (27,356)

    0

    0

    0

    0

    Cash outflow from derivatives

     

    27,467

    27,467

    0

    0

    0

    0

    Total derivatives held for trading

    111

    111

    111

    0

    0

    0

    0

     

     

     

     

     

     

     

     

    Cash inflow from IRS

     

    0

    0

    0

    0

    0

    0

    Cash outflow from IRS

     

    33

    0

    11

    21

    0

    0

    Total derivatives used for hedging

    57

    33

    0

    11

    21

    0

    0

    Total estimated cash flow

    1,211,958

    1,224,773

    533,676

    102,404

    204,411

    103,094

    281,188

     

     

    2016 In 1,000 CHF

    Carrying amount

    Contractual cash flows

    1 month or less

    2–3 months

    4–12 months

    13–24 months

    25–72 months

    Non-derivative liabilities

     

     

     

     

     

     

     

    Payables to counterparties

    286,898

    286,898

    181,446

    105,452

    0

    0

    0

    Other trade payables

    10,407

    10,407

    10,407

    0

    0

    0

    0

    Short-term interest-bearing liabilities

    848,253

    855,146

    208,773

    0

    646,373

    0

    0

    Other payables

    16,770

    16,770

    5,590

    0

    11,180

    0

    0

    Accrued expenses

    67,609

    67,609

    67,609

    0

    0

    0

    0

    Total current liabilities

    1,229,936

    1,236,830

    473,826

    105,452

    657,553

    0

    0

     

     

     

     

     

     

     

     

    Long-term interest-bearing liabilities

    275,678

    290,469

    0

    0

    3,094

    3,094

    284,281

    Total non-current liabilities

    275,678

    290,469

    0

    0

    3,094

    3,094

    284,281

     

     

     

     

     

     

     

     

    Cash inflow from derivatives

     

    (26,856)

    (26,856)

    0

    0

    0

    0

    Cash outflow from derivatives

     

    27,062

    27,062

    0

    0

    0

    0

    Total derivatives held for trading

    206

    206

    206

    0

    0

    0

    0

     

     

     

     

     

     

     

     

    Cash inflow from IRS

     

    0

    0

    0

    0

    0

    0

    Cash outflow from IRS

     

    389

    22

    68

    233

    66

    0

    Total derivatives used for hedging

    289

    389

    22

    68

    233

    66

    0

    Total estimated cash flow

    1,506,109

    1,527,894

    474,053

    105,520

    660,880

    3,160

    284,281

    Market risk

    Market risk is the risk of losses arising from movements in market prices in on-balance and off-balance sheet items. Three of the standard market risk factors cover the risk of price movements in foreign currency, interest rates and equity price risk.

    Foreign currency risk

    The Group’s exposure to foreign currency risk is as follows based on notional amounts. There is no currency risk on Swiss francs (CHF) as it is the functional currency of the Company.

     

    Foreign currencies

    2017 In 1,000 CHF

    CHF/EUR

    CHF/USD

    CHF/Other

    Cash and cash equivalents

    678

    639

    12

    Receivables from business unit Payment

    21,041

    8,143

    1

    Receivables from business unit Consumer Finance

    0

    0

    0

    Other trade receivables and other receivables

    12,515

    0

    7

     

     

     

     

    Payables to counterparties

    7,252

    8,778

    0

    Other trade payables

    132

    4

    0

    Short-term interest-bearing liabilities

    48

    12

    0

    Other payables

    0

    0

    0

    Accrued expenses

    9

    0

    0

    Long-term interest-bearing liabilities

    0

    0

    0

     

     

     

     

    Gross balance sheet exposure

    26,792

    (12)

    19

     

     

     

     

    Derivatives held for trading

    (18,903)

    (8,454)

    0

    Derivatives used for hedging

    0

    0

    0

     

     

     

     

    Net exposure

    7,889

    (8,465)

    19

     

    Foreign currencies

    2016 In 1,000 CHF

    CHF/EUR

    CHF/USD

    CHF/Other

    Cash and cash equivalents

    368

    15

    700

    Receivables from business unit Payment

    20,244

    9,449

    1,246

    Receivables from business unit Consumer Finance

    0

    0

    0

    Other trade receivables and other receivables

    576

    0

    32

     

     

     

     

    Payables to counterparties

    1,832

    13,264

    2,193

    Other trade payables

    636

    50

    0

    Short-term interest-bearing liabilities

    1,765

    1,282

    0

    Other payables

    0

    0

    0

    Accrued expenses

    18

    0

    0

    Long-term interest-bearing liabilities

    0

    0

    0

     

     

     

     

    Gross balance sheet exposure

    16,937

    (5,132)

    (214)

     

     

     

     

    Derivatives held for trading

    (15,494)

    (10,403)

    (959)

    Derivatives used for hedging

    0

    0

    0

     

     

     

     

    Net exposure

    1,443

    (15,535)

    (1,173)

    Sensitivity analysis

    The Group has estimated the effects of a strengthening of the Swiss franc against the following currencies. As a measure the Group assumed a volatility for CHF/EUR of 5.5% and for CHF/USD of 7.9%. These assumptions are based on market data from 2017.

    With these assumptions, a strengthening of the Swiss franc against the following currencies at 31 December would have increased profit or loss after tax by the amounts shown below. No changes will occur within the equity of the Group when exchange rates change.

    This analysis assumes that all other variables, in particular interest rates, remain constant.

    In 1,000 CHF

    %

    2017 CHF

    %

    2016 CHF

    CHF/EUR

    5.5

    384

    5.9

    75

    CHF/USD

    7.9

    (592)

    9.3

    (1,272)

     

     

     

     

     

    Total currency sensitivity

     

    (208)

     

    (1,196)

    In the case where the Swiss franc declines in value, the same effect vice versa would occur.

    Interest rate risk

    At the reporting date the interest rate profile of the Group’s interest bearing financial instruments after the effects of interest swaps was:

    In 1,000 CHF

    2017

    2016

    Instruments at long-term fixed rates

     

     

    Interest-bearing liabilities

    275,000

    275,000

    Instruments with variable or short-term fixed rates

     

     

    Interest-bearing liabilities

    691,820

    840,000

    Interest rate swaps

    (6,000)

    (41,000)

    Bank accounts

    951

    10,512

     

     

     

    Total exposure from variable rate instruments

    686,771

    809,512

    Cash flow sensitivity analysis

    Due to the hedging activities, the exposure from variable rate instruments is highly reduced. If interest rates had been 10 basis points lower as at 31 December 2017, the post-tax profit of the Group would have been CHF 0.6 million higher with all other variables held constant (2016: CHF 0.7 million higher).

    If interest rates had been 10 basis points higher, with all other variables held constant, post-tax profit would have been lower for the same amounts as above, arising mainly as a result of higher interest expenses on variable borrowings.

    Fair value sensitivity analysis

    The Group does not account for any fixed rate financial liabilities at fair value through profit or loss. Therefore, a change in interest rates at the reporting date would not affect profit or loss.

    Equity price risk

    The Group is exposed to equity price risk, which arises from available for sale equity securities. Currently, the Group holds preferential Visa Inc. shares of Visa. The shares of Visa are listed on the New York Stock Exchange. A 3% increase in the Dow Jones Industrial at the reporting date would have increased equity by CHF 0.6 million after tax (2016: increase by CHF 0.4 million); an equal change in the opposite direction would have decreased equity by CHF 0.6 million after tax (2016: decrease by CHF 0.4 million).

    Fair values

    The fair values of financial assets and liabilities together with the carrying amounts shown in the balance sheet are as follows:

    In 1,000 CHF

    Carrying amount

    2017 Fair value

    Carrying amount

    2016 Fair value

    Cash and cash equivalents

    22,146

    22,146

    41,489

    41,489

    Receivables from business unit Payment

    455,552

    455,552

    549,213

    549,213

    Receivables from business unit Consumer Finance

    1,356,382

    1,356,382

    1,269,519

    1,269,519

    Other trade receivables and other receivables

    12,500

    12,500

    81,498

    81,498

    Total loans and receivables

    1,846,579

    1,846,579

    1,941,718

    1,941,718

     

     

     

     

     

    Financial investments available for sale

    26,131

    26,131

    18,732

    18,732

    Derivatives held for trading

    75

    75

    49

    49

     

     

     

     

     

    Total financial assets

    1,872,786

    1,872,786

    1,960,499

    1,960,499

     

     

     

     

     

    Payables to counterparties

    163,901

    163,901

    286,898

    286,898

    Other trade payables

    7,144

    7,144

    10,407

    10,407

    Short-term interest-bearing liabilities

    592,275

    592,517

    848,253

    853,218

    Other payables

    14,744

    14,744

    16,770

    16,770

    Accrued expenses

    59,110

    59,110

    67,609

    67,609

    Long-term interest-bearing liabilities

    374,614

    387,503

    275,678

    288,008

    Total financial liabilities at amortised cost

    1,211,789

    1,224,920

    1,505,614

    1,522,909

     

     

     

     

     

    Derivatives held for trading

    (186)

    (186)

    (255)

    (255)

    Derivatives used for hedging

    (57)

    (57)

    (289)

    (289)

     

     

     

     

     

    Total financial liabilities

    1,211,545

    1,224,676

    1,505,071

    1,522,366

    Basis for the determination of fair value

    The following summarises the significant methods and assumptions used in estimating the fair value of financial instruments reflected in the table above.

    Receivables and payables
    Trade accounts receivable and payable are stated in the balance sheet at their carrying value less impairment allowance. Due to their short-term nature, receivables from card activities are assumed to approximate their fair value.

    In the case of long-term financial instruments with a maturity or a refinancing profile of more than one year and for which observable market transactions are not available, the fair value is estimated using valuation models such as discounted cash flow techniques. Input parameters into the valuation include expected lifetime credit losses, interest rates, prepayment rates and primary origination or secondary market spreads.

    Non-derivative financial liabilities
    The fair value of financial instruments for disclosure purposes is calculated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments.

    The difference between the carrying amount and the fair value of the interest-bearing liabilities (short-term as well as long-term) is caused by the unsecured bond issues and amounted to a total of CHF 13.1 million in 2017 (2016: CHF 21.8 million). These unsecured bonds are categorised in Level 1 of the fair value hierarchy.

    ­Interest rates used for determining fair value
    The interest rates used to discount estimated cash flows, where applicable, are based on the market interest rates for the maturity of the debt at the reporting date, and were in the range of –0.77% and –0.62% for the current year and­­ –0.80% and –0.65% for 2016.

    Financial instruments carried at fair value, fair value hierarchy

    The table below analyses recurring fair value measurements for financial assets and financial liabilities. These fair value measurements are categorised into different levels in the fair value hierarchy based on the inputs to valuation techniques used. The different levels are defined as follows.

    • Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at the measurement date
    • Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly
    • Level 3: unobservable inputs for the asset or liability

    2017 In 1,000 CHF

    Level 1

    Level 2

    Level 3

    Total

    Financial investments available for sale

    0

    26,131

    0

    26,131

    Derivative financial instruments

    0

    75

    0

    75

    Total financial assets carried at fair value

    0

    26,206

    0

    26,206

     

     

     

     

     

    Derivative financial instruments

    0

    (244)

    0

    (244)

    Total financial liabilities carried at fair value

    0

    (244)

    0

    (244)

    2016 In 1,000 CHF

    Level 1

    Level 2

    Level 3

    Total

    Financial investments available for sale

    0

    18,732

    0

    18,732

    Derivative financial instruments

    0

    49

    0

    49

    Total financial assets carried at fair value

    0

    18,780

    0

    18,780

     

     

     

     

     

    Derivative financial instruments

    0

    (544)

    0

    (544)

    Total financial liabilities carried at fair value

    0

    (544)

    0

    (544)

    Input for Level 2 valuation

    Level 2 fair values for simple over-the-counter derivative financial instruments are based on broker quotes. Those quotes are tested for reasonableness by discounting expected future cash flows using market rates for a similar instrument at the measurement date. Fair values reflect the credit risk of the instrument and include adjustments to take account of the non-performance risk, where appropriate. Level 2 fair values for available for sale financial instruments are based on market prices multiples without any unobservable input.

    The fair value of financial instruments disclosed at fair value is determined as follows

    2017 In 1,000 CHF

    Level 1

    Level 2

    Level 3

    Total

    Cash and cash equivalents

    22,146

    0

    0

    22,146

    Receivables from business unit Payment

    0

    455,552

    0

    455,552

    Receivables from business unit Consumer Finance

    0

    1,356,382

    0

    1,356,382

    Other trade receivables and other receivables

    0

    12,500

    0

    12,500

    Total financial assets

    22,146

    1,824,433

    0

    1,846,579

     

     

     

     

     

    Payables to counterparties

    0

    163,901

    0

    163,901

    Other trade payables

    0

    7,144

    0

    7,144

    Short-term interest-bearing liabilities

    490,094

    102,423

    0

    592,517

    Other payables

    0

    14,744

    0

    14,744

    Accrued expenses

    0

    59,110

    0

    59,110

    Long-term interest-bearing liabilities

    386,913

    590

    0

    387,503

    Total financial liabilities at amortised cost

    877,007

    347,913

    0

    1,224,920

    2016 In 1,000 CHF

    Level 1

    Level 2

    Level 3

    Total

    Cash and cash equivalents

    41,489

    0

    0

    41,489

    Receivables from business unit Payment

    0

    549,213

    0

    549,213

    Receivables from business unit Consumer Finance

    0

    1,269,519

    0

    1,269,519

    Other trade receivables and other receivables

    0

    81,498

    0

    81,498

    Total financial assets

    41,489

    1,900,230

    0

    1,941,718

     

     

     

     

     

    Payables to counterparties

    0

    286,898

    0

    286,898

    Other trade payables

    0

    10,407

    0

    10,407

    Short-term interest-bearing liabilities

    584,780

    268,438

    0

    853,218

    Other payables

    0

    16,770

    0

    16,770

    Accrued expenses

    0

    67,609

    0

    67,609

    Long-term interest-bearing liabilities

    288,008

    0

    0

    288,008

    Total financial liabilities at amortised cost

    872,788

    650,121

    0

    1,522,909

    Offsetting

    An offsetting agreement was in place between Mastercard and different group companies (“offsetting agreement”). In its normal course of business as an acquirer (until the sale of the acquiring business in August 2017), the Group transfers the purchase price for card transactions to its affiliated partners. Mastercard simultaneously credits the respective amounts to the Group. At the same time, the Group as an issuer of credit cards has an obligation to Mastercard from the card transactions of its cardholders. The offsetting agreement allowed the Group to offset the respective credit and debit balances through the payments to or from Mastercard.

    As at 31 December 2017 the offseting agreement was no longer in place as the acquiring business was sold. As at 31 December 2016 the outstanding amount in favour of the Group amounted to CHF 66.1 million included in “Receivables from business unit Payment, net”, while the Group had an outstanding obligation of  CHF 39.7 million included in “Payables to counterparties”, resulting in a net amount of CHF 26.4 million in favour of the Group against Mastercard.

    33. Related parties

    Related parties are the shareholders which have a direct influence on the Group’s activities by delegating a member to the Group’s Board of Directors, the other members of the Group’s Board of Directors, the Executive Committee, entities controlled by a member of the Group’s Board of Directors and the associates Accarda and SwissWallet AG.

    The shareholders that are considered as being related parties are as follows:

    Part of share capital in % held at 31 December

    2017

    2016

    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 (since 2017)

    4.8%

    n/a

    EFG Bank AG

    3.6%

    3.6%

    Zuger Kantonalbank

    1.4%

    1.4%

    Freiburger Kantonalbank (until 2016)

    n/a

    1.0%

     

     

     

    Total related parties

    71.0%

    67.3%

    Transactions with related parties

    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

    2017

    2016

    Interest income

    20

    45

    Interest expenses

    3,881

    4,594

    Distribution, advertising and promotion expenses

    17,575

    14,092

    Other expenses

    147

    147

     

     

     

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

    21,584

    18,787

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

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

    In 1,000 CHF

    2017

    2016

    Cash and cash equivalents

    7,492

    39,892

    Other receivables and other assets

    75

    49

    Prepaid expenses and accrued income

    922

    9,270

    Short-term interest-bearing liabilities

    251,361

    157,174

    Other payables

    244

    525

    Accrued expenses and deferred income

    1,770

    2,272

     

     

     

    Total exposure to related parties

    261,865

    209,181

    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

    In 2017 and 2016 respectively, transactions with associates concerned mainly scanning services provided by Accarda to the Group as well as fees for consulting services provided to Accarda, and since 2015 processing services provided by SwissWallet AG to the Group.

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

    In 1,000 CHF

    2017

    2016

    Other income

    73

    38

    Processing and service expenses

    637

    897

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

    564

    859

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

    In 1,000 CHF

    2017

    2016

    Other receivables and other assets

    12

    0

    Other payables

    0

    540

     

     

     

    Total exposure with associated parties

    12

    540

    Transactions with key management personnel

    The members of the Board of Directors and the Executive Board of the Group and their immediate relatives do not have any ownership interest in the Group’s companies.

    The Group provides short-term remuneration to the members of the Board of Directors and Executive Board. Beside their salaries and pension fund benefits, the members of the Executive Board and directors receive long-term benefits based on the results of the Company.

    The key management personnel compensation is as follows:

    In 1,000 CHF

    2017

    2016

    Base salaries and other short-term benefits

    4,482

    4,876

    Long-term benefits

    2,582

    3,014

    Contribution to retirement benefits plan and social security

    784

    856

    Other personnel benefits

    223

    240

     

     

     

    Total compensation to key management

    8,071

    8,986

    There are no loan agreements in place with key management. However, Viseca issues credit cards for key management. It is in the nature of the credit card business that the customer gets temporarily into debt with Viseca. Furthermore, cashgate offers Consumer Finance loans and leasing, and AdunoKaution and SmartCaution offer rental guarantees. In the case of ongoing business, employees and also key management can apply for those credits and facilities.

    The conditions and requirements for eventually granted facilities and loans are under normal commercial terms and conditions that would also be provided to unrelated third parties.

    34. Group companies

    In 1,000 CHF

    Country of incorporation

    Currency

    Share capital 2017

    Share capital 2016

    Ownership interest 2017

    Ownership interest 2016

    Aduno Holding AG, Zurich (ZH), parent company

    Switzerland

    CHF

    25,000

    25,000

    -

    -

    Accarda AG, Brüttisellen (ZH)**

    Switzerland

    CHF

    18,500

    18,500

    30%

    30%

    Aduno Finance AG, Stans (NW)

    Switzerland

    CHF

    1,000

    1,000

    100%

    100%

    AdunoKaution AG, Zurich (ZH)

    Switzerland

    CHF

    1,365

    1,365

    100%

    100%

    cashgate AG, Zurich (ZH)

    Switzerland

    CHF

    35,000

    35,000

    100%

    100%

    Contovista AG, Schlieren (ZH)

    Switzerland

    CHF

    140

    140

    70%

    14.3%

    SmartCaution SA, Geneva (GE)

    Switzerland

    CHF

    500

    500

    100%

    100%

    SwissWallet AG, Zurich (ZH)**

    Switzerland

    CHF

    105

    105

    33.3%

    33.3%

    Vibbek AG, Urdorf (ZH)

    Switzerland

    CHF

    1,300

    1,300

    67%

    67%

    Vibbek GmbH, Hamburg*

    Germany

    EUR

    25

    25

    67%

    67%

    Viseca Card Services SA, Zurich (ZH)

    Switzerland

    CHF

    20,000

    20,000

    100%

    100%

    Aduno SA, Bedano (TI)***

    Switzerland

    CHF

    n/a

    120

    0%

    100%

    * Vibbek GmbH is fully owned by Vibbek AG. 

    ** Associates, the Group has significant influence.