Notes to the Statutory Financial Statements - SoftwareONE Annual Report 2019

1 General

SoftwareONE Holding AG is the holding company of the SoftwareONE Group and holds all investments, directly or indirectly, in SoftwareONE Group companies.

SoftwareONE Holding AG’s income primarily comprises dividends and interest income from subsidiaries and recharges for some administrative expenses to other Group companies. SoftwareONE Holding AG does not have any employees, nor does it have any research or development activities.

SoftwareONE Holding AG’s risk management is integrated into the Group-wide risk management system of SoftwareONE Group. Risks identified are assessed individually based on their probability of occurrence and scope of potential losses. Appropriate measures are defined for the individual risks. Risks are systematically collected and updated once a year. The risk situation and the implementation of the measures defined are monitored. The Board of Directors of SoftwareONE Holding AG addresses the topic of risk management at least once a year. Please refer to Note 3 (financial risk management) of the consolidated financial statements for an explanation of Group-wide risk management at SoftwareONE Group.

SoftwareONE Holding AG will continue to act as the holding company of the SoftwareONE Group in the 2020 financial year. There are no plans to change the company’s business activities.

COMPAREX acquisition

As of 31 January 2019, SoftwareONE Holding AG acquired 100% of COMPAREX AG, Germany (“COMPAREX”).

This transaction resulted in the issuance of 2,315,289 new SoftwareONE Holding AG shares and the creation of a non-Swiss capital contribution reserve in the amount of CHF 264,768,471. Please also see Note 8 "Capital contribution reserve".

As part of the purchase agreement, a contingent consideration arrangement has been agreed resulting in a short-term loan due to shareholders in the amount of CHF 32,600,970 as of 31 December 2019.

In the context of the COMPAREX acquisition, SoftwareONE Holding AG separately purchased real estate in Leipzig, Germany.

IPO

On 25 October 2019, SoftwareONE Holding AG was listed on the SIX Swiss Exchange. In this context, SoftwareONE Holding AG’s shares have been split by 1:10. At the IPO date additional members of the Board of Directors have been elected and additional expertise has been added.

2 Accounting principles

The financial statements of SoftwareONE Holding AG, Stans, have been prepared in accordance with the provisions of Swiss accounting legislation (Title 32 of the Swiss Code of Obligations).

The disclosures have been slightly adjusted for the financial statements as at 31 December 2019. These adjustments have no impact on the previous year’s figures.

The following section describes the main valuation principles applied that are not specified by law.

Financial assets

Financial assets are valued at their acquisition cost adjusted for impairment losses. In 2018, financial assets have been valued at the quoted market price as the balance sheet date. A valuation adjustment reserve has not been accounted for.

Property, plant and equipment

Property, plant and equipment is valued at acquisition costs less accumulated depreciation and impairment losses. Expected useful life of real estate is 33.33 years.

Investments

Investments are valued at their acquisition cost adjusted for impairment losses.

Treasury shares

Treasury shares are recognized at acquisition cost and deducted from shareholders’ equity at the time of acquisition. The gain or loss related to treasury shares is recognized directly in equity.

3 Other current receivables due from shareholders

Other current receivables due from shareholders are related to indemnities under the share purchase agreement of COMPAREX .

4 Financial assets

Financial assets are solely related to shares in the listed company Crayon Group Holding ASA. In 2018, the shares have been valued at the quoted market price which resulted in a revaluation gain of CHF 848,090. In 2019, no further revaluation (gain) was recognized.

5 Investments

All investments except SWO Switzerland AG are indirectly held. For details please refer to section “32 List of Group companies” in the Consolidated Financial Statements 2019.

6 Other current liabilities due to shareholders

Other current liabilities due to shareholders are related to the earn-out payment for the COMPAREX acquisition, which was paid in January 2020.

7 Share capital

The share capital as at 31 December 2019 was composed of 158,581,460 (2018: 13,542,857) fully paid-in registered shares, each with a nominal value of CHF 0.01 (2018: CHF 0.10).

8 Capital contribution reserve

The reserves from capital contributions (Swiss) include the premium from the capital increase in 2015 and the gain on treasury shares used for share-based payments of Group entities. The reserves from capital contributions (non-Swiss) result from the COMPAREX acquisition on 31 January 2019. The qualification of the capital contribution reserve is subject to the final approval of the Swiss Federal Tax Administration (SFTA).

9 Treasury shares

The following table summarizes the balance of treasury shares:

	Number of shares	Average in CHF	In CHF 1,000

Total treasury shares at 31 December 2017	304,874	0.75	230
Shares purchased under employee share plan	193,253	52.88	10,219
Shares used for acquisition	–100,273	5.05	–506

Total treasury shares at 31 December 2018	397,854	24.99	9,943
Treasury shares after split (9 October 2019)	3,978,540	2.5	9,943
Shares purchased under transfer window	486,570	5.38	2,618
Shares used for acquisition	–99,399	5.4	–536
Shares issued under employee share plan	–94,207	0.01	–1

Total treasury shares at 31 December 2019	4,271,504	2.81	12,024

10 Dividend income

Dividend income comprises dividends received from subsidiaries.

11 Financial income

in CHF	2019	2018

Interest income	2,692,037	2,134,790
Foreign exchange gains	2,324,981	–
Fair value gain on financial assets	–	848,090

Total financial income	5,017,018	2,982,880

12 Administrative expenses

in CHF	2019	2018

IPO costs	–10,505,718	–
Other	–2,389,948	–4,734,193

Total administrative expenses	–12,895,666	–4,734,193

13 Financial expenses

in CHF	2019	2018

Interest expenses	–14,879	–6,709
Foreign exchange losses	–	–1,048,755

Total financial income	–14,879	–1,055,464

14 Major shareholders

Shareholders	Shares held	% of voting rights

Westminster Bidco Sàrl 1)	23,454,893	14.79 %
B. Curti Holding AG 2)	19,031,853	12.00 %
Dr. Daniel Marc von Stockar- Scherer-Castell, Hergiswil, Switzerland	17,489,874	11.03 %
Raiffeisen Informatik GmbH & CO KG 3)	12,573,693	7.93 %
René Rudolf Gilli, Emmetten, Switzerland	12,445,068	7.85 %
Anastasia Karolina Nielsen and Leon Elias Winter, both Monaco, Principality of Monaco 4)	12,445,068	7.85 %
Current and former employees, officers and directors 5)	10,749,660	6.78 %
Pictet Asset Management SA	5,154,610	3.25 %

1) Westminster Bidco Sàrl, Luxembourg, the Grand Duchy of Luxembourg is the direct shareholder of the shares indirectly and beneficially owned by funds advised by KKR, with its principal executive offices in New York, USA.

2) B. Curti Holding AG, Sarnen, Switzerland is the direct shareholder of the shares which are indirectly controlled by Dr. Beat Alex Curti, Erlenbach, Switzerland.

3) Raiffeisen Informatik GmbH & CO KG, Vienna, Austria, is the direct shareholder of the shares indirectly and beneficially owned by RAIFFEISEN-HOLDING NIEDERÖSTERREICH-WIEN registrierte Genossenschaft mit beschränkter Haftung, Vienna, Austria, and Raiffeisen Bank International AG, Vienna, Austria.

4) Anastasia Karolina Nielsen and Leon Elias Winter are each represented by their mother, Marina Nielsen, Monaco, Principality of Monaco, as their legal representative. Marina Nielsen is thus seen as having discretionary power to exercise the voting rights (within the meaning of article 120(3) FMIA) with respect to the shares held by Anastasia Karolina Nielsen and Leon Elias Winter.

5) In connection with SoftwareONE Holding AG's IPO, the above mentioned current and former employees, officers and directors of SoftwareONE Holding AG have agreed to a lock-up period undertaking ending 6 months after the first trading day of SoftwareONE Holding AG's shares on the SIX Swiss Exchange (ie until 25 April 2020).

15 Shares held by members of the Board of Directors and Executive Board

The table below shows the shareholdings of the Board of Directors (BoD) and closely related persons to the members of the BoD as at 31 December 2019.

Members of the BoD	Number of directly held shares 1)		Number of indirectly held blocked shares 3)	Total shareholdings
Members of the BoD	Vested shares	Blocked shares 2)	Number of indirectly held blocked shares 3)	Total shareholdings

Daniel von Stockar (Chairman, NCC)	–	17,489,874	–	17,489,874
Beat Curti (Vice-Chairman)	–	–	19,031,853	19,031,853
Peter Kurer (Lead Independent Director)	–	279,630	–	279,630
José Alberto Duarte (AC) Since 25 October 2019	–	–	–	–
Andreas Fleischmann (member) Since 31 January 2019	–	–	–	–
René Gilli (member)	–	12,445,068	–	12,445,068
Johannes Huth (NCC)	–	–	–	–
Timo Ihamuotila (AC Chair) Since 25 October 2019	–	10,000	–	10,000
Marina Nielsen (member)	–	12,445,068	–	12,445,068
Marie-Pierre Rogers (NCC Chair) Since 25 October 2019	15,000	–	–	15,000
Jean-Pierre Saad (AC)	–	–	–	–

Total	15,000	42,669,640	19,031,853	61,716,493

1) Ordinary registered shares of SoftwareONE

2) For 2019, the BoD’s compensation will be fully paid in cash. For the members of the BoD’s term starting at the 2020 AGM, a portion of 40 % of their BoD compensation will be paid in the form of blocked shares

3) Shares held indirectly through partnership interests in B. Curti Holding AG, which holds ordinary registered shares of SoftwareONE

The table below shows the shareholdings of the Executive Board (EB) and closely related persons to the members of the EB – such as spouses – as at 31 December 2019.

Members of the EB	Number of directly held shares		Restricted shares 3)	Total shareholdings
Members of the EB	Vested shares 1)	Blocked shares 2)	Restricted shares 3)	Total shareholdings

Dieter Schlosser (CEO)	426,890	431,898		858,788
Hans Grüter (CFO)	355,056	431,898		786,954
Alex Alexandrov (COO)	507,001	530,392	78,230	1,115,623
Neil Lomax (President)	739,285	431,898		1,171,183

Total	2,028,232	1,826,086	78,230	3,932,548

1) Includes shares individually purchased under the ESPP and shares granted through MEP, subject to a post-vesting sales restriction of 12 months after the IPO First Trading Day

2) Shares held through MEP subject to staggered restriction periods for a term of three years with early leaver conditions

3) Shares legally held by SoftwareONE Holding AG, whereby the legal share transfer to happen after vesting period of 3 years

16 Shares or options on shares for members of the board, executive board and other employees

In 2019, SoftwareONE Holding AG granted to other employees 12,707 (prior year: 51,500) treasury shares for free.

17 Events after the reporting period

Please refer to Note 31 "Subsequent event" in the Consolidated Financial Statements 2019.