1 General information

SoftwareONE Holding AG ('the company') and its subsidiaries (together ‘the group’ or ‘SoftwareOne’) is a leading software and cloud solutions provider. It develops and delivers the technology solutions that modernise applications and software in the cloud, while enabling those purchases and optimising those investments over time.

The company is incorporated and domiciled in Stans, Switzerland. The address of its registered office is Riedenmatt 4, 6370 Stans. SoftwareONE Holding AG is traded on the SIX Swiss Exchange. The shares trade under the ticker symbol 'SWON'.

The consolidated financial statements of SoftwareOne are presented in Swiss francs (CHF). Unless otherwise stated, all amounts are stated in thousands of Swiss francs (TCHF). All figures shown are rounded in accordance with standard business rounding principles.

These consolidated financial statements were authorised for issue by the Board of Directors on 30 March 2023 and are subject to approval by the Annual General Meeting to be held on 4 May 2023.

2 Summary of significant accounting policies

SoftwareONE Holding AG’s consolidated financial statements are prepared in accordance with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). The principal accounting policies applied in the preparation of these consolidated financial statements are set out below.

Basis of presentation

New and amended standards and interpretations

As of 1 January 2022, the following amendments to the International Financial Reporting Standards (IFRS) entered into force:

  • IFRS 3: Business Combinations: References to the Conceptual Framework
  • IAS 37: Provisions, Contingent Liabilities and Contingent Assets: Onerous Contracts, Costs of Fulfilling a Contract 
  • IAS 16: Property, Plant and Equipment: Proceeds before Intended Use
  • Annual Improvements Project 2018-2020: Changes to IFRS 1, IFRS 9, IFRS 16, IAS 41

These amendments did not have a significant effect on the group’s consolidated financial statements. SoftwareOne has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

New standards and interpretations not yet adopted

The IASB has issued several potentially relevant changes to IFRS that will be effective in future accounting periods. New standards that are expected to have only a minor impact on the group and the effective date are listed below:

  • IAS 1: Presentation of Financial Statements: Disclosure of Accounting Policies – adoption by 1 January 2023
  • IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates – adoption by 1 January 2023
  • IAS 12: Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction – adoption by 1 January 2023
  • IAS 1: Presentation of Financial Statements: Classifications of Liabilities as Current or Non-Current including Deferral of Effective Date – adoption by 1 January 2024

There are no other IFRS or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the group.

Change in accounting policies

In December 2021, the IFRS Interpretations Committee (IFRS IC) issued a tentative agenda decision on ‘Principal versus Agent: Software Reseller (IFRS 15)’ about whether a reseller of software licenses is acting as principal or agent for the purposes of recognising revenue under IFRS 15 Revenue from Contracts with Customers. As an addendum to its April 2022 meeting, the IFRS IC issued the final agenda decision 'Principal versus Agent: Software Reseller (IFRS 15)' on 30 May 2022.

In view of the clarifications from the draft agenda decision management re-assessed and concluded in 2021 that SoftwareOne does not control the software licenses from the third-party software providers before they are transferred to the customer and therefore acts as an agent for transactions in the indirect business. Consequently, SoftwareOne recognises revenue from Software & Cloud Marketplace in the net amount that the group is entitled to retain in return for its agent services and end customer invoicing to the software provider, i.e., the difference between the consideration received from the customer and cost of software purchased.

SoftwareOne completed the assessment of further implications of the agenda decision on other revenue contracts in the second half of 2022. Based on this assessment SoftwareOne identified an impact on the accounting for multi-year licensing contracts in which the end customer has the right to change the software reseller during the contract term. Multi-year licensing contracts normally have a term of up to three years with annual billing of the corresponding fee. Previously, revenue for such contracts was recognised at the end of the annual notice period. Based on the agenda decision SoftwareOne already concluded that it acts as an agent for transactions in the indirect business and therefore the performance obligation is to arrange for software licenses to be provided by the software manufacturer. This performance obligation is fulfilled at inception of the multi-year licensing contract. As a result, the group recognises revenue for the contract between the end customer and the third-party software provider upfront for the entire term when the contract is signed considering the effects of a potential change in channel partner based on historical experience as a variable consideration. For performance obligations in which the customer can reduce the units to be provided to a minimum level until the annual notice period (cloud component), the group recognises revenue only for the binding commitment upfront for the entire term when the contract is signed. Revenue for the variable units in excess of this is recognised at the end of the annual notice period.

For the comparative period 2021, the adjustment resulted in a reduction in revenue from Software & Cloud Marketplace of TCHF 3,431, in personnel expenses of TCHF 158 and in income tax expenses of TCHF 851. This results in a total effect of TCHF –3,273 on earnings before income tax and an effect of TCHF –2,442 on profit for the period, refer to the table below. Basic earnings per share decreased by CHF 0.02 and diluted earnings per share decreased by CHF 0.01.

In addition, SoftwareOne identified a type of service contracts in Software & Cloud Services in which SoftwareOne also acts as an agent and, therefore, recognises revenue in the net amount. Additionally, the group identified contracts associated with software asset management solutions in which revenue for separate performance obligations of the contract relates to external tooling costs, i.e., on-premise software used exclusively for such contracts, which were reported gross under Software & Cloud Services. The group concluded that it acts as an agent and recognises revenue for external tooling costs in the net amount. For the comparative period 2021, both effects resulted in a reduction of revenue from Software & Cloud Services of TCHF 46,644 and a reduction of third-party service delivery costs of TCHF 46,644.

The result of the change in accounting policies within the consolidated income statement for the comparative period is shown in the following table:

in CHF 1,000

2021 reported

Adjustments

2021 adjusted

 

 

 

 

Revenue from Software & Cloud Marketplace

533,629

–3,431

530,198

Revenue from Software & Cloud Services

430,724

–46,644

384,080

 

 

 

 

Total revenue

964,353

–50,075

914,278

Third-party service delivery costs

–109,281

46,644

–62,637

Personnel expenses

–608,806

158

–608,648

 

 

 

 

Earnings before net financial items, taxes, depreciation and amortisation

160,179

–3,273

156,906

 

 

 

 

Earnings before net financial items and taxes

104,838

–3,273

101,565

 

 

 

 

Earnings before income tax

154,265

–3,273

150,992

Income tax expense

–34,199

851

–33,348

 

 

 

 

Profit for the period

120,066

–2,422

117,644

The following table shows which balance sheet items were adjusted as of 31 December 2021:

in CHF 1,000

31 December 2021 reported

Adjustment

31 December 2021 adjusted

 

 

 

 

Assets

 

 

 

Prepayments and contract assets

81,532

17,453

98,985

Current assets

2,612,200

17,453

2,629,653

TOTAL ASSETS

3,380,819

17,453

3,398,272

 

 

 

 

Liabilities and shareholders’ equity

 

 

 

Accrued expenses and contract liabilities

158,744

803

159,547

Current liabilities

2,362,680

803

2,363,483

Deferred tax liabilities

24,893

4,329

29,222

Non-current liabilities

160,721

4,329

165,050

TOTAL LIABILITIES

2,523,401

5,132

2,528,533

Retained earnings

706,204

12,321

718,525

Equity attributable to owners of the parent

857,256

12,321

869,577

TOTAL EQUITY

857,418

12,321

869,739

TOTAL LIABILITIES AND EQUITY

3,380,819

17,453

3,398,272

The following table shows which balance sheet items were adjusted as of 1 January 2021:

in CHF 1,000

1 January 2021 reported

Adjustment

1 January 2021 adjusted

 

 

 

 

Assets

 

 

 

Prepayments and contract assets

87,172

20,884

108,056

Current assets

2,459,621

20,884

2,480,505

TOTAL ASSETS

3,127,230

20,884

3,148,114

 

 

 

 

Liabilities and shareholders’ equity

 

 

 

Accrued expenses and contract liabilities

128,636

961

129,597

Current liabilities

2,137,652

961

2,138,613

Deferred tax liabilities

28,821

5,180

34,001

Non-current liabilities

213,056

5,180

218,236

TOTAL LIABILITIES

2,350,708

6,141

2,356,849

Retained earnings

560,797

14,743

575,540

Equity attributable to owners of the parent

776,451

14,743

791,194

TOTAL EQUITY

776,522

14,743

791,265

TOTAL LIABILITIES AND EQUITY

3,127,230

20,884

3,148,114

Due to the change in accounting policies, the comparative figures in the consolidated statement of cash flows were adjusted for (loss)/profit for the period (TCHF –2,422), income tax expense (TCHF –851), change in other receivables, prepayments and contract assets (TCHF 3,431) and change in accrued expenses and contract liabilities (TCHF –158).

Disclosure of additional information on business line performance in the segment reporting

The identification of the group's reporting segments has not changed. However, starting 2022, SoftwareOne internally also reports EBITDA by business lines to the Chief Operating Decision Maker. The view presents a breakdown of total revenue, gross profit, contribution margin and EBITDA for the business lines Software & Cloud Marketplace, Software & Cloud Services and Corporate to measure the individual success of the business lines. For additional information on business line performance, refer to Note 28 Segment Reporting.

Impact of the Ukraine war on the consolidated financial statements

In light of the invasion of Ukraine by Russian forces and the changed political and economic environment in Russia, which does not offer potential to operate with stability in this market in the mid-term, SoftwareOne decided in March 2022 to suspend a significant part of its sales and business operations in Russia. As a consequence of this decision, SoftwareOne Russia was sold to a third-party on 20 May 2022. For more information, refer to Note 3 Changes in the scope of consolidation.

On the basis of the information available in the reporting period, an analysis of the effects on the accounting of SoftwareOne was carried out as of 31 December 2022, in particular with respect to the expected credit losses on trade receivables and contract assets. SoftwareOne has determined additional expected credit losses of CHF 3.5 million for receivables of clients in Russia that are recorded in the consolidated income statement.

Consolidation

Subsidiaries

Subsidiaries are all entities over which the group has control. The group controls an entity when the group 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. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the date when control ceases.

Intercompany transactions, balances, and unrealised gains on transactions between group companies are eliminated in full.

Business combinations and goodwill

Business combinations are accounted for using the acquisition method of accounting. The cost of a business combination is equal to the fair values on the date of acquisition of assets given, liabilities incurred or assumed, and equity instruments issued by SoftwareOne group, in exchange for control over the acquired company. Any difference between the consideration transferred in the business combination and the net fair value of the identifiable assets, liabilities, and contingent liabilities so recognised is treated as goodwill. Goodwill is not amortised but is assessed for impairment annually. Contingent considerations to selling shareholders who become employees and for which payments are automatically forfeited if employment terminates, are not part of the consideration transferred and are accounted as remuneration. Acquisition-related costs are expensed. For each business combination, the group recognises the non-controlling interests in the acquiree at the non-controlling interests’ proportionate share in the recognised amounts of the acquiree’s identifiable net assets.

If a business combination is achieved in stages (control obtained over an associate or joint venture), the previously held equity interest in an associate or joint venture is remeasured to its acquisition-date fair value and any resulting gain or loss is recognised in the finance result in the income statement.

Non-controlling interests

Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the group’s equity therein. Non-controlling interests consist of the amount of those interests on the date of the original business combination and the non-controlling shareholder’s share of changes in equity since the date of the combination.

Foreign currency translation

Functional and presentation currency

Items included in the financial statements of each of the group’s entities are measured using the currency of the primary economic environment in which the entity operates ('the functional currency'). The consolidated financial statements are presented in Swiss francs (CHF), which is the group’s presentation currency.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured.

Monetary assets and liabilities of group companies which are denominated in foreign currencies are translated using closing exchange rates. Exchange rate differences are recorded as income or expense. Non-monetary assets and liabilities are translated at historical exchange rates. Translation differences on non-monetary financial assets and liabilities such as equity securities held at fair value through profit or loss are recognised in the income statement as part of the fair value gain or loss.

Foreign currency translation

When translating foreign currency financial statements into Swiss francs, year-end exchange rates are applied to assets and liabilities, while average rates for the period are applied to income statement accounts. The resulting exchange differences are recognised in other comprehensive income.

Goodwill and fair value adjustments arising from the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at closing rate. The resulting exchange differences are recognised in other comprehensive income (OCI).

The following exchange rates were used:

 

 

2022

2021

Currency (CHF 1 =)

Code

Ø-rate

Closing rate

Ø-rate

Closing rate

 

 

 

 

 

 

Euro

EUR

1.00

1.02

0.92

0.97

US dollar

USD

1.05

1.08

1.09

1.09

British pound

GBP

0.85

0.90

0.79

0.81

Brazilian real

BRL

5.40

5.63

5.89

6.15

Mexican peso

MXN

21.06

20.99

22.18

22.43

Indian rupee

INR

82.26

89.69

80.85

81.29

Swedish krone

SEK

10.56

11.34

9.38

9.89

Polish zloty

PLN

4.66

4.77

4.22

4.44

Financial assets

Initial recognition and measurement

The group classifies its financial assets at initial recognition in the following categories: subsequently measured at amortised cost, fair value through OCI and fair value through profit or loss. The classification depends on the financial asset’s contractual cash flow characteristics and the group’s business model for managing them. Except for trade receivables that do not contain a significant financing component or for which the group has applied the practical expedient, the group initially measures a financial asset at its fair value plus transaction costs in the case of a financial asset not at fair value through profit or loss. Trade receivables that do not contain a significant financing component or for which the group has applied the practical expedient are measured at the transaction price determined under IFRS 15.

For a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding. This assessment is performed at an instrument level.

SoftwareOne’s business model for managing financial assets refers to how it manages its financial assets to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets or both.

Financial assets are classified as current if payments are due within one year or less. If not, they are presented as non-current receivables.

Subsequent measurement

For purposes of subsequent measurement, SoftwareOne has financial assets at amortised cost (debt instruments), financial assets at fair value through profit or loss and derivatives designated as hedging instruments.

Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to impairment. Gains and losses are recognised in the income statement when the asset is derecognised, modified, or impaired.

The group’s financial assets at amortised cost comprise trade and other receivables, loans and cash and cash equivalents.

Cash and cash equivalents

The position includes cash on hand, bank accounts and short-term bank deposits with original maturities of three months or less.

Trade receivables

Trade receivables are initially recorded at a transaction price determined in accordance with IFRS 15 less impairments.

Financial assets

The group has listed equity instruments presented as short-term financial assets which are subsequently measured at fair value through profit or loss, as it had not irrevocably elected to classify those at fair value through OCI at initial recognition. Financial assets at fair value through profit or loss are carried in the balance sheet at fair value with net changes in fair value recognised in the income statement.

Derecognition

The group derecognises financial assets when:

  • the rights to receive cash flows from the asset have expired; or
  • the group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third-party under a ‘pass-through’ arrangement; and either (a) the group has transferred substantially all the risks and rewards of the asset, or (b) the group has neither transferred nor retained substantially all the risks and rewards of the asset but has transferred control of the asset.

Receivables subject to factoring arrangements may be derecognised on sale and these assets are not held to collect contractual cash flows and would be measured at fair value through profit or loss. However, due to their short-term nature, the difference between transaction price and fair value is not considered to be material. Where the factored receivables continue to be recognised in the balance sheet, they are treated as held to collect contractual cash flows and measured at amortised cost.

Impairment of financial assets

The group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the group expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include those from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

For trade receivables and contract assets, the group applies a simplified approach in calculating ECLs. Therefore, the group does not track changes in credit risk but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The group has established a provision matrix that is based on its historical credit loss experience and SoftwareOne’s business knowledge, adjusted for forward-looking factors specific to the debtors and the economic environment.

Derivative financial instruments and hedge accounting

The group reviews the currency exposure regularly and covers its risks in two ways:

  • The group hedges the net exposure from foreign currency balance sheet positions with forward contracts. Such contracts, however, are not accounted for using hedge accounting.
  • Highly probable future transactions are hedged with forward transactions (sales and purchase). These contracts are designated as cash flow hedges. The transactions are expected to affect profit and loss within the next 36 months. At inception of a hedge relationship, the group designates and documents the hedge relationship to apply hedge accounting. The hedge relationship includes the hedging instrument, the hedged item and the nature of the risk being hedged. The hedges are expected to be highly effective.

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value through profit or loss except for the effective portion of cash flow hedges, which is recognised in OCI and later reclassified to the income statement when the hedged item affects profit or loss. The ineffective portion is recognised immediately in the income statement.

In case of a positive value, the derivative is recognised as an asset and in case of a negative value, as a liability (classified as non-current when the remaining maturity of the hedged item is more than 12 months and as current when the remaining maturity of the hedged item is less than 12 months).

Tangible assets

Tangible assets are stated at historical cost less depreciation and impairments. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Repair and maintenance costs are recognised in the income statement for the period in which they are incurred.

Depreciation is calculated using the straight-line method over the expected useful life as follows:

  • Land is not depreciated
  • Buildings: max. 33 years
  • Furniture, fixtures and other equipment: max. 5 years
  • Leasehold improvements: max. 10 years or shorter duration lease contract
  • Vehicles: max. 5 years
  • IT equipment: max. 3 years

Intangible assets

Purchased intangible assets such as software, acquired technology and customer relationships are measured at cost less accumulated amortisation (applying the straight-line method) and any impairment. The useful life is as follows:

  • Software: 3–10 years
  • Acquired customer relationships: max. 10 years
  • Acquired technology and other intangible assets: 3–10 years
  • Internally generated intangible assets: 3–5 years

Internally generated intangible assets are capitalised only if the identifiable asset is commercially and technically feasible, can be completed, its costs can be measured reliably and will generate probable future economic benefits. In addition to the internal costs (including all attributable direct costs), total costs also include externally contracted development work. In-process capitalised development costs are tested annually for impairment.

Acquired customer relationships are capitalised and amortised over their useful lives. They are assessed for impairment if events or changes in circumstances indicate that their value may be impaired. If the reason for a previously recognised impairment loss no longer applies, the impairment loss is reversed to the recoverable amount.

An intangible asset is classified as having an indefinite useful life when there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows. It is not amortised and the group evaluates at the end of each reporting period the classification as intangible asset with indefinite useful life and tests it for impairment on an annual basis.

Impairment test of goodwill and intangibles with indefinite useful life

Regarding impairment testing of goodwill and other intangible assets such as the SoftwareOne brand deemed to have indefinite lives, the group determines the higher of value in use and fair value less costs of disposal of the respective cash generating units to which goodwill and intangibles have been allocated. The calculation of value in use is based on the current budget and business plan approved by the Board of Directors and the expectations regarding the future development of the respective markets, market shares and profitability. The planning period covers five years. Assumptions are made for the subsequent years considering macroeconomic trends and historical information adjusted for current developments.

The impairment test is performed at least once a year and additionally when there are indications of impairment in the cash-generating unit. Impairment losses for goodwill are never reversed.

Financial liabilities

Initial recognition and measurement

SoftwareOne classifies financial liabilities at initial recognition as financial liabilities at fair value through profit or loss, financial liabilities subsequently measured at amortised cost or as derivatives designated as hedging instruments in an effective hedge as appropriate.

All financial liabilities are recognised initially at fair value, and in the case of instruments, not subsequently measured at fair value through profit or loss net of directly attributable transaction costs.

The group’s financial liabilities include trade and other payables, accrued expenses, contingent consideration liabilities and other financial liabilities including bank overdrafts and derivative financial instruments.

Subsequent measurement

Contingent consideration liabilities are subsequently measured at fair value through profit or loss.

Derivatives are subsequently measured at fair value with fair value changes in the income statement, except for the effective portion of cash flow hedges that is initially recognised in other comprehensive income.

All other financial liabilities are subsequently measured at amortised cost using the effective interest method.

Trade payables and financial liabilities are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities.

Current and deferred income tax

The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement except to the extent that it relates to items recognised in OCI or directly in equity. In this case, tax is also recognised in OCI or directly in equity respectively.

The current income tax charge is calculated based on the tax laws enacted or substantively enacted at the reporting date in the countries where the company and its subsidiaries operate and generate taxable income. Periodically, management evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate based on amounts expected to be paid to the tax authorities.

Deferred income tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted at the reporting date and are expected to apply when the related deferred income tax asset is realised, or the deferred income tax liability is settled.

Deferred income tax liabilities are provided on taxable temporary differences arising from investments in subsidiaries except for deferred income tax liabilities where the timing of the reversal of the temporary difference is controlled by the group and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred income tax assets are recognised on deductible temporary differences arising from investments in subsidiaries. They are only recognised to the extent that it is probable that the temporary difference will reverse in the future and there needs to be a sufficient taxable profit available against which the temporary difference can be utilised.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

Employee benefits

The group operates various post-employment schemes including both defined benefit and defined contribution pension plans.

Defined contribution plans

A defined contribution plan is a pension plan under which the group pays fixed contributions into a separate entity. The group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. The contributions are recognised as employee benefit expenses when they are due. Prepaid contributions are recognised as an asset.

Defined benefit plans

A defined benefit plan is a pension plan that is not a defined contribution plan.

Typically, defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.

The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. Actuarial gains or losses are recognised in OCI. Service costs are presented in personnel expenses. Interest costs and interest on plan assets are netted in finance costs.

Other employee benefits

Obligations to employees not paid at the reporting date, such as bonuses, holiday entitlements or compensations are presented as accrued expenses.

Contingent consideration arrangements related to business acquisitions in which payments are contingent on continued employment and thus compensation for future service is recognised as remuneration and accrued amounts presented as earn-out provisions.

Share-based payments

Certain management members and senior employees participate in equity compensation plans. The fair value of all equity-settled compensation awards granted to employees is determined at the grant date and recorded as an expense over the vesting period. The expense for equity compensation awards is part of personnel expense and a corresponding increase in equity is recorded.

Provisions

Provisions are recognised when the group has a present legal or constructive obligation as a result of past events, when it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. If the effect of the time value of money is material, provisions are discounted.

Share capital

Ordinary shares are classified as equity. Dividends on ordinary shares are recorded in equity in the period in which they are approved by the parent company’s shareholders.

Where the group purchases shares of the company, the consideration paid (including any attributable transaction costs) is deducted from equity as treasury shares. Any consideration received from the sale of own shares is recognised in equity, net of any taxes.

Revenue recognition

recognition

Revenue from contracts with customers comprises revenue from the sale of Software & Cloud Marketplace products as well as the sale of Software & Cloud Services. Revenue from contracts with customers is recognised when the performance obligation in the contract has been satisfied either at the ‘point in time’ or ‘over time’ as control of the promised goods or service is transferred to the customer at an amount that reflects the consideration to which the group expects to be entitled in exchange for those goods or services. The normal credit term is 30 to 90 days upon delivery.

Revenue from Software & Cloud Marketplace

SoftwareOne enters contracts with end customers to sell Software & Cloud Marketplace products of several third-party software providers. Below, software is used as a synonym for Software & Cloud Marketplace. A distinction is made between two types of software selling arrangements:

  • Direct business: As a ‘software advisor’, the group’s obligation in these arrangements is only to arrange for another entity to provide the software license to the end customer. Thus, the performance obligation consists of establishing the business relationship between the software provider and the end customer. When the software is provided to the end customer, SoftwareOne is entitled to receive an agency commission from the software provider and recognises revenue at this point of time. Hence, SoftwareOne acts as an agent and recognises revenue at the amount that it retains from its agency services.
  • Indirect business: As a ‘value added reseller’, the group provides pre-sales consulting services to end customers and advises them on the selection of the appropriate end-to-end software or cloud technology solution. SoftwareOne is in the contractual relationship between the third-party software provider and the end customer and is commissioned to place orders and manage customer purchases on behalf of the end customer. Even if SoftwareOne provides pre-sales services in connection with the sale of the software licenses to its end customers, the group is not primarily responsible for fulfilling the promise to provide the software or cloud solution. Primary responsibility to provide the products lies with the third-party software provider, while SoftwareOne provides the access to the software license or manages cloud subscriptions. SoftwareOne invoices the end customer and receives the considerations from the end customer. SoftwareOne concluded that it does not control the software from the third-party software providers before they are transferred to the end customer and therefore acts as an agent in these arrangements. Revenue is recognised at the point in time when the access to the software license is transferred to the end customer, generally on delivery of the product key or with signing the contract in the volume license business. The group recognises revenue in the net amount in the consolidated financial statements, i.e., the difference between the consideration received from the end customer and cost of software purchased.

In the indirect business, the group also enters multi-year licensing contracts with annual billing of the corresponding fee in which the end customer has the right to change the software reseller during the contract term. For such contracts, SoftwareOne recognises revenue for the contract between the end customer and the third-party software provider upfront for the entire term when the contract is signed considering the effects of a potential change in channel partner based on historical experience as a variable consideration.

Additionally, non-cancellable multi-year licensing contracts with annual billing of the corresponding fee exist without the right to change the software reseller during the contract term. As the customer pays in arrears, SoftwareOne is effectively providing financing to the customer. Hence, there are two components in such arrangements: a revenue component (for the notional cash sales price net of the related costs of purchasing the software); and a loan component (for the effect of the deferred payment terms). Interest income on the loan finance component is calculated based on the rate that would be reflected in a separate financing transaction between the group and the end customers at contract inception and is presented under finance income. SoftwareOne uses the practical expedient in IFRS 15 and does not adjust the promised amount of consideration for the effects of a significant financing component if it expects at contract inception that the period between the provision access to the software license to the customer and the receipt of the consideration from the end customer will be one year or less.

Revenue from Software & Cloud Services

SoftwareOne provides a wide range of technology consulting services but also delivers self-developed on-premise software.

Revenue from technology consulting services is generally recognised over time as the customer simultaneously receives and consumes the benefits provided. SoftwareOne uses an input method based on costs incurred to measure progress towards the stage of completion of the service. The group determined that the input method based on costs incurred in relation to total expected costs is the best method of measuring progress of the consulting services because there is a direct relationship between SoftwareOne’s effort and the transfer of the service to the customer. In addition, in cases where the group provides standardised services (i.e., managed services), revenue is recognised pro rata over the term of the contract. Payment is due 30 days after the solutions and services have been performed. As a rule, services are priced separately. If this is not the case, the transaction prices are allocated based on the relative individual selling prices.

Revenue from self-developed on-premise software is recognised at the point in time when control of the license is transferred to the customer. Such contracts and related revenues exist only to a limited extent. The same applies to revenue from external on-premise software which is only used to provide software asset management solutions. The related revenue is recognised net under revenue from Software & Cloud Services.

Contract balances

  • Contract assets
    A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the group performs by transferring services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional. In addition, SoftwareOne recognises contract assets for revenue recognised upfront in connection with multi-year licensing contracts in which the end customer has the right to change the software reseller during the contract term.
  • Trade receivables
    A trade receivable represents the group’s right to an amount of consideration that is unconditional (in other words only the passage of time is required before payment of the consideration is due).
  • Contract liabilities
    A contract liability is the obligation to transfer goods or services to a customer for which the group has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the group transfers goods or services to the customer, a contract liability is recognised when the payment is made, or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the group performs under the contract.

Transaction price of unsatisfied performance obligations

SoftwareOne uses the practical expedient in IFRS 15.121 and does not disclose information about the aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied when the original expected duration of the underlying contract is one year or less. After applying this practical expedient, the remaining performance obligations to be disclosed 31 December 2022 and 2021 are not material.

Leases

Right-of-use assets

The group recognises right-of-use assets at the commencement date of the lease (that is the date the underlying asset is available for use). Right-of-use assets are measured at cost less any accumulated depreciation and impairment losses and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. For leased vehicles, SoftwareOne makes use of the option not to separate lease and non-lease components and ancillary costs are therefore included in the calculation of the entire lease component.

Unless the group is reasonably certain of obtaining ownership of the leased asset at the end of the lease term, the recognised right-of-use assets are depreciated on a straight-line basis over the shorter of their estimated useful life and the lease term. The useful life is as follows:

  • Buildings: max. 10 years
  • Vehicles: max. 5 years
  • Other equipment: max. 5 years

Right-of-use assets are subject to impairment.

Lease liabilities

At the commencement date of the lease, the group recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the group and payments of penalties for terminating a lease if the lease term reflects the group exercising the option to terminate.

The variable lease payments that do not depend on an index or a rate are recognised as expenses in the period during which the event or condition that triggers the payment occurs.

In calculating the present value of lease payments, the group uses the incremental borrowing rate at the lease commencement date, if the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset. Lease liabilities are included in the financial liabilities, refer to Note 19 Financial liabilities.

Short-term leases and leases of low-value assets

The group applies the short-term lease recognition exemption to its short-term leases of other machinery and equipment (these are those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered of low value (in other words below CHF 5,000). Lease payments on short-term leases and leases of low-value assets are recognised as expenses on a straight-line basis over the lease term.

3 Change in the scope of consolidation

Acquisitions in 2022

The fair values of the identifiable assets and liabilities as of the date of acquisition were:

in CHF 1,000

Predica

Others

Total

 

 

 

 

Cash and cash equivalents

3,097

235

3,332

Trade receivables

5,943

82

6,025

Other current assets

3,150

50

3,200

Indemnification assets

560

560

Tangible assets

83

99

182

Intangible assets (excluding goodwill)

11,323

11,323

Deferred tax assets

493

493

Other non-current assets

19

19

 

 

 

 

Total assets

24,668

466

25,134

 

 

 

 

Trade payables

1,737

20

1,757

Accrued expenses and contract liabilities

1,991

69

2,060

Other current liabilities

3,656

26

3,682

Contingent liabilities

560

560

Contingent consideration liabilities

937

937

Financial liabilities

593

593

Deferred tax liabilities

2,060

2,060

 

 

 

 

Net assets acquired at fair value

13,134

351

13,485

Acquisition of Predica

On 2 February 2022, SoftwareOne acquired 100% of Predica Sp zoo, Poland (‘Predica’), a cloud-native provider of industry-leading Azure cloud professional and managed services with subsidiaries in Europe and the Middle East and the US. As an acclaimed Microsoft Gold partner with 15 Gold competencies and Azure Expert Managed Service Provider, the company specialises in applications & DevOps, cloud infrastructure, security, and data analytics in order to drive digital transformation with clients.

A contingent consideration arrangement was agreed that could result in additional cash payments to the previous shareholders of Predica. The calculation depends on certain KPIs of the years 2022 to 2024 and the retention of three key employees, which is reduced proportionately in the event of termination. The contingent consideration for the performance year 2022 is based on revenue, revenue growth and new customers. The calculation for the performance years 2023 and 2024 is primarily based on chargeability of delivery resources and new customers. The earn-out amount in the maximum amount of TCHF 26,250 contingent on continuing employment of the selling shareholders is recognised as a personnel expense over the service period of three years and thus not part of the purchase price. The fair value of the contingent consideration of TCHF 8,750 payable to selling shareholders without continuing employment is part of the purchase price and recognised as a financial liability. Cash outflows for both earn-outs are expected on a yearly basis until 2025.

The goodwill recognised is primarily attributed to the workforce and the expected synergies and other benefits from combining the activities of Predica with those of the group. The goodwill is not deductible for income tax purposes. Transaction costs of TCHF 1,082 are related to this acquisition.

From the date of acquisition, Predica has contributed TCHF 30,493 of revenue and TCHF 1,501 to the profit for the period.

Other acquisitions

On 4 February 2022, SoftwareOne acquired 100% of Satzmedia GmbH, Germany (‘Satzmedia’), a provider of digital experience, eCommerce and CMS (Content Management) solutions. The purchase price paid for the acquisition of Satzmedia relates mainly to the skilled workforce and, therefore, represents goodwill.

If all acquisitions had taken place at the beginning of the year, total revenue of SoftwareOne would have been TCHF 1,006,501 and net loss for the period would have been TCHF –58,377.

The purchase price allocation for all business combinations made in 2022 is finalised as of 31 December 2022.

Purchase considerations and goodwill

Details of the purchase considerations recognised at acquisition and the derivation of goodwill are as follows:

in CHF 1,000

Predica

Others

Total

 

 

 

 

Cash paid

73,549

1,803

75,352

Contingent consideration liabilities

8,750

8,750

 

 

 

 

Total purchase consideration

82,299

1,803

84,102

Less net assets acquired at fair value

13,134

351

13,485

 

 

 

 

Goodwill

69,165

1,452

70,617

The cash flow on acquisitions

in CHF 1,000

Predica

Others

Total

 

 

 

 

Cash consideration

–73,549

–1,803

–75,352

Net cash acquired

3,097

235

3,332

Cash consideration for current period acquisitions

–70,452

–1,568

–72,020

Cash consideration for prior period acquisitions

–6,412

–6,412

 

 

 

 

Net outflow of cash – investing activities

–70,452

–7,980

–78,432

Acquisitions in 2021

In 2022, the group finalised the purchase accounting of the acquisitions made in 2021:

  • 29 September 2021: Dino Newco Ltd, UK, a leading certified SAP services partner, with subsidiaries, in particular Centiq Ltd in the UK.
  • 23 September 2021: HeleCloud Ltd, UK, a certified and independent Amazon Web Services (AWS) premier consulting partner, with subsidiaries in the Netherlands and Bulgaria.
  • 13 September 2021: activities and assets of SE16N Sp zoo and SE16 Consulting Sp zoo, Poland, two leading SAP technology service providers and SAP S/4HANA specialists.
  • 14 July 2021: ITST Consultoria em Informática Ltda, Brazil, a specialist for professional and managed SAP services.
  • 29 April 2021: 70% in SynchroNet Corp, US, an AWS-focused cloud specialist in digital workplace solutions.
  • 1 March 2021: VB Technology Group AG, Switzerland, an SAP specialist for S/4HANA transformations and public cloud migrations, with subsidiaries in Switzerland and India

There were no changes in the final fair values of acquired assets and liabilities compared to the provisional amounts disclosed in the Annual Report 2021.

Details of the purchase considerations recognised at acquisition and the derivation of goodwill were as follows:

in CHF 1,000

Centiq

HeleCloud

Others

Total

 

 

 

 

 

Cash paid

35,089

37,786

22,222

95,097

Deferred purchase price

5,013

270

5,283

Offsetting of receivables of previous shareholders

954

954

 

 

 

 

 

Total purchase consideration

40,102

38,740

22,492

101,334

Less net assets acquired at fair value

4,932

1,427

1,611

7,970

 

 

 

 

 

Goodwill

35,170

37,313

20,881

93,364

in CHF 1,000

Centiq

HeleCloud

Others

Total

 

 

 

 

 

Cash consideration

–35,089

–37,786

–22,222

–95,097

Net cash acquired

1,102

754

646

2,502

Cash consideration for current period acquisitions

–33,987

–37,032

–21,576

–92,595

Cash consideration for prior period acquisitions 1)

–20,142

–20,142

 

 

 

 

 

Net outflow of cash – investing activities

–33,987

–37,032

–41,718

–112,737

1) In January 2021, the purchase price for the acquisition of the remaining 60 % of the shares of InterGrupo (TCHF 20,142) was paid.

Acquisition of non-controlling interests

On 26 August 2022, the group acquired the remaining 30% of SynchroNet Corp, following its initial investment of 70% in 2021. The consideration for the 30% ownership interests was paid to an amount of TCHF 726 in cash and to an amount of TCHF 243 through a contingent consideration agreement.

On 7 October 2022, SoftwareOne acquired the remaining 0.08% of SoftwareOne Japan KK for a purchase price of TCHF 3.

Sale of subsidiaries in 2022

On 20 May 2022, SoftwareOne Russia was sold to a third-party. Sale proceeds consisted of RUB 1,000. During the sale, the recoverability of the group's existing receivables and loans against the company was reassessed and their fair value was estimated to be TCHF 2,021. The repayment is subject to the risk of potential sanctions which might prohibit the transfer of cash. At the end of the reporting period, there is no longer a claim for repayment, therefore the receivable was written off.

Upon closing of the sale, the group recognised a loss to an amount of TCHF 29,655, included in the line other operating expenses of the consolidated income statement. The composition of the loss on disposal is set forth below:

in CHF 1,000

Total

 

 

Consideration received for the disposal

Fair value of receivables from the former subsidiary

2,021

Carrying amount of net assets, excluding goodwill, derecognised

–9,414

Carrying amount of goodwill allocated to the subsidiary derecognised

–18,163

Reclassification of currency translation adjustments

–4,099

 

 

Loss on disposal of subsidiaries

–29,655

On 7 April 2022, ISP*D International Software Partners GmbH, Germany, was sold to a third-party. The sale proceeds consisted of TCHF 619 in cash. The group recognised a loss on disposal of TCHF 27, which is included in the line other operating expenses of the consolidated income statement.

in CHF 1,000

Total

 

 

Cash received on disposal of subsidiaries

619

Cash disposed

–4,412

 

 

Sale of subsidiaries (net of cash disposed)

–3,793

4 Financial risk management

4.1 Financial risk factors

The group’s activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk, equity price risk), credit risk and liquidity risk. The group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the group’s financial performance. The group uses derivative financial instruments to hedge certain risk exposures. The financial derivatives are measured with the aid of standardised mathematical models. The counterparty risk related to those derivatives is immaterial for the group.

Risk management is carried out by Group Treasury under a policy approved by the Board of Directors. Group Treasury identifies, evaluates, and hedges financial risks in close cooperation with the group’s operating entities. The Board provides written principles for overall risk management, as well as written policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments and investment of excess liquidity.

Market risk

Foreign exchange risk

The group operates internationally and is exposed to foreign exchange risk arising from various currency exposures. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in foreign operations.

Group Treasury has set up a policy to manage its foreign exchange risk. The group hedges its foreign exchange risk exposure of recognised assets and liabilities and future commercial transactions by derivative contracts.

The group has certain investments in foreign operations whose net assets are exposed to foreign currency translation risk which, as per group policy, is not hedged. These differences are recognised in other comprehensive income and accumulated in equity. Translation risk is not considered in the analysis below.

The following table details the group’s sensitivity to the major currencies with all the other variables held constant:

 

 

2022

2021

Impact in TCHF

Sensitivity

Earnings before income tax

Equity

Earnings before income tax

Equity

 

 

 

 

 

 

EUR

+/– 5 %

+/– 799

+/– 614

+/– 1,332

+/– 1,289

USD

+/– 5 %

+/– 439

+/– 1,364

+/– 467

+/– 1,232

GBP

+/– 5 %

+/– 320

+/– 20

+/– 661

+/– 66

BRL

+/– 5 %

+/– 1

+/– 11

MXN

+/– 5 %

+/– 1

+/– 142

INR

+/– 5 %

+/– 33

+/– 9

+/– 18

SEK

+/– 5 %

+/– 112

+/– 219

+/– 23

PLN

+/– 5 %

+/– 170

+/– 275

Interest rate risk

The group’s interest-bearing instruments with variable interest are cash, bank overdrafts, bank loans and a multiple currency revolving credit facility (undrawn as of 31 December 2022 and 2021). Currently, there is no material exposure to interest rate risk. Also refer to Note 19 Financial liabilities.

Equity price risk

The group is exposed to price risks related to listed shares. Changes in fair value are recognised in profit and loss as they arise. In 2022, SoftwareOne sold shares for cash proceeds of TCHF 72,940. In December 2022, the group entered into a total return swap agreement in which it sold the shares but remains exposed to the price risk related to these shares, refer to further explanations in section Liquidity Risk below.

A sensitivity analysis was performed. A 10% fluctuation in share price leads to fluctuations in pre-tax earnings of TCHF +/– 5,841 (prior year: TCHF +/– 20,876).

Credit risk

Group Treasury and the Group Credit & Collection Department are responsible for managing and analysing the credit risk for all new clients before standard payment and delivery terms and conditions are offered. Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions, as well as credit exposures to customers, including outstanding receivables and contract assets. Risk control assesses the credit quality of the customers, considering its financial position, past experience and other factors. No collateral is required. Individual risk limits are set based on internal or external ratings in accordance with guidelines set by the Board. The utilisation of credit limits is regularly monitored.

There is no concentration of credit risk with respect to trade receivables, as the group has many customers that are internationally diversified. 39% of trade receivables are covered through credit insurance (prior year: 47%).

The remaining part is not insured for one of the following reasons:

  • From end customers with top rating (based on internal and credit insurance assessment): 42% (prior year: 22%)
  • Too small to be insured: 1% (prior year: 3%)
  • No insurance available: 18% (prior year: 28%)

Refer to Note 12 Trade receivables for information about the credit risk exposure on the group’s trade receivables and contract assets using a provision matrix.

Liquidity risk

Liquidity

Cash flow forecasting is performed in the operating entities of the group and aggregated by Group Treasury. Group Treasury monitors rolling forecasts of the group’s liquidity requirements to ensure it has sufficient cash to meet operational needs while always maintaining sufficient headroom on its undrawn borrowing facilities (for further details see below).

The table below analyses the group’s non-derivative financial liabilities according to relevant maturity groupings based on the remaining period as of the reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows, i.e., undiscounted interest and principal payments:

 

 

 

Cash outflows

in CHF 1,000

Carrying amount

Total cash outflow

Less than 3 months

Between 3 months and 1 year

Between 1 and 5 years

Over 5 years

 

 

 

 

 

 

 

As of 31 December 2022

 

 

 

 

 

 

Trade payables

1,915,936

1,915,936

1,695,224

220,712

Other payables

181,238

181,238

23,275

725

157,238

Accrued expenses

78,370

78,370

56,836

21,534

Financial liabilities (including bank overdrafts, excluding lease liabilities)

82,482

45,400

22,241

7,917

12,623

2,619

Lease liabilities

33,070

34,104

3,007

12,104

16,901

2,092

 

 

 

 

 

 

 

Total

2,291,096

2,255,048

1,800,583

262,992

186,762

4,711

 

 

 

Cash outflows

in CHF 1,000

Carrying amount

Total cash outflow

Less than 3 months

Between 3 months and 1 year

Between 1 and 5 years

Over 5 years

 

 

 

 

 

 

 

As of 31 December 2021

 

 

 

 

 

 

Trade payables

1,848,712

1,848,712

1,789,930

58,782

Other payables

102,211

102,211

37,492

5,867

58,852

Accrued expenses 1)

91,996

91,996

76,190

15,404

402

Financial liabilities (including bank overdrafts, excluding lease liabilities)

61,504

63,338

8,264

42,793

10,855

1,426

Lease liabilities

38,037

38,448

3,200

12,834

20,481

1,933

 

 

 

 

 

 

 

Total

2,142,460

2,144,705

1,915,076

135,680

90,590

3,359

1) Prior-year figures restated, refer to Note 2 Change in accounting policies.

In July 2022 the group signed an amendment and restatement agreement for the multiple currency revolving credit facility to increase the facility from CHF 470 million to CHF 660 million and extend the tenor to 31 December 2025. The initial agreement was signed in 2019. The facility contains two extension options which can be exercised with the consent of the lending banks in the fourth quarter of 2023 and 2024. This allows the term of the credit facility to be extended by another year to a maximum of 31 December 2027. Interest would be payable at a base rate plus a margin ranging from 62.5 to 77.5 basis points initially, depending on the currency, and thereafter adjusted for changes in the leverage ratio of the group. As of 31 December 2022 and 2021, the credit facility was not used. Each drawdown within the facility would have a tenor ranging from one week up to the maturity of the credit facility. The facility is subject to loan covenants (leverage ratio: net debt/earnings before net financial items, taxes, depreciation and amortisation). A potential breach of covenant triggers measures which are standard in such circumstances. Under the agreement, the covenants are monitored on a regular basis by the treasury department and half yearly reported to management and lending banks to ensure compliance with the agreement.

In December 2022, the group entered into a total return swap agreement related to listed equity securities. Under the total return swap, SoftwareOne sold the underlying shares for cash consideration of TCHF 42,559, classified as investing cash inflow, but remains exposed to changes in the market value of these shares. As a result, the group did not derecognise the financial asset. SoftwareOne recorded a financial liability for the receipts from swap contracts of TCHF 42,559. In the event of a negative market price development of the underlying asset, there is a risk of a cash outflow when agreed thresholds are exceeded up to the amount of the consideration received. On maturity date of the total return swap, the liability from the swap contract and the related financial asset will both be derecognised and the related cashflows will be settled. At the end of the reporting period, the total return swap had a positive market value.

The maturity structure of the derivative financial instruments based on cash flows is as follows:

 

 

 

Cashflows

in CHF 1,000

Carrying amount

Total cashflow

Less than 3 months

Between 3 months and 1 year

Between 1 and 5 years

Over 5 years

 

 

 

 

 

 

 

As of 31 December 2022

 

 

 

 

 

 

Derivative assets with gross settlement

4,048

 

 

 

 

 

– Cash outflow

 

335,302

295,930

22,731

16,640

– Cash inflow

 

339,588

298,360

23,924

17,304

Derivative liabilities with gross settlement

6,318

 

 

 

 

 

– Cash outflow

 

517,741

464,464

27,139

26,137

– Cash inflow

 

511,832

460,105

25,969

25,758

 

 

 

Cashflows

in CHF 1,000

Carrying amount

Total cashflow

Less than 3 months

Between 3 months and 1 year

Between 1 and 5 years

Over 5 years

 

 

 

 

 

 

 

As of 31 December 2021

 

 

 

 

 

 

Derivative assets with gross settlement

6,470

 

 

 

 

 

– Cash outflow

 

341,409

295,685

25,659

20,065

– Cash inflow

 

348,018

299,516

27,296

21,206

Derivative liabilities with gross settlement

6,119

 

 

 

 

 

– Cash outflow

 

620,619

568,873

28,125

23,621

– Cash inflow

 

614,252

563,909

27,389

22,953

The contractual agreement determines whether the contracting parties must fulfil their obligations from derivative financial instruments net or gross.

As of 31 December 2022, the group had total committed and uncommitted credit lines (including factoring) of TCHF 1,097,742 (prior year: TCHF 963,559) available, of which 24% (prior year: 21%) was drawn. From the drawn amount, TCHF 35,121 were covered by financial covenants and fulfilled as of 31 December 2021.

4.2 Capital risk management

The group’s objectives when managing capital are to safeguard the group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

Surplus cash held by the operating entities over and above working capital requirements are transferred to Group Treasury whenever the legal environment permits. Group Treasury invests surplus cash in interest-bearing current accounts or short-term time deposits to provide sufficient headroom as determined by the abovementioned forecasts.

In order to maintain or adjust the capital structure, the group may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares.

Capital is measured based on the group’s consolidated financial statements and monitored closely on an ongoing basis. Management's target for the period under review was to strengthen the capital base to sustain and support further development of the business. In 2022, this goal was not achieved due to the one-time effects related to the loss on disposal of SoftwareOne Russia and a fair value loss related to the valuation of equity instruments.

The equity ratio for the period ended 31 December 2022 and the prior year were as follows:

in CHF 1,000

2022

2021

 

 

 

Total equity 1)

738,996

869,739

Total assets 1)

3,449,077

3,398,272

 

 

 

Equity ratio 1)

21.4 %

25.6 %

1) Prior-year figures restated, refer to Note 2 Change in accounting policies.

The equity ratio for 2022 decreased compared to the previous year, which is mainly due to the loss for the period in 2022.

4.3 Categories of financial instruments and fair value estimation

instruments

Categories of financial instruments

The following table discloses the carrying amounts and fair values, as required, of the group’s financial instruments by class and category:

As of 31 December 2022

 

 

 

 

in CHF 1,000

IFRS 9 category

Carrying amount

Fair value

Fair value level

 

 

 

 

 

FINANCIAL ASSETS

 

 

 

 

Cash and cash equivalents

Amortised cost

325,791

n/a*

 

Trade receivables

Amortised cost

1,944,969

n/a*

 

Other receivables

Amortised cost

190,948

n/a*

 

Derivative financial instruments

Fair value through profit or loss

1,804

 

Level 2

Derivative financial instruments

Designated as cash flow hedge

2,244

 

Level 2

Financial assets - listed equity instrument

Fair value through profit or loss

58,415

 

Level 1

Financial assets - loans

Amortised cost

775

n/a*

 

 

 

 

 

 

Total financial assets

 

2,524,946

 

 

 

 

 

 

 

FINANCIAL LIABILITIES

 

 

 

 

Trade payables

Financial liabilities at amortised cost

1,915,936

n/a*

 

Other payables

Financial liabilities at amortised cost

181,238

n/a*

 

Accrued expenses

Financial liabilities at amortised cost

78,370

n/a*

 

Contingent consideration liabilities

Fair value through profit or loss

15,030

 

Level 3

Financial liabilities

Financial liabilities at amortised cost

25,514

n/a*

 

Financial liabilities

Fair value through profit or loss

41,938

 

Level 2

Derivative financial instruments

Fair value through profit or loss

3,576

 

Level 2

Derivative financial instruments

Designated as cash flow hedge

2,742

 

Level 2

Lease liabilities

n/a

33,070

 

 

 

 

 

 

 

Total financial liabilities

 

2,297,414

 

 

* The carrying amount is a reasonable approximation for fair value.

Financial assets consist of an investment in listed equity instruments for which the group recognised a fair value loss of TCHF 71,328 in finance expenses in 2022 (prior year: gain of TCHF 67,812).

As of 31 December 2021

 

 

 

 

in CHF 1,000

IFRS 9 category

Carrying amount

Fair value

Fair value level

 

 

 

 

 

FINANCIAL ASSETS

 

 

 

 

Cash and cash equivalents

Amortised cost

350,352

n/a*

 

Trade receivables

Amortised cost

1,861,168

n/a*

 

Other receivables

Amortised cost

105,875

n/a*

 

Derivative financial instruments

Fair value through profit or loss

3,529

 

Level 2

Derivative financial instruments

Designated as cash flow hedge

2,941

 

Level 2

Financial assets - listed equity instrument

Fair value through profit or loss

208,756

 

Level 1

Financial assets - loans

Amortised cost

352

n/a*

 

 

 

 

 

 

Total financial assets

 

2,532,973

 

 

 

 

 

 

 

FINANCIAL LIABILITIES

 

 

 

 

Trade payables

Financial liabilities at amortised cost

1,848,712

n/a*

 

Other payables

Financial liabilities at amortised cost

102,211

n/a*

 

Accrued expenses 1)

Financial liabilities at amortised cost

91,996

n/a*

 

Contingent consideration liabilities

Fair value through profit or loss

8,644

 

Level 3

Other financial liabilities

Financial liabilities at amortised cost

52,860

n/a*

 

Derivative financial instruments

Fair value through profit or loss

4,534

 

Level 2

Derivative financial instruments

Designated as cash flow hedge

1,585

 

Level 2

Lease liabilities

n/a

38,037

 

 

 

 

 

 

 

Total financial liabilities

 

2,148,579

 

 

* The carrying amount is a reasonable approximation for fair value.

1) Prior-year figures restated, refer to Note 2 Change in accounting policies.

Fair value estimation

The carrying amounts of cash and cash equivalents, trade and other receivables and trade and other payables with a remaining term of up to 12 months, as well as other current financial assets and liabilities, represent a reasonable approximation of their fair values, due to the short-term maturities of these instruments.

The fair value of financial assets (equity instruments) is based on observable price quotations at the reporting date. The fair value of derivatives is determined based on input factors observed directly or indirectly on the market. The fair value of foreign exchange forward contracts is based on forward exchange rates.

Financial instruments carried at fair value are analysed by valuation method. The fair value hierarchy has been defined as follows:

Level 1: The fair value of financial instruments traded in active markets is based on quoted market prices for identical assets or liabilities at the reporting date.

Level 2: The fair value measurements are those derived from valuation techniques using inputs for the asset or liability that are observable market data, either directly or indirectly. Such valuation techniques include the discounted cash flow method and option pricing models. For example, the fair value of interest rate and currency swaps is determined by discounting estimated future cash flows, and the fair value of forward foreign exchange contracts is determined using the forward exchange market at the end of the reporting period.

Level 3: The fair value measurements are those derived from valuation techniques using significant inputs for the asset or liability that are not based on observable market data.

The following table discloses valuation classes for financial instruments measured at fair value:

 

As of 31 December 2022

As of 31 December 2021

in CHF 1,000

Level 1

Level 2

Level 3

Total

Level 1

Level 2

Level 3

Total

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Financial assets

58,415

58,415

208,756

208,756

Derivative financial instruments

4,048

4,048

6,470

6,470

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

Contingent consideration liabilities

15,030

15,030

8,644

8,644

Financial liabilities

41,938

41,938

Derivative financial instruments

6,318

6,318

6,119

6,119

There have been no transfers between the different hierarchy levels in 2022 and 2021.

The change in carrying values associated with 'Level 3' contingent consideration liabilities are set forth below:

in CHF 1,000

2022

2021

 

 

 

On 1 January

8,644

9,848

Business acquisitions

937

Additions

8,993

Settlement in cash

–3,606

–1,895

Fair value adjustment

167

613

Currency translation adjustments

–105

78

 

 

 

As of 31 December

15,030

8,644

The most significant contingent consideration liabilities relate to the acquisition of the customer base of CompuCom, the acquisition of Intelligence Partner and Predica.

CompuCom (fair value as of 31 December 2022: TCHF 3,438; prior year: TCHF 5,212)
The purchase price for the customer base of CompuCom acquired in 2015 is fully based on variable payments that depend on the future revenues generated from those clients over a period of 10 years. During 2022, the group recognised an unrealised fair value loss of TCHF 167 (prior year: loss of TCHF 613). The most significant unobservable input used to determine the fair value of the CompuCom contingent consideration is the cash flow forecast, which is mainly based on future gross profit. The development of the future gross profit and the contingent consideration is linear. Thus, a change of +/– 10% in gross profit development leads to a change of cash outflow by +/– 10%, i.e., TCHF +/– 344 (prior year: TCHF +/– 521).

Intelligence Partner (fair value as of 31 December 2022: TCHF 2,065; prior year: TCHF 3,264)
The contingent consideration liability of Intelligence Partner depends on the EBITDAs of the years 2022 to 2023 and an additional ‘catch-up’ year if necessary. The development of the future EBITDAs and the contingent consideration is not linear and is capped at a maximum of TEUR 2,100 (prior year: TCHF 3,150).

Predica (fair value as of 31 December 2022: TCHF 8,750)
The contingent consideration liability of Predica depends on certain KPIs of the years 2022 to 2024 and the retention of three key employees. The contingent consideration is capped at a maximum of TCHF 8,750. A partial amount of TCHF 5,125 is exclusively related to the retention of the three key employees. The contingent consideration for performance year 2022, which amounts to a maximum of TCHF 1,875, is based on revenue, revenue growth and new customers. The calculation for the performance years 2023 and 2024 is primarily based on chargeability of delivery resources and new customers and amounts to a maximum of TCHF 1,750. In the event of termination by one of the three key employees, the contingent consideration is reduced proportionately.

4.4 Transfer of financial assets

The group enters transactions in which it transfers trade receivables under factoring agreements and, as a result, may either be eligible to derecognise the transferred receivables in their entirety or must continue to recognise the transferred receivables to the extent of any continuing involvement, depending on certain criteria. These criteria are presented in Note 2 Summary of significant accounting policies.

The amount of the receivables sold as of 31 December 2022 is TCHF 197,477 (prior year: TCHF 170,260). The amount is fully derecognised from the balance sheet. Moreover, liabilities to factoring partners for forwarding incoming payments from clients of TCHF 14,150 (prior year: TCHF 3,991) are recognised under financial liabilities.

5 Critical accounting estimates and judgments

Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The resulting accounting estimates may differ from the actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

Significant estimates

Income taxes (Note 10)

The group is subject to income taxes in numerous jurisdictions. Significant judgment is required in determining the worldwide provision for income taxes.

In particular, the deferred tax assets on unused tax losses require estimates of the amount and dates of future taxable income as well as the future tax planning strategies. If the group expects not to realise the unused tax losses, these are not recognised.

Contingent consideration liabilities related to business acquisitions and the acquisition of customer relationships (Note 4.3, 16 and 19)

Contingent consideration liabilities reflect potential future payments following the acquisition of customer relationships and businesses. The calculation of the future payments is based on different variable input factors. These future cash flows were estimated at initial recognition. These assumptions are reviewed at each reporting date and changes impact profit and loss.

Defined benefit obligations (Note 20)

The present value of the defined benefit obligations depends on actuarial assumptions including the discount rate. Any changes in these assumptions will impact the carrying amount of defined benefit obligations. Additional information is disclosed in Note 20 Defined benefit liabilities.

Contingent liabilities and indemnification assets related to purchase price allocations (Note 13 and 18)

COMPAREX, acquired in 2019, has several ongoing dispute cases which could lead to future cash outflows. Occasional dispute cases also exist for InterGrupo, Intelligence Partner, ITST and Predica. During the purchase price allocation, these contingent liabilities were measured at fair value on the acquisition date and presented as provisions. On each reporting date, such contingent liabilities are valued at the higher amount that would result in accordance with IAS 37 or the amount initially recognised less the cumulative amount of liabilities settled, cancelled, or expired. Part of the risks are covered through indemnity clauses. The resulting indemnification assets were measured at fair value on the acquisition date on the same basis as the indemnified liability.

6 Revenue

SoftwareOne generates its revenue from Software & Cloud Marketplace by arranging software license agreements between software providers and end customers and managing cloud subscriptions for them (point in time). Revenue from Software & Cloud Services is generated in providing services to customers (over time), the sale of on-premise software only used to provide software asset management solutions and the resale or sale of self-developed on-premise software (both point in time and presented in Software & Cloud Services).

For management purposes, SoftwareOne is organised by geographical areas. The breakdown of revenue below follows the regional clusters by the group’s operating segments, refer to Note 28 Segment reporting.

Revenue is broken down as follows:

2022

 

 

 

 

 

in CHF 1,000

EMEA

NORAM

LATAM

APAC

Total

 

 

 

 

 

 

Revenue from Software & Cloud Marketplace

360,998

77,224

34,614

65,560

538,396

Revenue from Software & Cloud Services

258,551

76,222

69,893

61,045

465,711

 

 

 

 

 

 

Total revenue

619,549

153,446

104,507

126,605

1,004,107

2021

 

 

 

 

 

in CHF 1,000

EMEA

NORAM

LATAM

APAC

Total

 

 

 

 

 

 

Revenue from Software & Cloud Marketplace 1)

362,411

73,412

31,129

63,246

530,198

Revenue from Software & Cloud Services 1)

210,036

61,841

60,976

51,227

384,080

 

 

 

 

 

 

Total revenue 1)

572,447

135,253

92,105

114,473

914,278

1) Prior-year figures restated, refer to Note 2 Change in accounting policies.

SoftwareOne distinguishes between indirect and direct business when generating revenue from Software & Cloud:

in CHF 1,000

2022

2021

 

 

 

Revenue from Software & Cloud Marketplace

 

 

– indirect business 1)

438,409

415,263

– direct business

99,987

114,935

 

 

 

Total revenue from Software & Cloud Marketplace 1)

538,396

530,198

1) Prior-year figures restated, refer to Note 2 Change in accounting policies.

7 Personnel expenses

in CHF 1,000

2022

2021

 

 

 

Salaries fixed

–375,906

–348,394

Salaries variable 1)

–115,088

–108,182

Social security costs

–75,401

–70,901

Earn-out expenses (Note 18)

–34,319

–26,888

Pension costs – defined benefit plans (Note 20)

–5,477

–5,645

Pension costs – defined contribution plans

–9,529

–8,409

Other personnel expenses

–40,168

–40,229

 

 

 

Total personnel expenses 1)

–655,888

–608,648

 

 

 

Average head count (FTE)

8,948

8,292

1) Prior-year figures restated, refer to Note 2 Change in accounting policies.

Other personnel expenses include expenses for the Management Equity Plan of TCHF 3,349 (prior year: TCHF 9,079) and other share-based payment programmes of TCHF 9,158 (prior year: TCHF 7,981), refer to Note 25 Share-based payments.

8 Other operating expenses

in CHF 1,000

2022

2021

 

 

 

Travel and car expenses

–24,336

–14,472

Administrative expenses

–49,408

–48,171

Maintenance and utility expenses

–8,831

–7,638

Information technology expenses

–18,460

–14,621

Telecommunication expenses

–3,725

–3,920

Marketing expenses

–9,336

–5,700

Bad debt expenses

–10,594

–366

Other expenses

–14,785

–8,940

Loss on disposal of subsidiaries

–29,682

 

 

 

Total other operating expenses

–169,157

–103,828

The increase in other operating expenses of TCHF 65,329 is mainly related to higher travel expenses (TCHF 9,864), higher bad debt provisions (TCHF 10,228), as well as loss on disposal of subsidiaries (TCHF 29,682).

9 Finance result

in CHF 1,000

2022

2021

 

 

 

Interest income

1,600

972

Other finance income

4,157

70,078

 

 

 

Finance income

5,757

71,050

Interest expense

–4,829

–3,093

Other finance expenses

–83,047

–6,840

Change in fair value of contingent consideration liability

–167

–613

Finance expenses

–88,043

–10,546

 

 

 

Foreign exchange differences, net

–9,933

–11,077

 

 

 

Total finance result

–92,219

49,427

Other finance income includes TCHF 3,904 income from significant finance components (prior year: TCHF 1,759).

Other finance expenses include a fair value loss of TCHF 71,328 from the valuation of equity instruments (prior year: gain of TCHF 67,812 recognised in other finance income) and TCHF 4,488 factoring expenses (prior year: TCHF 1,986).

The foreign exchange differences, net result 2022 excludes unrealised gains on derivatives designated as instruments to hedge foreign currency risks in the amount of TCHF 128 (prior year: unrealised losses of TCHF 1,251) recognised in OCI and to be reclassified to the income statement in future periods. In 2022, losses of TCHF 1,784 (prior year: losses of TCHF 1,564) have been reclassified to profit and loss, refer to Note 14 Derivative financial instruments.

10 Income taxes

Tax expenses comprise the following positions:

in CHF 1,000

2022

2021

 

 

 

Current income taxes

–48,433

–50,020

Change in deferred taxes 1)

4,139

16,672

 

 

 

Total tax expense 1)

–44,294

–33,348

1) Prior-year figures restated, refer to Note 2 Change in accounting policies.

The tax on the group’s profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the consolidated entities as follows:

in CHF 1,000

2022

2021

 

 

 

Earnings before income tax (EBT) 1)

–14,040

150,992

Expected average group tax rate 1)

–119.3 %

19.9 %

 

 

 

Tax at expected average rate

–16,752

–30,055

+/– Effect of

 

 

Expenses not deductible for tax purposes

–22,174

–10,211

Income not subject to tax

1,986

9,843

Utilisation of previously unrecognised tax losses

1,188

606

Impairment of previously recognised tax losses

–4,756

–578

Capitalisation of tax losses previously not recognised

1,023

2,354

Unrecognised current year's tax losses

–2,024

–2,992

Current income tax charges/credits related to prior periods

–1,202

482

Impact from tax rate changes

118

723

Other effects

–1,701

–3,520

 

 

 

Total tax expense 1)

–44,294

–33,348

 

 

 

Effective tax rate 1)

–315.5 %

22.1 %

1) Prior-year figures restated, refer to Note 2 Change in accounting policies.

The group’s expected average tax rate is the aggregate obtained by applying the expected tax rate for each individual jurisdiction to its respective result before taxes.

In 2022 the group EBT is significantly impacted by the fair value loss of financial assets (prior year gain included in position 'Income not subject to tax') and increased expenses for future earn-out payments. Simultaneously, the group has taxable profits in other jurisdictions. The fair value loss and the earn-out expenses are mainly non-tax deductible and are therefore included in 'Expenses not deductible for tax purposes'. The impact results in a weighted average expected tax rate of –119.3% (prior year: 19.9%).

The group has not recognised deferred tax assets of TCHF 2,024 (prior year: TCHF 2,992) in respect of losses for the period ended 31 December 2022 of TCHF 9,043 (prior year: TCHF 12,685).

Other effects in 2022 are mainly related to withholding taxes on intercompany transactions and additional local taxes. Other effects in 2021 were mainly related to withholding taxes on intercompany transactions.

Deferred income tax

Deferred tax expense of TCHF 1,048 (prior year: TCHF 1,942) is recorded in other comprehensive income on actuarial losses on defined benefit liabilities and on hedge accounting, refer to Note 20 Defined benefit liabilities and Note 14 Derivative financial instruments.

Deferred tax assets and liabilities are based on the temporary differences between group valuation and tax bases.

 

2022

2021

in CHF 1,000

Deferred tax assets

Deferred tax liabilities

Deferred tax assets

Deferred tax liabilities

 

 

 

 

 

Trade receivables 1)

4,270

7,413

3,583

7,554

Other current assets

1,052

759

705

234

Tangible, intangible and right-of-use assets

4,504

27,518

4,267

30,221

Other non-current assets

262

223

2,205

4

Accrued expenses, prepaid income and contract assets

5,514

905

5,394

1,232

Other current liabilities 1)

9,215

565

7,943

296

Defined benefit liabilities

805

1,892

Other non-current liabilities

7,050

376

4,278

1,523

Deferred taxes from losses carried forward

9,876

13,995

 

 

 

 

 

Total 1)

42,548

37,759

44,262

41,064

Offsetting of balances 1)

–14,073

–14,073

–11,842

–11,842

 

 

 

 

 

Total 1)

28,475

23,686

32,420

29,222

1) Prior-year figures restated, refer to Note 2 Change in accounting policies.

For some group companies, dividend payments are subject to a withholding tax which cannot be fully recovered in Switzerland. The company has not recognised deferred tax liabilities associated with investments in subsidiaries where the group can control the reversal of the temporary differences and where it is not probable that the temporary differences will reverse in the foreseeable future.

The aggregate amount of temporary differences associated with investments in subsidiaries for which no deferred tax liabilities have been recognised amounted to TCHF 33,515 (prior year: TCHF 41,338).

The movement of available tax loss carry forwards is as follows:

in CHF 1,000

2022

2021

 

 

 

On 1 January

125,018

172,260

Business acquisitions

5,153

Disposal of subsidiaries

–824

Tax losses arising in current year

13,585

26,419

Tax losses utilised against current year profits

–15,781

–8,582

Expired tax losses during the period

–3,015

–2,507

Other movements

–27,481

–63,691

Currency translation adjustments

–4,012

–4,034

 

 

 

As of 31 December

87,490

125,018

Deferred tax assets of TCHF 9,876 (prior year: TCHF 13,995) were recorded in respect of available tax loss carry forwards of TCHF 37,061 (prior year: TCHF 52,099).

Tax loss carry forwards as of 31 December 2020 included tax losses in the amount of TCHF 92,161 (no expiry date) originating from the Austrian permanent establishment of COMPAREX AG in Germany. In 2020, the Austrian permanent establishment of COMPAREX AG was dissolved. It was legally uncertain if these tax loss carry forwards were transferred to the head office of COMPAREX AG. Therefore, no deferred tax asset was recognised. As of 31 December 2022, tax loss carry forwards are no longer included in the table above due to a negative final court decision (prior year: TCHF 25,062).

Tax losses, for which no deferred tax asset was recognised will expire as follows:

in CHF 1,000

2022

2021

 

 

 

Expiry within 12 months

1,818

6,423

Expiry in 2–3 years

9,258

6,409

Expiry in 4–5 years

9,648

15,089

Expiry in more than 5 years

8,925

11,094

No expiry date

20,780

33,903

 

 

 

Total not recognised tax losses

50,429

72,918

11 Cash and cash equivalents

in CHF 1,000

2022

2021

 

 

 

Cash at bank

323,405

338,167

Short-term bank deposits

2,386

12,185

 

 

 

Total cash and cash equivalents

325,791

350,352

12 Trade receivables

in CHF 1,000

2022

2021

 

 

 

Trade receivables

1,963,504

1,874,472

Less provision for impairment of trade receivables

–18,535

–13,304

 

 

 

Total trade receivables, net

1,944,969

1,861,168

Trade receivables are non-interest bearing and are generally on terms of 30 to 90 days.

An impairment analysis is performed at each reporting date using a provision matrix to measure expected credit losses. The provision rates are based on days past due for groupings of various customer segments with similar loss patterns (i.e., geographical region and customer rating and coverage by letters of credit or other forms of credit insurance). The calculation reflects the probability weighted outcome and reasonable and supportable information that is available at the reporting date about past events, current conditions, and forecasts of future economic conditions.

The provision matrix is initially based on the group’s historical observed default rates. The group calibrates the matrix to adjust the historical credit loss experience with forward-looking information. For instance, if forecast economic conditions (i.e. gross domestic product) are expected to deteriorate over the next year which can lead to an increased number of defaults, the historical default rates are adjusted. At each reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.

The group applies the expected credit loss model under IFRS 9 and reviews its receivables periodically to determine an adequate impairment provision. Loss allowances are recognised based on lifetime ECLs at the reporting date. The aging of the receivables for the year 2022 and 2021 are as follows:

2022

 

 

 

in CHF 1,000

Expected credit loss rate

Estimated total gross carrying amount at default

Expected credit loss

 

 

 

 

Not past due

–0.1 %

1,681,720

–1,507

Past due since 1–90 days

–1.1 %

217,727

–2,344

Past due since 91–180 days

–6.9 %

35,653

–2,469

Past due since 181–360 days

–26.1 %

16,171

–4,213

Past due since more than 360 days

–65.4 %

12,233

–8,002

 

 

 

 

Total trade receivables, gross

–0.9 %

1,963,504

–18,535

2021

 

 

 

in CHF 1,000

Expected credit loss rate

Estimated total gross carrying amount at default

Expected credit loss

 

 

 

 

Not past due

0.0 %

1,616,421

–578

Past due since 1–90 days

–0.5 %

212,094

–996

Past due since 91–180 days

–5.8 %

29,899

–1,736

Past due since 181–360 days

–30.8 %

6,245

–1,924

Past due since more than 360 days

–82.2 %

9,813

–8,070

 

 

 

 

Total trade receivables, gross

–0.7 %

1,874,472

–13,304

Movements on the group’s provision for impairment of trade receivables are as follows:

 

2022

2021

 

 

 

On 1 January

–13,303

–17,108

Disposal of subsidiaries

3,247

Allowance recognised

–17,041

–3,436

Receivables written off during the year as uncollectible

1,372

2,091

Unused amounts reversed

6,650

5,116

Currency translation adjustments

540

34

 

 

 

As of 31 December

–18,535

–13,303

In 2022, SoftwareOne has recorded additional expected credit losses of TCHF 3,537 for receivables of clients in Russia in the consolidated income statement.

13 Other receivables, prepaid expenses and contract assets

in CHF 1,000

2022

2021

 

 

 

Other receivables

74,547

87,170

– thereof financial assets: 8,777 (prior year: 27,919)

 

 

Indemnification assets

2,091

6,586

Prepaid expenses

37,409

26,033

Contract assets 1)

88,217

72,952

 

 

 

Current other receivables, prepaid expenses and contract assets

202,264

192,741

Other receivables

191,244

87,446

– thereof financial assets: 182,171 (prior year: 77,956)

 

 

Indemnification assets

518

 

 

 

Non-current other receivables

191,762

87,446

 

 

 

Total other receivables, prepaid expenses and contract assets

394,026

280,187

1) Prior-year figures restated, refer to Note 2 Change in accounting policies.

Contract assets are initially recognised for services as receipt of consideration is conditional on successful completion of the service. Upon completion of the service and acceptance by the customer, the amounts recognised as contract assets are reclassified to trade receivables.

Current other receivables mainly include VAT and other sales tax receivables.

Indemnification assets are related to acquisitions of prior periods in the amount of TCHF 2,609 (prior year: TCHF 6,586). In 2022, the group received payments of TCHF 1,698 from the previous shareholders of the acquired companies (prior year: TCHF 1,896). The underlying risks that have been classified as contingent liabilities are recorded as provisions, refer to Note 18 Provisions.

Other non-current receivables include TCHF 171,475 non-current trade receivables for multi-year contracts (prior year: TCHF 69,998)

14 Derivative financial instruments

 

2022

2021

2022

2021

in CHF 1,000

Notional amount

Notional amount

Derivative financial assets

Derivative financial liabilities

Derivative financial assets

Derivative financial liabilities

 

 

 

 

 

 

 

Current

 

 

 

 

 

 

Forward foreign exchange contracts

829,426

949,076

3,769

5,515

5,542

5,441

– cash flow hedges recognised in OCI

65,101

64,533

1,964

1,939

2,013

907

– not designated as hedging instruments

764,325

884,543

1,805

3,576

3,529

4,534

 

 

 

 

 

 

 

Non-current

 

 

 

 

 

 

Forward foreign exchange contracts

43,043

44,029

279

803

928

678

– cash flow hedges recognised in OCI

43,043

44,029

279

803

928

678

 

 

 

 

 

 

 

Total derivatives

872,469

993,105

4,048

6,318

6,470

6,119

In 2022 and 2021, no ineffectiveness was recognised in the income statement.

15 Tangible assets

in CHF 1,000

Land

Buildings

IT equipment

Leasehold improvement

Furniture and fixtures

Vehicles

Other equipment

Total

 

 

 

 

 

 

 

 

 

On 1 January 2022

3,534

16,255

27,602

5,736

5,556

2,162

916

61,761

Business acquisitions

69

29

50

34

182

Additions

4,504

1,795

1,947

349

125

8,720

Disposals

–478

–5,704

–720

–675

–525

–324

–8,426

Disposal of subsidiaries

–332

–6

–72

–410

Currency translation adjustments

–228

–843

–821

185

–623

–75

–149

–2,554

 

 

 

 

 

 

 

 

 

As of 31 December 2022

3,306

14,934

25,318

7,019

6,183

1,911

602

59,273

 

 

 

 

 

 

 

 

 

Accumulated depreciation

 

 

 

 

 

 

 

 

On 1 January 2022

984

18,094

3,753

3,827

1,526

709

28,893

Additions

373

5,720

974

817

192

113

8,189

Disposals

–334

–5,360

–720

–576

–471

–231

–7,692

Disposal of subsidiaries

–206

–6

–48

–260

Currency translation adjustments

–87

–530

82

–181

–38

–165

–919

 

 

 

 

 

 

 

 

 

As of 31 December 2022

936

17,718

4,083

3,839

1,209

426

28,211

 

 

 

 

 

 

 

 

 

Carrying amount 31 December 2022

3,306

13,998

7,600

2,936

2,344

702

176

31,062

As of 31 December 2022, there were no contractual commitments for the purchase of tangible assets and no impairment was required.

in CHF 1,000

Land

Buildings

IT equipment

Leasehold improvement

Furniture and fixtures

Vehicles

Other equipment

Total

 

 

 

 

 

 

 

 

 

On 1 January 2021

3,748

17,109

20,580

5,197

4,914

2,187

1,316

55,051

Business acquisitions

175

90

218

30

513

Additions

7,384

500

580

724

191

9,378

Disposals

–285

–171

–135

–630

–480

–1,702

Currency translation adjustments

–214

–854

–251

121

–21

–119

–140

–1,479

 

 

 

 

 

 

 

 

 

As of 31 December 2021

3,534

16,255

27,602

5,736

5,556

2,162

916

61,761

 

 

 

 

 

 

 

 

 

Accumulated depreciation

 

 

 

 

 

 

 

 

On 1 January 2021

582

13,840

2,793

3,168

1,703

943

23,029

Additions

413

4,620

983

634

254

281

7,185

Disposals

–237

–157

–14

–428

–375

–1,212

Currency translation adjustments

–11

–129

134

39

–2

–140

–109

 

 

 

 

 

 

 

 

 

As of 31 December 2021

984

18,094

3,753

3,827

1,526

709

28,893

 

 

 

 

 

 

 

 

 

Carrying amount 31 December 2021

3,534

15,271

9,509

1,983

1,729

635

207

32,868

As of 31 December 2021, there were no contractual commitments for the purchase of tangible assets and no impairment was required.

16 Intangible assets

in CHF 1,000

Goodwill

Software, acquired technology and customer relationships

Brand

Internally generated intangibles

Total

 

 

 

 

 

 

On 1 January 2022

435,658

158,261

31,881

69,072

694,872

Business acquisitions

70,617

11,323

81,940

Additions

4,289

34,254

38,543

Disposals

–386

–1,345

–1,731

Disposal of subsidiaries

–18,163

–2,863

–21,026

Currency translation adjustments

–26,299

–5,599

–85

–23

–32,006

 

 

 

 

 

 

As of 31 December 2022

461,813

165,025

31,796

101,958

760,592

 

 

 

 

 

 

Accumulated amortisation

 

 

 

 

 

On 1 January 2022

77,267

217

40,520

118,004

Amortisation

19,069

216

14,845

34,130

Disposals

–310

–1,269

–1,579

Disposal of subsidiaries

–930

–930

Currency translation adjustments

–2,120

–87

–4

–2,211

 

 

 

 

 

 

As of 31 December 2022

92,976

346

54,092

147,414

 

 

 

 

 

 

Carrying amount 31 December 2022

461,813

72,049

31,450

47,866

613,178

in CHF 1,000

Goodwill

Software, acquired technology and customer relationships

Brand

Internally generated intangibles

Total

 

 

 

 

 

 

On 1 January 2021

358,361

156,350

31,962

44,190

590,863

Business acquisitions

93,364

6,825

100,189

Additions

3,970

19,935

23,905

Subsequent purchase price allocation adjustment

–405

–405

Disposals

–1,139

–1,139

Reclassification

–4,947

4,947

Currency translation adjustments

–15,662

–2,798

–81

–18,541

 

 

 

 

 

 

As Of 31 December 2021

435,658

158,261

31,881

69,072

694,872

 

 

 

 

 

 

Accumulated amortisation

 

 

 

 

 

On 1 January 2021

60,239

35

27,928

88,202

Amortisation

19,472

201

11,346

31,019

Disposals

–763

–763

Reclassification

–1,246

1,246

Currency translation adjustments

–435

–19

–454

 

 

 

 

 

 

As of 31 December 2021

77,267

217

40,520

118,004

 

 

 

 

 

 

Carrying amount 31 December 2021

435,658

80,994

31,664

28,552

576,868

Internally generated intangible assets relate mainly to Goatpath, the successor of PyraCloud, a platform helping organisations manage the entire lifecycle of on-premise software and providing insights into options and consumption as workloads shift to the cloud. All functions of PyraCloud have been fully transferred to Goatpath. Technical innovations are capitalised separately in accordance with the component approach if the group expects to obtain a future use from these. The average remaining amortisation period is 2.0 years with a carrying amount of TCHF 16,613 (prior year: TCHF 16,028).

The acquired technology and customer relationships include customer relationships/bases primarily related to the CompuCom acquisition in 2015 and the COMPAREX acquisition in 2019. The purchase price for the customer relationships of CompuCom is fully based on variable payments depending on future revenues generated from those customers over a period of 10 years. On the acquisition date, the purchase price was determined based on the net present value of estimated total payments to be made. These customer relationships are amortised over a period of 10 years. For the customer base of CompuCom, the remaining amortisation period is 2.5 years with a carrying amount of TCHF 7,006 (prior year: TCHF 10,080). For the customer base of COMPAREX, the remaining amortisation period is 6.1 years with a carrying amount of TCHF 32,613 (prior year: TCHF 41,856). During the sale of SoftwareOne Russia, a former COMPAREX subsidiary, a part of the customer base of TCHF 1,933 was disposed, which related to the EMEA segment.

The brand SoftwareOne was acquired in a business combination. It has been determined to have an indefinite useful life as there is no intention to abandon the brand name. As it has existed for many years, the group can maintain its brand for an indefinite period of time. Thus, the brand name is not amortised but is assessed for impairment annually. As the brand does not generate largely independent cash inflows, it is allocated to the group’s CGUs for goodwill impairment testing as part of corporate assets. In addition, the brand InterGrupo was acquired in 2020, which will be amortised over an estimated useful life of three years.

Goodwill and the brand are allocated to four CGU’s as illustrated below:

in CHF 1,000

EMEA

NORAM

LATAM

APAC

Carrying amount

 

 

 

 

 

 

Goodwill

400,426

15,692

36,623

9,072

461,813

Brand

31,277

31,277

 

 

 

 

 

 

As of 31 December 2022

431,703

15,692

36,623

9,072

493,090

in CHF 1,000

EMEA

NORAM

LATAM

APAC

Carrying amount

 

 

 

 

 

 

Goodwill

373,201

15,531

37,105

9,821

435,658

Brand

31,277

31,277

 

 

 

 

 

 

As of 31 December 2021

404,478

15,531

37,105

9,821

466,935

During the sale of SoftwareOne Russia, a part of the goodwill of TCHF 18,163 was disposed, which related to the EMEA segment.

The annual goodwill impairment test for all CGUs is performed as of 30 September by comparing the recoverable amount of each goodwill carrying cash-generating unit with the carrying amount. The recoverable amount for each CGU was determined based on its value in use. Cash flows are calculated based on the expected growth rates in the sales markets concerned. Growth in the operating profit of the cash generating unit is expected up to the end of the detailed planning period of five years. Estimated cash flow for the year after the detailed planning period is based on an annual growth rate.

The discount rates and annual growth rate as per CGU are as follows:

 

2022

2021

 

Pre-tax discount rate

Post-tax discount rate

Annual growth rate

Pre-tax discount rate

Post-tax discount rate

Annual growth rate

 

 

 

 

 

 

 

EMEA

9.8 %

7.8 %

2.0 %

8.2 %

6.6 %

2.0 %

LATAM

16.5 %

15.6 %

3.0 %

16.7 %

12.5 %

3.0 %

APAC

11.2 %

9.0 %

2.4 %

10.9 %

8.6 %

2.4 %

NORAM

10.8 %

8.6 %

2.1 %

9.8 %

7.8 %

2.1 %

The pre-tax discount rate is calculated based on a country-specific weighted risk-free interest rate as well as the market risk premium and borrowing interest rate. Specific peer group information for beta factors and the debt ratio are also considered.

The recoverable amount of CGU LATAM exceeds the carrying amount by CHF 34.8 million (prior year: CHF 55.7 million). A change in the projected annual gross profit growth (CAGR) during the planning period from the current 19.2% to 14.1% (prior year: 18.8% to 11.3%), the gross profit/EBITDA ratio from 14.4% to 11.8% (prior year: 18.2% to 13.5%) or the pre-tax discount rate from 16.5% to 19.8% (prior year: 16.7% to 22.2%) would use up the existing headroom of CGU LATAM.

17 Trade payables, accrued expenses, contract liabilities and other payables

in CHF 1,000

2022

2021

 

 

 

Trade payables

1,915,936

1,848,712

Accrued expenses 1)

94,155

100,793

– thereof financial liabilities 78,370 (prior year: 91,996) 1)

 

 

Contract liabilities

83,313

58,754

Other payables

212,156

233,170

– thereof financial liabilities 24,000 (prior year: 43,359)

 

 

 

 

 

Current trade payables, accrued expenses, contract liabilities and other payables 1)

2,305,560

2,241,429

Other payables

168,888

70,206

– thereof financial liabilities 157,238 (prior year: 58,852)

 

 

 

 

 

Non-current other payables

168,888

70,206

 

 

 

Total trade payables, accrued expenses, contract liabilities and other payables 1)

2,474,448

2,311,635

1) Prior-year figures restated, refer to Note 2 Change in accounting policies.

Contract liabilities include short-term advances received to render services. All contract liabilities as of 1 January 2022 were recognised as revenue in 2022 (TCHF 58,754).

Accrued expenses mainly include employee-related accruals and accruals related to other operating expenses. Current other payables mainly include VAT and other sales tax-related liabilities.

Other non-current payables include TCHF 152,851 non-current trade payables for multi-year contracts (prior year: TCHF 51,648).

18 Provisions

in CHF 1,000

Employment- related

Non-income tax-related

Earn-out- related

Other

Total

 

 

 

 

 

 

Current provisions

2,570

2,516

25,996

2,235

33,317

Non-current provisions

2,765

118

16,311

518

19,712

 

 

 

 

 

 

Total Provision as of 31 December 2022

5,335

2,634

42,307

2,753

53,029

 

 

 

 

 

 

On 1 January 2022

7,035

4,799

28,631

1,622

42,087

Business acquisitions

517

517

Increase

1,167

–513

38,933

1,235

40,822

Used provisions

–723

–19,986

–128

–20,837

Unused amounts released

–2,317

–1,970

–4,587

–430

–9,304

Currency translation adjustments

171

317

–683

–61

–256

 

 

 

 

 

 

As of 31 December 2022

5,333

2,633

42,308

2,755

53,029

Provisions related to employment and non-income taxes are mainly associated with business acquisitions within the scope of IFRS 3. For the acquisition of COMPAREX group in 2019, risks to an amount of TCHF 14,689 have been identified and classified as contingent liabilities. By the end of the year, there are still provisions to an amount of TCHF 3,062 which are related to employment (TCHF 1,467; prior year: TCHF 2,772) and non-income taxes (TCHF 1,595; prior year: TCHF 3,134). Indemnification assets related to the acquisition of COMPAREX group have been reduced to TCHF 49 (prior year: TCHF 4,303). Further risks also exist for the acquisition of Predica, InterGrupo, Intelligence Partner and ITST to a lesser extent. For a significant portion, indemnification assets have been recognised, refer to Note 13 Other receivables and prepaid expenses.

Earn-out-related provisions are associated with contingent consideration arrangements that could result in additional cash payments to the previous owners of the acquired companies. They are presented as provisions if they are contingent on continued employment and thus compensation for services. The amount of the earn-out depends on KPI developments for a contractually defined period and, where appropriate, a multiplier derived from other variables. They are recognised as personnel expenses during the period of service.

The earn-out calculations are based on the following KPIs:

Acquired company

Earn-out relevant KPI

Cash outflow expected in year

 

 

 

B-Lay

EBITDA

2023

BNW

EBITDA

2023

Centiq

Revenue and Gross Profit

2023/ 2024/ 2025/ 2026

Intelligence Partner

EBITDA

2023/ 2024

ITPC

Gross Profit

2023/ 2024

ITST

Gross Profit

2023/ 2024

makeITnoble

Gross Profit

2023/ 2024/ 2025

MassiveR&D

Gross Profit and EBITDA

2023

Optimum

Gross Profit

2023/ 2024

Predica

Chargeability and retention 1)

2023/ 2024/ 2025

RightCloud

EBITDA

2023

Satzmedia

Revenue

2023/ 2024

SE16N

Gross Profit

2023/ 2024

1) Chargeability of delivery resources and retention of key employees

19 Financial liabilities

in CHF 1,000

2022

2021

 

 

 

Current

 

 

Bank overdrafts

5,178

1,170

Contingent consideration liabilities

6,011

1,646

Lease liabilities

14,948

15,939

Other financial liabilities

17,040

47,206

 

 

 

Total current financial liabilities

43,177

65,961

 

 

 

Non-current

 

 

Contingent consideration liabilities

9,019

6,998

Lease liabilities

18,122

22,098

Other financial liabilities

45,234

4,484

 

 

 

Total non-current financial liabilities

72,375

33,580

 

 

 

Total financial liabilities

115,552

99,541

Revolving credit loan

The group has access to a CHF 660 million (prior year: CHF 470 million) multiple currency revolving credit facility. Of this revolving credit facility, no amount was drawn as of 31 December 2022 and 2021.

Contingent consideration liabilities

The most significant contingent consideration liabilities relate to the acquisition of the customer base of CompuCom, the acquisition of Intelligence Partner and Predica. The contingent consideration liability reflects the fair value of the expected payments. These estimates are reviewed at each reporting date and adjusted as necessary. Adjustments are booked in finance income or expenses. Payments for CompuCom are made monthly, for the other acquisitions payments are made on a yearly basis.

For further information, refer to explanation of 'Level 3' financial instruments in Note 4.3 Categories of financial instruments and fair value estimation.

Changes in liabilities arising from financing activities

 

Changes in financial liabilities

in CHF 1,000

1 January 2022

Business acquisitions

Financing cash flows

Foreign exchange movement

Change in fair value

Other

31 December 2022

 

 

 

 

 

 

 

 

Bank overdrafts

1,170

11,981

–7,973

5,178

Contingent consideration liabilities

8,644

937

–2,542

–105

167

7,929

15,030

Lease liabilities

38,037

–16,368

–1,993

13,394

33,070

Other current financial liabilities

47,206

581

–26,083

334

–4,998

17,040

Other non-current financial liabilities

4,484

12

–650

–1,089

42,477

45,234

 

 

 

 

 

 

 

 

Total

99,541

1,530

–33,662

–10,826

167

58,802

115,552

In 2022, SoftwareOne paid back the promissory loan (TCHF 35,658). The group paid the deferred purchase price for the acquisition of Centiq (TCHF 5,013), which is presented in cashflow from investing activities. In addition, SoftwareOne recorded a financial liability related to swap contracts for which the cashflow was classified as cashflow from investing activities (TCHF 42,559).

Further effects in column 'Other' are related to the initial recognition of liabilities for the contingent consideration liability for the acquisition of Predica (TCHF 8,750), additions, disposals and compounding of lease liabilities (TCHF 13,394) and, to a limited extent, accrued interest.

 

Changes in financial liabilities

in CHF 1,000

1 January 2021

Business acquisitions

Financing cash flows

Foreign exchange movement

Change in fair value

Other

31 December 2021

 

 

 

 

 

 

 

 

Bank overdrafts

9,605

–6,699

–1,736

1,170

Contingent consideration liabilities

9,849

–1,895

77

613

8,644

Lease liabilities

41,718

815

–17,522

–1,127

14,153

38,037

Other current financial liabilities

31,723

200

–5,283

–1,370

21,936

47,206

Other non-current financial liabilities

52,731

–10,784

–264

–37,199

4,484

 

 

 

 

 

 

 

 

Total

145,626

1,015

–42,183

–4,420

613

–1,110

99,541

In 2021, SoftwareOne paid the purchase price for the acquisition of the remaining shares of IG Services SAS (TCHF 20,142), which was presented in cashflow from investing activities.

Further effects in column 'Other' were related to additions, disposals and compounding of lease liabilities (TCHF 14,153), the initial recognition of liabilities for the deferred purchase price payments for the acquisition of HeleCloud and Centiq (TCHF 5,283), a reclassification from non-current to current financial liabilities (TCHF 37,096) and, to a limited extent, accrued interest.

In the statement of cash flows the change in financial liabilities is presented on a gross basis.

20 Defined benefit liabilities

Defined benefit plans

The group’s retirement plans include defined benefit pension plans in Switzerland, Belgium, Germany, Austria, India, Mexico, Ecuador, France, Italy, Turkey, Costa Rica, and Indonesia. These plans, excluding those in Switzerland, Belgium, and Germany, are unfunded and all determined by local regulations using independent actuarial valuations according to IAS 19. The group’s major defined benefit plan in Switzerland accounts for 81.6% (prior year: 83.4%) of the group’s present value of funded and unfunded obligations.

Pension plans in Switzerland

The current pension arrangement for employees in Switzerland is made through a plan governed by the Swiss Federal Occupational Old Age, Survivors and Disability Pension Act (BVG). The plan of SoftwareOne’s Swiss company is administered by a separate legal foundation, which is funded by regular employer and employee contributions defined in the pension fund rules. The Swiss pension plan contains a cash balance benefit which is in essence contribution-based with certain minimum guarantees. Due to these minimum guarantees, the Swiss plan is treated as a defined benefit plan under IFRS. The plan is invested in a diversified range of assets in accordance with the investment strategy and the common criteria of an asset and liability management. A potential underfunding may be remedied by various measures such as increasing employer and employee contributions or reducing future benefits.

As of 31 December 2022, 346 employees (prior year: 252 employees) and no retiree (prior year: no retiree) are insured under the Swiss plan. The defined benefit obligation has a duration of 15 years (prior year: 19 years).

Based on the independent actuarial valuation for the Swiss plan as of 31 December 2022, the present value of funded obligations decreased by TCHF 15,945 due to an increase in discount rate from 0.3% to 2.0%.

Amounts recognised in the balance sheet:

in CHF 1,000

Swiss plan

Other plans

2022

2021

 

 

 

 

 

Present value of funded obligations

52,316

6,463

58,779

76,826

Fair value of plan assets

–52,074

–5,368

–57,442

–68,535

Present value of unfunded obligations

5,343

5,343

5,070

 

 

 

 

 

Total defined benefit liabilities

242

6,438

6,680

13,361

Reconciliation of the present value of the defined benefit obligation (DBO):

in CHF 1,000

Swiss plan

Other plans

2022

2021

 

 

 

 

 

On 1 January

68,261

13,635

81,896

72,380

Business acquisitions

1,668

Service costs

4,110

1,367

5,477

5,803

Employee contribution

2,251

2,251

3,093

Interest cost

210

264

474

266

Actuarial losses/(gains)

–15,089

–1,992

–17,081

–3,187

Benefits paid/transferred

–6,917

–771

–7,688

2,449

Other

–510

–510

Currency translation adjustments

–697

–697

–576

 

 

 

 

 

As of 31 December

52,316

11,806

64,122

81,896

Reconciliation of fair value of plan assets:

in CHF 1,000

Swiss plan

Other plans

2022

2021

 

 

 

 

 

On 1 January

61,733

6,802

68,535

50,677

Business acquisitions

1,188

Interest income

195

140

335

178

Return on plan assets (excluding interest income)

–6,550

–1,670

–8,220

8,196

Employer contributions

2,251

512

2,763

2,515

Employee contributions

2,251

2,251

3,093

Benefits paid/transferred

–6,917

–94

–7,011

3,003

Other

–889

–889

Currency translation adjustments

–322

–322

–315

 

 

 

 

 

As of 31 December

52,074

5,368

57,442

68,535

Pension costs:

in CHF 1,000

Swiss plan

Other plans

2022

2021

 

 

 

 

 

Current service cost

4,110

1,367

5,477

5,645

Interest cost on defined benefit obligation

210

264

474

266

Interest on plan assets

–195

–140

–335

–178

 

 

 

 

 

Total defined benefit cost recognised in income statement

4,125

1,491

5,616

5,733

Thereof finance expense

15

124

139

88

Thereof personnel expense

4,110

1,367

5,477

5,645

 

 

 

 

 

Actuarial (gain)/loss arising from demographic assumptions

–136

–136

–1,985

Actuarial (gain)/loss arising from changes in financial assumptions

–11,955

–2,020

–13,975

–1,725

Actuarial (gain)/loss arising from experience

–3,134

164

–2,970

523

Return on plan assets excluding interest income

6,550

1,670

8,220

–8,196

 

 

 

 

 

Total remeasurements cost recognised in OCI

–8,539

–322

–8,861

–11,383

 

 

 

 

 

Total defined benefit cost

–4,414

1,169

–3,245

–5,650

Split of plan assets in %:

 

Swiss plan

Other plans

2022

2021

 

 

 

 

 

Cash and cash equivalents

1.8 %

1.6 %

0.5 %

Equity instruments

36.3 %

32.9 %

29.8 %

Debt instruments

39.7 %

36.0 %

36.6 %

Real estate

20.1 %

18.2 %

16.8 %

Other

2.1 %

100.0 %

11.3 %

16.3 %

 

 

 

 

 

Total

100.0 %

100.0 %

100.0 %

100.0 %

The actual return on plan assets amounted to TCHF –7,885 (prior year: TCHF 8,374).

Significant actuarial assumptions:

 

Swiss plan

Other plans

2022

2021

 

 

 

 

 

Discount rate

2.0 %

3.3 %

2.2 %

0.6 %

Salary growth rate

1.0 %

3.8 %

1.5 %

1.2 %

Pension liability – Sensitivity analysis for Swiss plans:

Change in assumption

Change in DBO 2022

Change in DBO 2021

 

 

 

 

Discount rate

+/– 0.25bps

–/+ 4.2 %

–/+ 4.9 %

Salary growth rate

+/– 0.25bps

+/– 0.7 %

+/– 0.9 %

The above sensitivity analyses are based on a change in one assumption while holding all other assumptions constant. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions, the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the pension liability recognised within the balance sheet.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.

Expected employer contributions to post-employment benefit plans for the period ended 31 December 2022 amounted to TCHF 2,177 (prior year: TCHF 2,560).

The group also operates defined contribution plans for its employees under which the relevant contributions are expensed as they occur. The aggregate cost of these plans in 2022 amounted to TCHF 9,529 (prior year: TCHF 8,409).

21 Leases

Group as a lessee

The group leases various offices, cars, and IT equipment under non-cancellable lease agreements. The lease terms are between three months and 10 years, and most lease agreements are renewable at market rate at the end of the lease period.

Set out below are the carrying amounts of right-of-use assets recognised and the movements during the period:

in CHF 1,000

Buildings

Vehicles

Other equipment

Total

 

 

 

 

 

On 1 January 2022

45,965

20,560

1,630

68,156

Additions

12,192

4,791

125

17,108

Disposals

–11,668

–4,544

–1,565

–17,777

Currency translation adjustments

–2,352

–1,186

–52

–3,590

 

 

 

 

 

As of 31 December 2022

44,137

19,621

138

63,897

 

 

 

 

 

Accumulated depreciation

 

 

 

 

On 1 January 2022

20,142

9,898

1,249

31,289

Additions

10,280

5,581

373

16,234

Disposals

–8,056

–4,204

–1,564

–13,824

Currency translation adjustments

–1,168

–583

–38

–1,789

 

 

 

 

 

As of 31 December 2022

21,198

10,692

20

31,910

 

 

 

 

 

Carrying amount 31 December 2022

22,939

8,929

119

31,987

in CHF 1,000

Buildings

Vehicles

Other equipment

Total

 

 

 

 

 

On 1 January 2021

43,975

18,815

1,707

64,497

Business acquisitions

815

815

Additions

9,067

6,494

15,561

Disposals

–7,006

–3,582

–10,588

Currency translation adjustments

–885

–1,167

–77

–2,129

 

 

 

 

 

As of 31 December 2021

45,965

20,560

1,630

68,156

 

 

 

 

 

Accumulated depreciation

 

 

 

 

On 1 January 2021

14,965

7,994

832

23,791

Additions

10,780

5,884

474

17,137

Disposals

–5,217

–3,414

–8,631

Currency translation adjustments

–386

–565

–57

–1,008

 

 

 

 

 

As of 31 December 2021

20,142

9,898

1,249

31,289

 

 

 

 

 

Carrying amount 31 December 2021

25,823

10,662

382

36,867

Set out below are the carrying amounts of lease liabilities (included under interest bearing loans and borrowings) and the movements during the period:

in CHF 1,000

2022

2021

 

 

 

On 1 January

38,037

41,718

Business acquisitions

815

Additions

17,070

15,467

Disposals

–4,177

–1,952

Accretion of interest

501

638

Payments

–16,368

–17,522

Currency translation adjustments

–1,993

–1,127

 

 

 

As of 31 December

33,070

38,037

The following are the amounts recognised in the income statement:

in CHF 1,000

2022

2021

 

 

 

Depreciation expenses on right-of-use assets

–16,234

–17,137

Interest expenses on lease liabilities

–501

–638

Expenses relating to short-term leases (included in other operating expenses)

–2,342

–817

Income from subleasing of right-of-use assets

409

878

 

 

 

Total

–18,668

–17,714

In 2022, the group had total cash outflows for leases of TCHF 18,710 (prior year: TCHF 18,339).

22 Share capital and treasury shares

Number of shares

Carrying amount in CHF 1,000

 

 

 

On 1 January 2021

158,581,460

1,586

Increase/(Decrease)

 

 

 

As of 31 December 2021

158,581,460

1,586

Increase/(Decrease)

 

 

 

As of 31 December 2022

158,581,460

1,586

The nominal value of the company’s shares amounted to CHF 0.01 as of 31 December 2022. All shares issued by the company are fully paid.

Treasury shares

Number of shares

Carrying amount in CHF 1,000

 

 

 

On 1 January 2021

4,016,801

10,650

Distribution to employee share plans

–264,490

–1,283

Distribution to members of the Board of Directors

–27,846

–150

 

 

 

As of 31 December 2021

3,724,465

9,217

Distribution to employee share plans

–162,609

–878

Distribution to members of the Board of Directors

–45,025

–243

 

 

 

As of 31 December 2022

3,516,831

8,096

23 Earnings per share (EPS)

Basic EPS is calculated by dividing the profit for the period attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period.

Diluted EPS is calculated by dividing the profit attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.

in CHF 1,000

2022

2021

 

 

 

(Loss)/Profit for the period attributable to owners of the parent 1)

–58,278

117,631

1) Prior-year figures restated, refer to Note 2 Change in accounting policies.

Number of shares

2022

2021

 

 

 

Weighted average number of ordinary shares

154,956,708

154,711,618

Adjustment for share-based payment plans

N/A

399,550

Weighted average number of shares used to calculate diluted earnings per share

154,956,708

155,111,168

 

 

 

Basic earnings per share in CHF 1)

–0.38

0.76

 

 

 

Diluted earnings per share in CHF 1)

–0.38

0.76

1) Prior-year figures restated, refer to Note 2 Change in accounting policies.

SoftwareOne has share-based payment plans which would increase the weighted average number of shares used to calculate diluted earnings per share by 370,394. However, due to the loss for the period in 2022, these are considered as anti-dilutive.

24 Dividends

The dividends paid in 2022 were TCHF 51,109 or CHF 0.33 per share (prior year: TCHF 46,396 or CHF 0.30 per share). A dividend in respect of the period ended 31 December 2022 of CHF 0.35 per share (excluding treasury shares), amounting to a total dividend of TCHF 55,504, is to be proposed at the Annual General Meeting on 4 May 2023. These financial statements do not reflect this proposed dividend. Dividends are paid out of the capital contribution reserve of SoftwareONE Holding AG.

25 Share-based payments

In 2022, SoftwareOne granted new awards under the Long-term Incentive Plan (‘LTIP22’). In addition, arrangements that were launched in prior years, the Share-based Payment Plan, and the Long-term Incentive Plan (‘LTIP21’ and ‘LTIP20’) still exist. The Management Equity Plan (‘MEP’) and the Free Share Grant expired in the second half of the year. The objective of the programmes is to support a business policy that is primarily oriented towards the interests of the shareholders by creating long-term increase in value through greater client focus, employee satisfaction as well as enhanced passion, loyalty, and retention of employees. Furthermore, the remuneration of the Board of Directors is partially paid out in shares.

SoftwareOne recognised total share-based payment expenses of TCHF 12,507 in 2022 (prior year: TCHF 17,060). The following table discloses how the expenses are allocated to the existing share-based payment arrangements:

2022

 

 

 

 

 

 

 

in CHF 1,000

Share-based Payment Plan

Management Equity Plan (MEP)

Free Share Grant

Employee Share Purchase Plan (ESPP)

Long-term Incentive Plan (LTIP)

Board of Directors fees paid in shares

Total

Programme granted in

2015

2019

2020

2020

2020/2021/2022

2022

 

Expenses recognised in income statement

–23

–3,349

–920

–641

–6,978

–596

–12,507

Thereof expenses related to key management

–2,253

–2,693

–596

–5,542

2021

 

 

 

 

 

 

 

in CHF 1,000

Share-based Payment Plan

Management Equity Plan (MEP)

Free Share Grant

Employee Share Purchase Plan (ESPP)

Long-term Incentive Plan (LTIP)

Board of Directors fees paid in shares

Total

Programme granted in

2015

2019

2020

2020

2020/2021

2021

 

Expenses recognised in income statement

–61

–9,079

–3,258

–510

–3,524

–628

–17,060

Thereof expenses related to key management

–1

–8,000

–1,566

–628

–10,195

SoftwareOne has recognised an increase in equity in the balance sheet of TCHF 12,131 for share-based payment (prior year: TCHF 17,256). The difference in share-based payments recorded in the consolidated income statement compared to the re