Annual Report 2023

SoftwareOne Holding AG’s consolidated financial statements are prepared in accordance with the IFRS Accounting Standards 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 2023, the following amendments to IFRS Accounting Standards entered into force:

• IAS 1: Presentation of Financial Statements: Disclosure of Accounting Policies
• IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates
• IAS 12: Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction
• IAS 12: Income Taxes: International Tax Reform — Pillar Two Model Rules

Due to changes in accounting policies in IAS 1 SoftwareOne only discloses accounting policy information of transactions, other events or conditions which have a material impact on the consolidated financial statements.

Application of mandatory exception to recognising and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes. Pillar Two legislation has been enacted or substantively enacted in certain jurisdictions where the group operates. The legislation will be effective for the group’s financial year beginning 1 January 2024. SoftwareOne is in scope of the enacted or substantively enacted legislation and has performed an assessment of the group’s potential exposure to Pillar Two income taxes. The assessment of the potential exposure to Pillar Two income taxes is based on the most recent tax filings, country-by-country reporting and financial statements for the constituent entities in the group. Based on the assessment, the Pillar Two effective tax rates in most of the jurisdictions in which the group operates are above 15%. However, there are a limited number of jurisdictions where the transitional safe harbour relief does not apply and the Pillar Two effective tax rate is close to 15%. SoftwareOne does not expect a material exposure to Pillar Two income taxes in those jurisdictions.

All other mentioned amendments did not have a material 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 Accounting Standards 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:

• Amendment to IAS 1: Classification of liabilities with covenants as current or non-current — adoption by 1 January 2024
• Amendments to IAS 7 and IFRS 7: Disclosure requirements about supplier finance arrangements — adoption by 1 January 2024
• Amendment to IAS 21: The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability — adoption by 1 January 2025

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

Correction of errors

In 2022, SoftwareOne finalised the assessment of the impact of the agenda decision of the IFRS Interpretations Committee (IFRS IC) on 'Principal versus Agent: Software Reseller (IFRS 15)' and retrospectively applied the related changes in accounting policies. In 2023, the group identified a further type of service contracts in Software & Cloud Services which should have been accounted for as agent on a net basis. For the comparative period, the correction of this error resulted in a reduction of revenue from Software & Cloud Services of TCHF 28,276 and a reduction of third-party service delivery costs of TCHF 28,276. 

The result of the error correction within the consolidated income statement for the comparative period is shown in the following table:

Foreign currency translation

The following exchange rates were used:

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.

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.

Acquisitions in 2023

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

Acquisition of Beniva

On 5 July 2023, SoftwareOne acquired 100% of Beniva Consulting Group Inc, Canada, and 100% of Beniva International Ltd, US (together ‘Beniva’). Beniva is a leading provider in ServiceNow, Configuration Management Database, IT and Operations Management, Cloud Advisory and Application Services. The acquisition adds deep process automation and service management specialisation to SoftwareOne’s existing market-leading IT Asset Management (ITAM) services.

The earn-out amount is related to a continuing employment of the selling shareholder, other key employees and the achievement of revenue goals. It will be recognised as a personnel expense over a period of three years and thus not part of the purchase price.

The goodwill recognised is primarily attributed to the workforce and the expected growth of the ITAM business by combining the activities of Beniva with those of the group. The goodwill is not deductible for income tax purposes. Transaction costs of TCHF 665 are related to this acquisition.

Other acquisitions

On 25 May 2023, SoftwareOne acquired the remaining 80% of AppScore Technology Ltd, UK, following its initial investment of 20% in 2021. The purchase price paid for the acquisition of AppScore relates mainly to their intellectual property. No significant goodwill resulted from the purchase price allocation.

On 21 December 2023, SoftwareOne acquired 100% of Novis Euforia SA, Spain, a SAP and cloud services company specialised in migrating and converting SAP environments to SAP S/4HANA and the cloud. The acquisition further expands SoftwareOne’s SAP practice. The purchase price paid for the acquisition of Novis Euforia 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 1,019,305 and net profit for the period would have been TCHF 21,759.

Purchase considerations and goodwill

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

The cash flow on acquisitions

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 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.

In addition, there are 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:

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. Also refer to Note 18 Financial liabilities. Using these instruments, the group is exposed to interest rate risks. Currently, the mitigation possibilities are reviewed.

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. For a part of these listed equity instruments, the group entered into a total return swap agreement in 2022, in which it sold 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 +/– 4,373 (prior year: TCHF +/– 5,841).

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. 36% of trade receivables are covered through credit insurance (prior year: 39%).

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): 53% (prior year: 42%)
• Too small to be insured: 1% (prior year: 1%)
• No insurance available: 10% (prior year: 18%)

Refer to Note 11 Trade receivables for information about the credit risk exposure on the group’s trade receivables and contract assets using a provision matrix.

Liquidity risk

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:

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. In December 2023, SWO exercised the first extension option. The tenor of the facility was extended from 31 December 2025 to 31 December 2026. The facility contains one remaining extension option (which can be exercised with consent of the lending banks in December 2024), which could extend the maturity of the credit facility by another year to December 2027. Interest is 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 2023, CHF 70 million of the credit facility has been drawn (prior year: CHF 0 million). The facility is available until maturity date with interest periods ranging from one week to six months. 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 but remains exposed to changes in the market value of these shares. As a result, the group did not derecognise the financial asset and recorded a financial liability for the receipts from swap contracts. 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. As of 31 December 2023, the market price of the underlying asset has fallen below the agreed threshold. Thus, SoftwareOne recorded a cash outflow of TCHF 10,447 which is set off against the financial liability and classified as investing cashflow. The financial liability for the receipts from swap contracts amounted to TCHF 27,050 at the end of the reporting period (prior year: TCHF 41,938). The total return swap had a negative market value (prior year: positive market value).

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

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

As of 31 December 2023, the group had total committed and uncommitted credit lines (including factoring) of CHF 1,149 million (prior year: CHF 1,098 million) available, of which 25% (prior year: 24%) was drawn. From the drawn amount, CHF 70 million were covered by financial covenants and fulfilled as of 31 December 2023 (prior year: CHF 0 million).

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 above-mentioned 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 2023, this goal was achieved through the positive operating results of the group.

The equity ratio for the period ended 31 December 2023 and the prior year were as follows:

The equity ratio for 2023 decreased compared to the previous year, which is due to an increase of total assets and a reduction in equity as a result of dividends paid and repurchases of treasury shares under share buyback programme which were only partly compensated by the net income for the period.

4.3 Categories of financial instruments and fair value estimation

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 for purposes of subsequent measurement.

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

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.

SoftwareOne has listed equity instruments presented as short-term financial assets which are subsequently measured at fair value through profit or loss. 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 finance income and finance costs.

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).

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:

For investments in listed equity instruments the group recognised a fair value loss of TCHF 9,244 in finance expenses in 2023 (prior year: TCHF 71,328).

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:

There have been no transfers between the different hierarchy levels in 2023 and 2022.

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

The most significant contingent consideration liability relates to the acquisition of the customer base of Predica acquired in 2022.

Predica (fair value as of 31 December 2023: TCHF 4,347; prior year: TCHF 8,750): The contingent consideration liability of Predica depends on certain KPIs of the year 2023 to 2024 and the retention of three key employees. An early termination of one key employee resulted in a fair value gain of TCHF 1,300. An amount of TCHF 2,708 was paid in 2023. The remaining contingent consideration is capped at a maximum of TCHF 4,347. A partial amount of TCHF 3,338 is exclusively related to the retention of the two remaining key employees. The calculation for the performance year 2024 is primarily based on chargeability of delivery resources and new customers and amounts to a maximum of TCHF 1,404.

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.

Receivables subject to factoring arrangements are 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.

The amount of the receivables sold as of 31 December 2023 is TCHF 192,671 (prior year: TCHF 197,477). The amount is fully derecognised from the balance sheet. 

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, 15 and 18)

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.

Goodwill (Note 15)

The recoverable amount of cash-generating units is measured on the basis of value-in-use calculations and as such is significantly impacted by the projected free cashflows, the discount rate, future tax rate and the revenue growth rate, which are subject to management judgement. Actual cash flows as well as other input parameters could vary significantly from these estimates.

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 it is transferred to the end customer and therefore acts as an agent in these arrangements. Revenue is recognised at the point in time when the license agreement is signed by all parties involved and the software manufacturer accepted the deal and the terms and conditions. If licenses are purchased via a distributor, SoftwareOne transfers the license key directly to the end customer. Thus, revenue is recognised at the point in time when the access to the software license is transferred. 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 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 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 software which is only used to provide software asset management solutions. The related revenue is recognised net under revenue from Software & Cloud Services.

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 2023 and 2022 are not material.

Breakdown of revenue

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 27 Segment reporting.

Revenue is broken down as follows:

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

In 2023, one-time costs for restructuring of TCHF 28,349 were recognised in personnel expenses.

Other operating expenses of 2023 were impacted by one-time advisory costs of TCHF 32,582 for the strategic review and the operational excellence programme.

Other finance income includes TCHF 2,822 income from significant finance components (prior year: TCHF 3,904).

Other finance expenses include a fair value loss of TCHF 9,244 from the valuation of equity instruments (prior year: TCHF 71,328) and TCHF 5,111 factoring expenses (prior year: TCHF 4,488).

The foreign exchange differences, net result 2023 excludes unrealised gains on derivatives designated as instruments to hedge foreign currency risks in the amount of TCHF 1,941 (prior year: TCHF 128) recognised in OCI and to be reclassified to the income statement in future periods. In 2023, foreign exchange losses of TCHF 2,177 (prior year: TCHF 1,784) have been reclassified to profit and loss, refer to Note 13 Derivative financial instruments.

Tax expenses comprise the following positions:

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:

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. These results vary in different jurisdictions. The weighted average expected tax rate was 29.9% (prior year: -119.3%).

The group has not recognised deferred tax assets of TCHF 3,080 (prior year: TCHF 2,024) in respect of losses for the period ended 31 December 2023 of TCHF 14,257 (prior year: TCHF 9,043).

Other effects in 2023 are mainly related to withholding taxes on intercompany transactions and additional local taxes as in prior year.

Deferred income tax

Deferred tax income of TCHF 554 (prior year: deferred tax expenses of TCHF 1,048) is recorded in other comprehensive income on actuarial losses on defined benefit liabilities and on hedge accounting.

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

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 13,566 (prior year: TCHF 33,515).

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

Deferred tax assets of TCHF 10,709 (prior year: TCHF 9,876) were recorded in respect of available tax loss carry forwards of TCHF 39,666 (prior year: TCHF 37,061).

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

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

For trade receivables the group applies a simplified approach in calculating an allowance for expected credit losses (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 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.

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.

At each reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.

The aging of the receivables and the related lifetime ECLs for the year 2023 and 2022 are as follows:

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

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

Indemnification assets are related to acquisitions of prior periods. The underlying risks that have been classified as contingent liabilities are recorded as provisions.

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.

Other non-current receivables include TCHF 190,145 non-current trade receivables for multi-year contracts (prior year: TCHF 171,475).

In 2023 and 2022, no ineffectiveness was recognised in the income statement.

Tangible assets are stated at historical cost less depreciation and impairments. 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

As of 31 December 2023 and 2022, there were no contractual commitments for the purchase of tangible assets and no impairment was required.

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