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 18 March 2024 and are subject to approval by the Annual General Meeting to be held on 18 April 2024.

2 Material accounting policy information

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:

in CHF 1,000

2022 reported

Adjustment

2022 adjusted

 

 

 

 

Revenue from Software & Cloud Marketplace

538,396

 

538,396

Revenue from Software & Cloud Services

465,711

–28,276

437,435

 

 

 

 

Total revenue

1,004,107

–28,276

975,831

Third-party service delivery costs

–71,512

28,276

–43,236

 

 

 

 

Earnings before net financial items, taxes, depreciation and amortisation

136,914

136,914

 

 

 

 

Earnings before net financial items and taxes

78,360

78,360

 

 

 

 

Earnings before income tax

–14,040

–14,040

 

 

 

 

Loss for the period

–58,334

–58,334

Foreign currency translation

The following exchange rates were used:

 

 

2023

2022

Currency (CHF 1 =)

Code

Ø-rate

Closing rate

Ø-rate

Closing rate

 

 

 

 

 

 

Euro

EUR

1.03

1.08

1.00

1.02

US dollar

USD

1.11

1.19

1.05

1.08

British pound

GBP

0.90

0.94

0.85

0.90

Swedish krone

SEK

11.80

11.87

10.56

11.34

Norwegian krone

NOK

11.74

12.12

10.04

10.73

3 Change in the scope of consolidation

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:

in CHF 1,000

Beniva

Others

Total

 

 

 

 

Cash and cash equivalents

938

450

1,388

Trade receivables

1,951

1,184

3,135

Other current assets

53

684

737

Tangible assets

17

20

37

Intangible assets (excluding goodwill)

3,450

2,841

6,291

Other non-current assets

5

5

 

 

 

 

Total assets

6,409

5,184

11,593

 

 

 

 

Trade payables

562

265

827

Accrued expenses and contract liabilities

296

443

739

Other current liabilities

704

1,075

1,779

Financial liabilities

36

36

Deferred tax liabilities

931

931

 

 

 

 

Net assets acquired at fair value

3,916

3,365

7,281

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:

in CHF 1,000

Beniva

Others

Total

 

 

 

 

Cash paid

18,506

5,134

23,640

Carrying amount of previously held equity interest in associates

1,004

1,004

Fair value remeasurement of previously held equity interest in associates

–445

–445

Deferred payment

1,297

1,297

 

 

 

 

Total purchase consideration

18,506

6,990

25,496

Less net assets acquired at fair value

3,916

3,365

7,281

 

 

 

 

Goodwill

14,590

3,625

18,215

The cash flow on acquisitions

in CHF 1,000

Beniva

Others

Total

 

 

 

 

Cash consideration

–18,506

–5,134

–23,640

Net cash acquired

938

450

1,388

Cash consideration for current period acquisitions

–17,568

–4,684

–22,252

Cash consideration for prior period acquisitions

–3,837

–3,837

 

 

 

 

Net outflow of cash – investing activities

–17,568

–8,521

–26,089

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 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:

 

 

2023

2022

Impact in TCHF

Sensitivity

Earnings before income tax

Equity

Earnings before income tax

Equity

 

 

 

 

 

 

 

 

 

 

EUR

+/– 5 %

+/–

476

+/–

1,452

+/–

799

+/–

614

USD

+/– 5 %

+/–

268

+/–

30

+/–

439

+/–

1,364

GBP

+/– 5 %

+/–

296

+/–

647

+/–

320

+/–

20

SEK

+/– 5 %

+/–

100

+/–

482

+/–

112

+/–

219

NOK

+/– 5 %

+/–

289

+/–

1,628

+/–

84

+/–

95

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:

 

 

 

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 2023

 

 

 

 

 

 

Trade payables

2,290,475

2,290,475

2,075,376

215,099

Other payables

190,993

190,993

6,402

9,517

175,074

Accrued expenses

39,157

39,157

18,316

20,841

Financial liabilities (excluding lease liabilities)

132,265

107,430

95,786

4,669

6,975

Lease liabilities

32,747

35,215

3,000

11,103

18,884

2,228

 

 

 

 

 

 

 

Total

2,685,637

2,663,270

2,198,880

261,229

200,933

2,228

 

 

 

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 1)

25,236

25,236

18,302

6,934

Financial liabilities (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

2,237,962

2,201,914

1,762,049

248,392

186,762

4,711

1) Reduction of accrued expenses (TCHF 53,134), refer to Note 16.

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:

 

 

 

Cashflows

in CHF 1,000

Carrying amount

Total cashflow

Less than 3 months

Between 3 months and 1 year

Between 1 and 5 years

 

 

 

 

 

 

As of 31 December 2023

 

 

 

 

 

Derivative assets with gross settlement

3,407

 

 

 

 

– Cash outflow

 

245,459

223,621

9,657

12,181

– Cash inflow

 

248,972

226,209

10,022

12,741

Derivative liabilities with gross settlement

13,453

 

 

 

 

– Cash outflow

 

654,336

574,527

39,890

39,919

– Cash inflow

 

642,353

563,828

38,744

39,781

 

 

 

Cashflows

in CHF 1,000

Carrying amount

Total cashflow

Less than 3 months

Between 3 months and 1 year

Between 1 and 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

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:

in CHF 1,000

2023

2022

 

 

 

Total equity

640,112

738,996

Total assets

3,783,891

3,449,077

 

 

 

Equity ratio

16.9 %

21.4 %

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:

As of 31 December 2023

 

 

 

 

in CHF 1,000

IFRS 9 category

Carrying amount

Fair value

Fair value level

 

 

 

 

 

FINANCIAL ASSETS

 

 

 

 

Cash and cash equivalents

Amortised cost

267,389

n/a*

 

Trade receivables

Amortised cost

2,317,187

n/a*

 

Other receivables

Amortised cost

224,533

n/a*

 

Derivative financial instruments

Fair value through profit or loss

2,537

 

Level 2

Derivative financial instruments

Designated as cash flow hedge

870

 

Level 2

Financial assets - listed equity instrument

Fair value through profit or loss

43,732

 

Level 1

Financial assets - loans

Amortised cost

125

n/a*

 

 

 

 

 

 

Total financial assets

 

2,856,373

 

 

 

 

 

 

 

FINANCIAL LIABILITIES

 

 

 

 

Trade payables

Financial liabilities at amortised cost

2,290,475

n/a*

 

Other payables

Financial liabilities at amortised cost

190,993

n/a*

 

Accrued expenses

Financial liabilities at amortised cost

39,157

n/a*

 

Contingent consideration liabilities

Fair value through profit or loss

7,342

 

Level 3

Financial liabilities

Financial liabilities at amortised cost

97,873

n/a*

 

Financial liabilities

Fair value through profit or loss

27,050

 

Level 2

Derivative financial instruments

Fair value through profit or loss

10,281

 

Level 2

Derivative financial instruments

Designated as cash flow hedge

3,172

 

Level 2

Lease liabilities

n/a

32,747

 

 

 

 

 

 

 

Total financial liabilities

 

2,699,090

 

 

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

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).

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 1)

Financial liabilities at amortised cost

25,236

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

 

2,244,280

 

 

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

1) Reduction of accrued expenses (TCHF 53,134), refer to Note 16.

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 2023

As of 31 December 2022

in CHF 1,000

Level 1

Level 2

Level 3

Total

Level 1

Level 2

Level 3

Total

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Financial assets

43,732

43,732

58,415

58,415

Derivative financial instruments

3,407

3,407

4,048

4,048

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

Contingent consideration liabilities

7,342

7,342

15,030

15,030

Financial liabilities

27,050

27,050

41,938

41,938

Derivative financial instruments

13,453

13,453

6,318

6,318

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:

in CHF 1,000

2023

2022

 

 

 

On 1 January

15,030

8,644

Business acquisitions

937

Additions

8,993

Settlement in cash

–6,522

–3,606

Fair value adjustment

–895

167

Currency translation adjustments

–271

–105

 

 

 

As of 31 December

7,342

15,030

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. 

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, 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.

6 Revenue

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:

2023

 

 

 

 

 

in CHF 1,000

EMEA

NORAM

LATAM

APAC

Total

 

 

 

 

 

 

Revenue from Software & Cloud Marketplace

368,976

64,754

33,764

82,283

549,777

Revenue from Software & Cloud Services

260,353

76,513

61,600

63,046

461,512

 

 

 

 

 

 

Total revenue

629,329

141,267

95,364

145,330

1,011,289

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 1)

235,086

76,222

65,082

61,045

437,435

 

 

 

 

 

 

Total revenue 1)

596,084

153,446

99,696

126,605

975,831

1) Prior-year figures restated, refer to Note 2 Correction of errors.

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

in CHF 1,000

2023

2022

 

 

 

Revenue from Software & Cloud Marketplace

 

 

– indirect business

405,173

438,409

– direct business

144,604

99,987

 

 

 

Total revenue from Software & Cloud Marketplace

549,777

538,396

graphic

7 Personnel expenses

in CHF 1,000

2023

2022

 

 

 

Salaries fixed

–415,354

–375,906

Salaries variable

–82,241

–115,088

Social security costs

–78,801

–75,401

Earn-out expenses (Note 17)

–14,760

–34,319

Pension costs – defined benefit plans (Note 19)

–5,497

–5,477

Pension costs – defined contribution plans

–10,647

–9,529

Share-based payment expense (Note 24)

–6,650

–12,507

Other personnel expenses

–30,695

–27,661

 

 

 

Total personnel expenses

–644,645

–655,888

 

 

 

Average head count (FTE)

9,268

8,948

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

graphic

8 Other operating expenses

in CHF 1,000

2023

2022

 

 

 

Travel and car expenses

–28,934

–24,336

Administrative expenses

–72,001

–49,408

Maintenance and utility expenses

–7,569

–8,831

Information technology expenses

–26,679

–18,460

Telecommunication expenses

–3,128

–3,725

Marketing expenses

–11,702

–9,336

Bad debt expenses

–11,185

–10,594

Other expenses

–19,249

–14,785

Loss on disposal of subsidiaries

–29,682

 

 

 

Total other operating expenses

–180,447

–169,157

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.

9 Finance result

in CHF 1,000

2023

2022

 

 

 

Interest income

3,362

1,600

Other finance income

3,623

4,157

Change in fair value of contingent consideration liability

1,483

 

 

 

Finance income

8,468

5,757

Interest expense

–10,983

–4,829

Other finance expenses

–19,952

–83,047

Change in fair value of contingent consideration liability

–588

–167

Losses from fair value remeasurement of previously held equity interest

–445

Finance expenses

–31,968

–88,043

 

 

 

Foreign exchange differences, net

–9,773

–9,933

 

 

 

Total finance result

–33,273

–92,219

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.

10 Income taxes

Tax expenses comprise the following positions:

in CHF 1,000

2023

2022

 

 

 

Current income taxes

–42,665

–48,433

Change in deferred taxes

1,646

4,139

 

 

 

Total tax expense

–41,019

–44,294

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

2023

2022

 

 

 

Earnings before income tax (EBT)

62,462

–14,040

Expected average group tax rate

29.9 %

–119.3 %

 

 

 

Tax at expected average rate

–18,658

–16,752

+/– Effect of

 

 

Expenses not deductible for tax purposes

–21,337

–22,174

Income not subject to tax

1,075

1,986

Utilisation of previously unrecognised tax losses

1,397

1,188

Impairment of previously recognised tax losses

–269

–4,756

Capitalisation of tax losses previously not recognised

2,144

1,023

Unrecognised current year's tax losses

–3,079

–2,024

Current income tax charges/credits related to prior periods

–941

–1,202

Impact from tax rate changes

–846

118

Other effects

–505

–1,701

 

 

 

Total tax expense

–41,019

–44,294

 

 

 

Effective tax rate

65.7 %

–315.5 %

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.

 

2023

2022

in CHF 1,000

Deferred tax assets

Deferred tax liabilities

Deferred tax assets

Deferred tax liabilities

 

 

 

 

 

Trade receivables

4,716

8,400

4,270

7,413

Other current assets

905

2,146

1,052

759

Tangible, intangible and right-of-use assets

4,129

24,815

4,504

27,518

Other non-current assets

729

230

262

223

Accrued expenses, prepaid income and contract assets

4,712

2,437

5,514

905

Other current liabilities

11,454

2,425

9,215

565

Defined benefit liabilities

1,104

6

805

Other non-current liabilities

7,097

1,015

7,050

376

Deferred taxes from losses carried forward

10,709

9,876

 

 

 

 

 

Total

45,555

41,474

42,548

37,759

Offsetting of balances

–20,476

–20,476

–14,073

–14,073

 

 

 

 

 

Total

25,079

20,998

28,475

23,686

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:

in CHF 1,000

2023

2022

 

 

 

On 1 January

87,490

125,018

Disposal of subsidiaries

–824

Tax losses arising in current year

21,093

13,585

Tax losses utilised against current year profits

–14,772

–15,781

Expired tax losses during the period

–2,676

–3,015

Other movements

4,172

–27,481

Currency translation adjustments

–5,975

–4,012

 

 

 

As of 31 December

89,332

87,490

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:

in CHF 1,000

2023

2022

 

 

 

Expiry within 12 months

923

1,818

Expiry in 2–3 years

9,213

9,258

Expiry in 4–5 years

21,071

9,648

Expiry in more than 5 years

6,721

8,925

No expiry date

11,737

20,780

 

 

 

Total not recognised tax losses

49,665

50,429

11 Trade receivables

in CHF 1,000

2023

2022

 

 

 

Trade receivables

2,343,507

1,963,504

Less provision for impairment of trade receivables

–26,320

–18,535

 

 

 

Total trade receivables, net

2,317,187

1,944,969

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:

2023

 

 

 

in CHF 1,000

Expected credit loss rate

Estimated total gross carrying amount at default

Expected credit loss

 

 

 

 

Not past due

–0.1 %

1,939,721

–1,351

Past due since 1–90 days

–0.3 %

294,933

–853

Past due since 91–180 days

–4.3 %

56,614

–2,435

Past due since 181–360 days

–24.1 %

24,802

–5,967

Past due since more than 360 days

–57.3 %

27,437

–15,714

 

 

 

 

Total trade receivables, gross

–1.1 %

2,343,507

–26,320

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

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

in CHF 1,000

2023

2022

 

 

 

On 1 January

–18,535

–13,303

Disposal of subsidiaries

3,247

Allowance recognised

–18,183

–17,041

Receivables written off during the year as uncollectible

2,338

1,372

Unused amounts reversed

6,645

6,650

Currency translation adjustments

1,415

540

 

 

 

As of 31 December

–26,320

–18,535

12 Other receivables, prepaid expenses and contract assets

in CHF 1,000

2023

2022

 

 

 

Other receivables

90,117

74,547

– thereof financial assets: 24,003 (prior year: 8,777)

 

 

Indemnification assets

2,027

2,091

Prepaid expenses

27,405

37,409

Contract assets

90,289

88,217

 

 

 

Current other receivables, prepaid expenses and contract assets

209,838

202,264

Other receivables

207,093

191,244

– thereof financial assets: 200,530 (prior year: 182,171)

 

 

Indemnification assets

529

518

 

 

 

Non-current other receivables

207,622

191,762

 

 

 

Total other receivables, prepaid expenses and contract assets

417,460

394,026

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).

13 Derivative financial instruments

 

2023

2022

2023

2022

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

888,386

829,426

3,006

12,457

3,769

5,515

– cash flow hedges recognised in OCI

66,671

65,101

469

2,176

1,964

1,939

– not designated as hedging instruments

821,715

764,325

2,537

10,281

1,805

3,576

 

 

 

 

 

 

 

Non-current

 

 

 

 

 

 

Forward foreign exchange contracts

52,751

43,043

401

996

279

803

– cash flow hedges recognised in OCI

52,751

43,043

401

996

279

803

 

 

 

 

 

 

 

Total derivatives

941,137

872,469

3,407

13,453

4,048

6,318

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

14 Tangible assets

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

in CHF 1,000

Land

Buildings

IT equipment

Leasehold improvement

Furniture and fixtures

Vehicles

Other equipment

Total

 

 

 

 

 

 

 

 

 

Historical cost

 

 

 

 

 

 

 

 

On 1 January 2023

3,306

14,934

25,318

7,019

6,183

1,911

602

59,273

Business acquisitions

17

20

37

Additions

3,486

1,140

754

224

246

5,850

Disposals

–2,770

–806

–551

–304

–319

–4,750

Reclassification to intangible assets 1)

–6,690

–6,690

Currency translation adjustments

178

993

–1,125

–340

–390

–153

–73

–910

 

 

 

 

 

 

 

 

 

As of 31 December 2023

3,484

15,927

18,236

7,013

5,996

1,698

456

52,810

 

 

 

 

 

 

 

 

 

Accumulated depreciation

 

 

 

 

 

 

 

 

On 1 January 2023

936

17,718

4,083

3,839

1,209

426

28,211

Additions

376

3,886

914

698

220

232

6,326

Disposals

–2,716

–751

–478

–304

–244

–4,493

Reclassification to intangible assets 1)

–4,561

–4,561

Currency translation adjustments

310

–823

–205

–170

–66

–71

–1,025

 

 

 

 

 

 

 

 

 

As of 31 December 2023

1,622

13,504

4,041

3,889

1,059

343

24,458

 

 

 

 

 

 

 

 

 

Carrying amount 31 December 2023

3,484

14,305

4,732

2,972

2,107

639

113

28,352

1) Correction of acquired software for one single entity which was presented in tangible assets in prior year.

As of 31 December 2023 and 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

 

 

 

 

 

 

 

 

 

Historical cost

 

 

 

 

 

 

 

 

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

15 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

in CHF 1,000

Goodwill

Software, acquired technology and customer relationships

Brand

Internally generated intangibles

Total

 

 

 

 

 

 

Historical cost

 

 

 

 

 

On 1 January 2023

461,813

165,025

31,796

101,958

760,592

Business acquisitions

18,215

6,291

24,506

Additions

3,643

47,729

51,372

Reclassification from tangible assets 1)

6,690

6,690

Currency translation adjustments

–17,000

–7,896

67

–36

–24,865

 

 

 

 

 

 

As of 31 December 2023

463,028

173,753

31,863

149,651

818,295

 

 

 

 

 

 

Accumulated amortisation

 

 

 

 

 

On 1 January 2023

92,976

346

54,092

147,414

Amortisation

19,250

171

23,278

42,699

Reclassification from tangible assets 1)

4,561

4,561

Currency translation adjustments

–5,890

53

–37

–5,874

 

 

 

 

 

 

As of 31 December 2023

110,897

570

77,333

188,800

 

 

 

 

 

 

Carrying amount 31 December 2023

463,028

62,856

31,293

72,318

629,495

1) Correction of acquired software for one single entity which was presented in tangible assets in prior year.

in CHF 1,000

Goodwill

Software, acquired technology and customer relationships

Brand

Internally generated intangibles

Total

 

 

 

 

 

 

Historical cost

 

 

 

 

 

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

Internally generated intangible assets relate mainly to SoftwareOne Marketplace Platform, a platform that offers clients a single digital entry point to access and manage their products, services and interactions with SoftwareOne. It combines investments made into Goatpath, and existing capabilities of PyraCloud, into a single unified portal. 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 1.7 years with a carrying amount of TCHF 19,399 (prior year: TCHF 16,613).

The acquired technology and customer relationships include customer relationships/bases primarily related to the COMPAREX acquisition in 2019. For the customer base of COMPAREX, the remaining amortisation period is 5.1 years with a carrying amount of TCHF 25,841 (prior year: TCHF 32,613). 

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.

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

in CHF 1,000

EMEA

NORAM

LATAM

APAC

Carrying amount

 

 

 

 

 

 

Goodwill

388,288

27,895

38,555

8,290

463,028

Brand

31,277

31,277

 

 

 

 

 

 

As of 31 December 2023

419,565

27,895

38,555

8,290

494,305

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

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 using also third-party market data. 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. Related assumptions are made considering macroeconomic trends and historical information adjusted for current developments. The annual goodwill impairment test for all CGUs is performed as of 30 September.

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

 

2023

2022

 

Pre-tax discount rate

Post-tax discount rate

Annual growth rate

Pre-tax discount rate

Post-tax discount rate

Annual growth rate

 

 

 

 

 

 

 

EMEA

10.5 %

8.4 %

1.9 %

9.8 %

7.8 %

2.0 %

LATAM

17.0 %

15.5 % / 11.9 % 1)

3.0 %

16.5 %

15.6 % / 11.1 % 1)

3.0 %

APAC

11.4 %

9.3 %

2.4 %

11.2 %

9.0 %

2.4 %

NORAM

11.9 %

9.6 %

2.1 %

10.8 %

8.6 %

2.1 %

1) Post-tax discount rate: 15.5 % (prior year: 15.6 %) for the detailed planning period and 11.9 % (prior year: 11.1 %) for the terminal value.

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.

In order to adequately reflect current interest rates and the long-term inflation forecast, two different discount rates are used for CGU LATAM. For the detailed planning period, the discount rate is based on an average 3-month risk-free interest rate. For the terminal value, the discount rate is calculated taking into account the expected long-term inflation rate plus the spread between the yield on a 10-year bond and a national inflation index.

The recoverable amount of CGU LATAM exceeds the carrying amount by CHF 62.6 million (prior year: CHF 34.8 million) at the end of the reporting period. A change in the projected annual revenue growth (CAGR) during the planning period from the current 14.3% to 5.9% (prior year annual gross profit growth: 19.2% to 14.1%), the revenue/EBITDA ratio from 20.5% to 19.2% (prior year gross profit/EBITDA ratio: 14.4% to 11.8%) or the pre-tax discount rate from 17.0% to 23.0% (prior year: 16.5% to 19.8%) would use up the existing headroom of CGU LATAM.

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

in CHF 1,000

2023

2022

 

 

 

Trade payables

2,290,475

1,915,936

Accrued expenses

101,332

94,155

– thereof financial liabilities 39,157 (prior year: 25.236) 1

 

 

Contract liabilities

80,302

83,313

Other payables

215,849

212,156

– thereof financial liabilities 15,919 (prior year: 24,000)

 

 

 

 

 

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

2,687,958

2,305,560

Other payables

178,646

168,888

– thereof financial liabilities 175,074 (prior year: 157,238)

 

 

 

 

 

Non-current other payables

178,646

168,888

 

 

 

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

2,866,604

2,474,448

1) Thereof financial liabilities 2022 adjusted for accrued expenses in relation with IAS 19 (reduction of TCHF 53,134).

Accrued expenses mainly include obligations to employees not paid at the reporting date, such as bonuses, holiday entitlements or compensations, and accruals related to other operating expenses. Current other payables mainly include VAT and other sales tax-related liabilities.

Contract liabilities include short-term advances received to render services. All contract liabilities as of 1 January 2023 were recognised as revenue in 2023 (TCHF 83,313).

Other non-current payables include TCHF 175,074 non-current trade payables for multi-year contracts (prior year: TCHF 152,851).

17 Provisions

in CHF 1,000

Employment- related

Non-income tax-related

Earn-out- related

Other

Total

 

 

 

 

 

 

Current provisions

9,956

4,085

18,604

1,359

34,004

Non-current provisions

1,688

12,339

545

14,572

 

 

 

 

 

 

Total Provision as of 31 December 2023

11,644

4,085

30,943

1,904

48,576

 

 

 

 

 

 

On 1 January 2023

5,333

2,633

42,308

2,755

53,029

Increase

8,492

3,047

16,058

1,057

28,654

Used provisions

–169

–26,385

–1,774

–28,328

Unused amounts released

–2,090

–1,578

–489

–90

–4,247

Currency translation adjustments

78

–17

–549

–44

–532

 

 

 

 

 

 

As of 31 December 2023

11,644

4,085

30,943

1,904

48,576

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

 

 

 

AppScore

Revenue

2024/ 2025/ 2026/ 2027

Beniva

Revenue

2024/ 2025/ 2026

Centiq

Contribution Margin

2024/ 2025/ 2026

Intelligence Partner

EBITDA

2024

InterGrupo

Revenue and EBITDA

2024

ITPC

Contribution Margin

2024/ 2025/ 2026

ITST

Contribution Margin

2024/ 2025/ 2026

makeITnoble

Gross Profit

2024/ 2025

Predica

Chargeability of delivery resources

2024/ 2025

Satzmedia

Revenue

2024

SE16N

Contribution Margin

2024/ 2025/ 2026

18 Financial liabilities

in CHF 1,000

2023

2022

 

 

 

Current

 

 

Bank overdrafts

375

5,178

Contingent consideration liabilities

5,302

6,011

Lease liabilities

13,411

14,948

Other financial liabilities

121,173

17,040

 

 

 

Total current financial liabilities

140,261

43,177

 

 

 

Non-current

 

 

Contingent consideration liabilities

2,040

9,019

Lease liabilities

19,336

18,122

Other financial liabilities

3,375

45,234

 

 

 

Total non-current financial liabilities

24,751

72,375

 

 

 

Total financial liabilities

165,012

115,552

Revolving credit loan

The group has access to a CHF 660 million (prior year: CHF 660 million) multiple currency revolving credit facility. Of this revolving credit facility, CHF 70 million was drawn as of 31 December 2023 (prior year: CHF 0 million).

Contingent consideration liabilities

The most significant contingent consideration liability relates to the acquisition of 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.

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 2023

Business acquisitions

Financing cash flows

Foreign exchange movement

Change in fair value

Other

31 December 2023

 

 

 

 

 

 

 

 

Bank overdrafts

5,178

–4,549

–254

375

Contingent consideration liabilities

15,030

–2,921

–272

–895

–3,600

7,342

Lease liabilities

33,070

–17,024

–2,002

18,703

32,747

Other current financial liabilities

17,040

36

84,202

–7,987

27,882

121,173

Other non-current financial liabilities

45,234

–403

–3,127

–38,329

3,375

 

 

 

 

 

 

 

 

Total

115,552

36

59,305

–13,642

–895

4,656

165,012

In 2023, the group paid contingent consideration liabilities for the acquisition of Predica (TCHF 2,709) and Intelligence Partner (TCHF 1,128), which is presented in cashflow from investing activities. In addition, SoftwareOne partially repaid receipts from swap contracts in an amount of TCHF 10,447 which is set off against the financial liability, which was initially recorded in 2022 and reclassed from non-current to current financial liabilities in 2023 (TCHF 38,441). The related cashflow was classified as cashflow from investing activities, for further explanations refer to section 4.1 Financial Risk Factors on Liquidity Risk. Further effects in column 'Other' are related to additions, disposals and compounding of lease liabilities (TCHF 18,703) and, to a limited extent, accrued interest.

 

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 was 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' were 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.

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

19 Defined benefit liabilities

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

Defined benefit plans

The liability recognised in the balance sheet in respect of defined benefit 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.

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 84.2% (prior year: 81.6%) 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 Accounting Standards. 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 2023, 345 employees (prior year: 346 employees) and no retiree (prior year: no retiree) are insured under the Swiss plan. The defined benefit obligation has a duration of 17 years (prior year: 15 years).

Amounts recognised in the balance sheet:

in CHF 1,000

Swiss plan

Other plans

2023

2022

 

 

 

 

 

Present value of funded obligations

57,800

5,423

63,223

58,779

Fair value of plan assets

–54,626

–4,460

–59,086

–57,442

Present value of unfunded obligations

5,430

5,430

5,343

 

 

 

 

 

Total defined benefit liabilities

3,174

6,393

9,567

6,680

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

in CHF 1,000

Swiss plan

Other plans

2023

2022

 

 

 

 

 

On 1 January

52,316

11,806

64,122

81,896

Service costs

4,129

1,368

5,497

5,477

Employee contribution

2,620

2,620

2,251

Interest cost

1,024

434

1,458

474

Actuarial losses/(gains)

2,343

–464

1,879

–17,081

Benefits paid/transferred

–4,632

–1,535

–6,167

–7,688

Other

–510

Currency translation adjustments

–756

–756

–697

 

 

 

 

 

As of 31 December

57,800

10,853

68,653

64,122

Reconciliation of fair value of plan assets:

in CHF 1,000

Swiss plan

Other plans

2023

2022

 

 

 

 

 

On 1 January

52,074

5,368

57,442

68,535

Interest income

1,040

150

1,190

335

Return on plan assets (excluding interest income)

904

–196

708

–8,220

Employer contributions

2,620

498

3,118

2,763

Employee contributions

2,620

2,620

2,251

Benefits paid/transferred

–4,632

–1,095

–5,727

–7,011

Other

–889

Currency translation adjustments

–265

–265

–322

 

 

 

 

 

As of 31 December

54,626

4,460

59,086

57,442

Pension costs:

in CHF 1,000

Swiss plan

Other plans

2023

2022

 

 

 

 

 

Current service cost

4,129

1,368

5,497

5,477

Interest cost on defined benefit obligation

1,024

434

1,458

474

Interest on plan assets

–1,040

–150

–1,190

–335

 

 

 

 

 

Total defined benefit cost recognised in income statement

4,113

1,652

5,765

5,616

Thereof finance expense

–16

284

268

139

Thereof personnel expense

4,129

1,368

5,497

5,477

 

 

 

 

 

Actuarial (gain)/loss arising from demographic assumptions

–325

–325

–136

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

2,569

–274

2,295

–13,975

Actuarial (gain)/loss arising from experience

–226

135

–91

–2,970

Return on plan assets excluding interest income

–904

196

–708

8,220

 

 

 

 

 

Total remeasurements cost recognised in OCI

1,439

–268

1,171

–8,861

 

 

 

 

 

Total defined benefit cost

5,552

1,384

6,936

–3,245

Split of plan assets in %:

 

Swiss plan

Other plans

2023

2022

 

 

 

 

 

Cash and cash equivalents

0.9 %

0.8 %

1.6 %

Equity instruments

36.8 %

34.0 %

32.9 %

Debt instruments

40.8 %

37.7 %

36.0 %

Real estate

19.6 %

18.1 %

18.2 %

Other

1.9 %

100.0 %

9.4 %

11.3 %

 

 

 

 

 

Total

100.0 %

100.0 %

100.0 %

100.0 %

The actual return on plan assets amounted to TCHF 1,898 (prior year: TCHF –7,885).

Significant actuarial assumptions:

 

Swiss plan

Other plans

2023

2022

 

 

 

 

 

Discount rate

1.5 %

4.3 %

1.9 %

2.2 %

Salary growth rate

1.0 %

4.2 %

1.5 %

1.5 %

Pension liability – Sensitivity analysis for Swiss plans:

Change in assumption

Change in DBO 2023

Change in DBO 2022

 

 

 

 

Discount rate

+/– 0.25bps

–/+ 4.3 %

–/+ 4.2 %

Salary growth rate

+/– 0.25bps

+/– 0.8 %

+/– 0.7 %

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.

Defined contribution plans

Contributions are recognised as employee benefit expenses when they are due. Prepaid contributions are recognised as an asset.

Expected employer contributions to post-employment benefit plans for the period ended 31 December 2023 amounted to TCHF 2,650 (prior year: TCHF 2,177).

20 Leases

Group as a lessee

The group leases various offices, cars, and IT equipment under non-cancellable lease agreements. Most lease agreements are renewable at market rate at the end of the lease period. 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

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 TCHF 5). 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.

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

 

 

 

 

 

Historical cost

 

 

 

 

On 1 January 2023

44,137

19,621

138

63,897

Additions

12,372

4,929

1,758

19,059

Disposals

–4,808

–5,332

–12

–10,152

Currency translation adjustments

–2,866

–1,169

82

–3,953

 

 

 

 

 

As of 31 December 2023

48,835

18,049

1,966

68,851

 

 

 

 

 

Accumulated depreciation

 

 

 

 

On 1 January 2023

21,198

10,692

20

31,910

Additions

10,111

5,110

645

15,866

Disposals

–4,294

–5,092

–12

–9,398

Impairment 1)

1,052

1,052

Currency translation adjustments

–1,407

–641

26

–2,022

 

 

 

 

 

As of 31 December 2023

26,660

10,069

679

37,408

 

 

 

 

 

Carrying amount 31 December 2023

22,175

7,980

1,287

31,443

1) Related to non-cancellable lease contracts for the closing of offices within segment EMEA.  

in CHF 1,000

Buildings

Vehicles

Other equipment

Total

 

 

 

 

 

Historical cost

 

 

 

 

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

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

2023

2022

 

 

 

On 1 January

33,070

38,037

Additions

18,577

17,070

Disposals

–827

–4,177

Accretion of interest

953

501

Payments

–17,024

–16,368

Currency translation adjustments

–2,002

–1,993

 

 

 

As of 31 December

32,747

33,070

The following are the amounts recognised in the income statement:

in CHF 1,000

2023

2022

 

 

 

Depreciation expenses on right-of-use assets (including impairment)

–16,918

–16,234

Interest expenses on lease liabilities

–953

–501

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

–1,056

–2,342

Income from subleasing of right-of-use assets

327

409

Income from operating lease contracts

783

 

 

 

Total

–17,817

–18,668

In 2023, the group had total cash outflows for leases including expenses relating to short-term leases of TCHF 18,080 (prior year: TCHF 18,710).

21 Share capital and treasury shares

Share capital

The nominal value of the company’s shares amounted to CHF 0.01 and is divided into 158,581,460 registered shares with a carrying amount of TCHF 1,586 as of 31 December 2023 and 2022. All shares issued by the company are fully paid.

Treasury shares

Number of shares

Carrying amount in CHF 1,000

 

 

 

On 1 January 2022

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

Distribution to employee share plans

–379,087

–2,046

Distribution to members of the Board of Directors

–39,052

–211

Sale of treasury shares

–126,541

–683

Repurchases under share buyback programme 1)

1,490,016

25,749

 

 

 

As of 31 December 2023

4,462,167

30,905

1) In 2023, SoftwareOne had a cash outflow of TCHF 25,337 for repurchases of treasury shares under share buyback.

In May 2023, SoftwareOne had introduced a share buyback programme. The programme has a volume of up to CHF 70 million, started on 22 May 2023, and shall be concluded by May 2026, at the latest. The shares are repurchased for the purpose of a capital reduction, subject to approval by future Annual General Shareholders’ Meetings.

graphic

22 Earnings per share (EPS)

in CHF 1,000

2023

2022

 

 

 

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

21,417

–58,278

Number of shares

2023

2022

 

 

 

Weighted average number of ordinary shares

154,966,202

154,956,708

Adjustment for share-based payment plans

632,697

n/a

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

155,598,899

154,956,708

 

 

 

Basic earnings per share in CHF

0.14

–0.38

 

 

 

Diluted earnings per share in CHF

0.14

–0.38

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

graphic

23 Dividends

The dividends paid in 2023 were TCHF 54,315 or CHF 0.35 per share (prior year: TCHF 51,109 or CHF 0.33 per share). A dividend in respect of the period ended 31 December 2023 of CHF 0.36 per share (excluding treasury shares), amounting to a total dividend of TCHF 57,089, is to be proposed at the Annual General Meeting on 18 April 2024. These financial statements do not reflect this proposed dividend. Dividends are paid out of the capital contribution reserve of SoftwareOne Holding AG.

24 Share-based payments

In 2023, SoftwareOne granted new awards under the Long-term Incentive Plan (‘LTIP23’). In addition, arrangements that were launched in previous years, the Employee Share Purchase Plan and the Long-term Incentive Plan (‘LTIP21’and ‘LTIP22’) still exist.

SoftwareOne recognised total share-based payment expenses of TCHF 6,650 in 2023 (prior year: TCHF 12,507). The following table discloses how the expenses are allocated to the existing share-based payment arrangements:

2023

 

 

 

 

 

 

 

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

2021/2022/ 2023

2023

 

Expenses recognised in income statement

expired

expired

expired

–478

–5,597

–575

–6,650

Thereof expenses related to key management

–1,800

–575

–2,375

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

SoftwareOne has recognised an increase in equity in the balance sheet of TCHF 6,208 for share-based payment (prior year: TCHF 12,131). The difference in share-based payments recorded in the consolidated income statement compared to the related expenses recognised in equity is due to foreign exchange gains of TCHF 442 (prior year: TCHF 376).

Employee Share Purchase Plan

The programme allows eligible SoftwareOne employees to participate in a sponsored ESPP granted in 2020. Participants are able to make periodic contributions to acquire investment shares at the respective market price over a purchase period, which will generally be one year. At the end of the purchase period, participants receive free matching shares based on the number of investment shares bought during the purchase period and held until the end of the purchase period. For every four investment shares acquired, SoftwareOne grants each employee one matching share free of charge. The matching shares granted represent an equity-settled share-based payment and are recognised over a service period ending 12 months after the purchase period. The programme is ongoing.

Long-term Incentive Plan

The LTIP grants the Executive Board, the Executive Leadership Team and selected key employees so-called performance share unit ('PSU') subscription rights. In 2023, SoftwareOne granted new awards under this plan (‘LTIP23’).

The number of PSUs granted is determined by dividing the individual LTIP grant on the grant date by the fair value of one PSU, rounding up to the next whole PSU. Each PSU subscription right securitises a right to receive shares depending on the development of the underlying vesting factor. The vesting factor depends 40% on a revenue growth, 40% EBITDA margin and 20% on relative total shareholder return ('rTSR'). In all variables, the target factor is 1.0, while the minimum factor is 0.0 and the maximum factor is 2.0. The revenue growth vesting factor depends on SoftwareOne’s average revenue growth over three years. The EBITDA margin vesting factor depends on SoftwareOne’s average EBITDA margin over three years. Both are determined on a straight-line basis between the target ranges. The relative rTSR vesting factor depends on the TSR of the company and the TSR of the STOXX® Global 1800 Industry Technology Index. A relative TSR of <= –33% leads to a vesting factor of 0 and a TSR >= 33% to a vesting factor of 2.0. The relative rTSR vesting factor distributes linearly between the target ranges. The award cycle (service period) is three years from the contractual grant date.

The LTIP is valued using a Monte Carlo simulation. SoftwareOne has taken the following parameters into account in the valuation:

 

LTIP23

LTIP22

LTIP21

 

PSU 2023

PSU 2022

PSU 2021

Valuation date

17 May 2023

19 May 2022

4 June 2021

Remaining term (in years)

3

3

3

SWON share price on the valuation date

CHF 13.08

CHF 13.48

CHF 21.55

Price STOXX 1800 Technology Index on the valuation date

USD 2,232.22

USD 1,888.91

USD 2,175.31

Volatility SWON

33.27 %

38.21 %

38.71 %

Volatility STOXX 1800 Technology Index

25.03 %

24.21 %

23.31 %

Correlation

36.77 %

34.13 %

34.92 %

Risk-free interest rate SWON

0.87 %

–0.02 %

–0.69 %

Risk-free interest rate STOXX 1800 Technology Index

3.88 %

2.69 %

0.32 %

Expected dividend yield

3.21 %

2.74 %

1.39 %

Exercise price

CHF 0.00

CHF 0.00

CHF 0.00

Gross profit vesting measure

1

1

1

Number of PSUs granted

1,287,714

760,282

363,031

Fair value per PSU

CHF 11.41

CHF 12.89

CHF 21.91

The term of the PSUs granted in 2023 started on 17 May 2023 (valuation date) and ends on 16 May 2026 (the vesting period). The term of the PSUs granted in 2022 started on 19 May 2022 and ends on 18 May 2025. The term of the PSUs granted in 2021 started on 4 June 2021 and ends on 3 June 2024. An average expected fluctuation of 0% p.a. for the Executive Board, 5.0% p.a. for the Executive Leadership Team including the regional leaders and 15% p.a. for the other beneficiaries has been applied as of 31 December 2023 based on historical fluctuation and management estimates.

Remuneration of Board of Directors partially paid in shares

The Board of Director's fees are settled 60% in cash and 40% in SoftwareOne shares. The share part of the compensation is granted immediately after the Annual General Meeting and the election or re-election of the members of the Board of Directors. For the share-based compensation, the Swiss franc amount is converted into shares at the closing price of the ex-date, the first date after the Annual General Meeting the shares are traded ex dividend (for 2023: 5 May 2023). The shares vest until the next Annual General Meeting and afterwards are subject to transfer restrictions of three years.

On 17 May 2023, the granted amount of TCHF 571 was converted into 39,052 shares (CHF 14.62 per share). In the prior year, the granted amount of TCHF 580 was converted into 45,025 shares (CHF 12.88 per share).

25 Contingencies

As an internationally operating group, SoftwareOne is exposed to contingencies in respect of legal and tax claims in the ordinary course of business. It is not anticipated that any material liabilities will arise from the contingent liabilities.

In 2016, the Federal Revenue Office in São José dos Campos (‘DRF/SJC’) issued an infraction notice against SoftwareOne Brazil for the fiscal year 2012, levying alleged debts related to sales tax contributions (‘PIS/COFINS’), charging the difference between the non-cumulative system (9.25%) and the cumulative system (3.65%). The value in dispute of the infraction notice was BRL 9.1 million (CHF 1.6 million) excluding penalty and interest. As expected, in July 2017, the administrative appeal against this infraction notice was rejected. Thus, SoftwareOne Brazil has filed a further appeal before the Administrative Tax Appeal Court (‘CARF’), which was decided unfavourably at CARF level in October 2021, and SoftwareOne was notified to file the appeal. After the notification of the CARF decision, the company filed a motion of clarification against this decision in October 2022. In December 2023, this motion of clarification was denied and SoftwareOne was notified to present a special appeal against the second level decision which was filed in 12 February 2024. SoftwareOne is currently awaiting the judgment of the special appeal. In 2020, The Federal Revenue Office issued a further infraction notice against SoftwareOne Brazil for the fiscal year 2017 for the same subject mentioned above. The value in dispute of the infraction notice was BRL 19.9 million (CHF 3.5 million) excluding penalties and interest. Thus, SoftwareOne Brazil filed a further appeal before CARF against this infraction notice, which was rejected in July 2021. SoftwareOne submitted an action for annulment at court level in November 2021 secured by a litigation bond. Nevertheless, SoftwareOne Brazil and SoftwareOne group are still of the opinion that the cumulative system was and continues to be correctly applied in line with industry standards and are defending their position for both fiscal years 2012 and 2017 with the support of third-party lawyers. Although the probability of the outcome of the dispute cannot be reliably predicted at this stage, SoftwareOne does not expect any cash outflow for the litigations at the reporting date.

In 2019, the National Tax Administration Superintendence (‘SUNAT’) in Lima issued an Infraction Notice against SoftwareOne Peru for the fiscal year 2016, levying alleged debts related to withholding taxes (‘Impuesto a la Renta de no Domiciliados’ – IRND), charging the not contributed withholding taxes related to Software Assurance for payments made abroad. The value in dispute of the Infraction Notice was PEN 5.4 million (CHF 1.2 million) excluding penalty and interest. According to Resolution 042-2014-SUNAT/5D0000 from 2014, licenses purchased abroad are not subject to withholding taxes, whereas services are subject to withholding tax contribution. In June 2020, the administrative appeal (2nd SUNAT instance) against this infraction notice was rejected. Nevertheless, SoftwareOne Peru and the group are still of the opinion that the non-contribution of withholding taxes was and continues to be correctly applied as Software Assurance is defined as licensing and not services in line with the industry standard and is defending its position with the support of third-party lawyers. SoftwareOne Peru therefore filed a further appeal before the administrative tax court (‘Tribunal Fiscal’), the last administrative instance, in July 2020, which ruled in favour of SoftwareOne Peru in January 2021. SUNAT took the right to appeal the decision before the civil court in May 2021. Although the probability of the outcome of the dispute cannot be reliably predicted at this stage, SoftwareOne does not expect any cash outflow for the litigation at the reporting date.

Related to an ongoing tax audit SoftwareOne is potentially exposed to a liability claim for which SoftwareOne is jointly liable for an amount up to a maximum of CHF 4.0 million. The potential liability still needs to be properly assessed building on the outcome of the tax audit. In addition, SoftwareOne’s final obligation will depend on the share of the tax liability borne by the original debtors. Based on the current assessment SoftwareOne expects most of the potential claim to be settled by the original debtors.

27 Segment reporting

For management purposes, SoftwareOne is organised by geographical areas. The following regional clusters are the group’s operating segments:

  • EMEA (Europe, including Mauritius and South Africa);
  • NORAM (USA, Canada);
  • LATAM (Latin America);
  • APAC (Asia Pacific, including Dubai and Qatar).

No operating segments have been aggregated to reportable segments.

The CEO is the Chief Operating Decision Maker (CODM). He assesses each of the reported segments separately for the purpose of evaluating performance and allocating resources. Total revenue, contribution margin and EBITDA are the key performance indicators used for internal management and monitoring purposes of the group and are reported as segment results. The group allocates revenue and expenses to regions based on the customer’s headquarter domicile since the region is responsible for the global client relationship. There are no intersegment revenues. Different average exchange rates are used in management reporting than for group consolidation purposes.

The segment reporting presents a breakdown of total revenue, directly attributable delivery costs, and indirectly attributable other operating costs such as sales and marketing costs as well as general and admin costs. The group’s financing (including finance income and finance costs) and income taxes are managed on a group basis and are not allocated to the operating segments.

The segment totals are reconciled to the figures reported in the consolidated income statement (column 'Total') as follows:

The column 'Group' includes the group cost centres and shared services costs. The column 'FX & Consolidation' eliminates the effect of using differing average foreign exchange rates in the segment reporting and consolidation effects. The column 'Other' includes other reconciling items that are not allocated to the segments and group internal reporting. They consist of costs affecting comparability in operating expenses such as integration expenses, M&A and earn-out expenses, restructuring expenses for the operational excellence programme and the MTWO business, one-time expenses for the strategic review and an adjustment for the upfront recognition of multi-year licensing contracts in which the end customer has the right to change the software reseller during the contract term. Additionally, the column 'Other' includes an adjustment for differences in accounting policies of IFRS 16 that are not reflected in the segments, an allocation of internal delivery costs to transition from the internal to the external reporting structure and, to a limited extent minor reconciliation items.

In 2023, the group made a change in presentation for bad debts provisions to align the internal and external reporting structure. In the prior year, bad debt provisions were presented in total revenue in internal reporting but in operating expenses in the consolidated income statement. The comparative period was restated.

Segment disclosure 2023

in CHF 1,000

EMEA

NORAM

LATAM

APAC

Total segments

Group

FX & Consoli- dation

Other incl. allocation of delivery costs

Total

 

 

 

 

 

 

 

 

 

 

Total revenue

609,786

149,120

99,692

144,317

1,002,915

5,275

1,428

1,671

1,011,289

Delivery costs

–201,492

–46,582

–49,406

–49,447

–346,927

14

–28

346,941

n/a

 

 

 

 

 

 

 

 

 

 

Contribution margin 1)

408,294

102,538

50,286

94,870

655,988

5,289

1,400

348,612

n/a

Other operating costs

–176,655

–55,946

–42,156

–45,666

–320,423

–108,599

–1,031

–419,512

–849,565

 

 

 

 

 

 

 

 

 

 

EBITDA 2)

231,639

46,592

8,130

49,204

335,565

–103,310

369

–70,900

161,724

1) Total revenue net of third-party service delivery costs and directly attributable internal delivery costs.

2) EBITDA from additional business lines view reconciled to earnings before net financial items, taxes, depreciation and amortisation.

The most relevant reconciliation items in the column ‘Other’ were related to one-time costs and accounting related adjustments:

in CHF 1,000

Integration, M&A and earn-out expenses

Restruc- turing expenses

One-time expenses strategic review

Restruc- turing MTWO business

IFRS 15 upfront revenue recognition

IFRS 16 leases

Allocation of delivery costs

Remaining

Total Other

 

 

 

 

 

 

 

 

 

 

Total revenue

236

1,435

1,671

Delivery costs

347,612

–671

346,941

 

 

 

 

 

 

 

 

 

 

Contribution margin 1)

236

347,612

764

348,612

Other operating costs

–23,051

–39,333

–15,874

–5,724

–10

17,024

–347,612

–4,932

–419,512

 

 

 

 

 

 

 

 

 

 

EBITDA 2)

–23,051

–39,333

–15,874

–5,724

226

17,024

–4,168

–70,900

1) Total revenue net of third-party service delivery costs and directly attributable internal delivery costs.

2) EBITDA from additional business lines view reconciled to earnings before net financial items, taxes, depreciation and amortisation.

Segment disclosure 2022

in CHF 1,000

EMEA

NORAM

LATAM

APAC

Total segments

Group

FX & Consoli- dation

Other incl. allocation of delivery costs

Total

 

 

 

 

 

 

 

 

 

 

Total revenue 1)

590,174

159,034

104,757

126,424

980,389

4,491

–2,181

–6,868

975,831

Delivery costs 1)

–202,063

–47,557

–51,570

–41,805

–342,995

–6,451

3,171

346,275

n/a

 

 

 

 

 

 

 

 

 

 

Contribution margin 2)

388,111

111,477

53,187

84,619

637,394

–1,960

990

339,407

n/a

Other operating costs

–174,840

–54,802

–35,602

–43,712

–308,956

–97,229

–537

–432,195

–838,917

 

 

 

 

 

 

 

 

 

 

EBITDA 3)

213,271

56,675

17,585

40,907

328,438

–99,189

453

–92,788

136,914

1) Prior-year figures restated, refer to Note 2 Correction of errors.

2) Total revenue net of third-party service delivery costs and directly attributable internal delivery costs.

3) EBITDA from additional business lines view reconciled to earnings before net financial items, taxes, depreciation and amortisation.

The most relevant reconciliation items in the column ‘Other’ were related to one-time costs and accounting related adjustments:

in CHF 1,000

Integration, M&A and earn-out expenses

Restruc- turing expenses

Share- based payment expenses

One-time expenses Russia & Ukraine 3)

IFRS 15 upfront revenue recognition

IFRS 16 leases

Allocation of delivery costs

Remaining

Total Other

 

 

 

 

 

 

 

 

 

 

Total revenue

–6,922

54

–6,868

Delivery costs

346,346

–71

346,275

 

 

 

 

 

 

 

 

 

 

Contribution margin 1)

–6,922

346,346

–17

339,407

Other operating costs

–44,287

–13,142

–4,888

–35,214

318

16,368

–346,346

–5,004

–432,195

 

 

 

 

 

 

 

 

 

 

EBITDA 2)

–44,287

–13,142

–4,888

–35,214

–6,604

16,368

–5,021

–92,788

1) Total revenue net of third-party service delivery costs and directly attributable internal delivery costs.

2) EBITDA from additional business lines view reconciled to earnings before net financial items, taxes, depreciation and amortisation.

3) One-time expenses Russia & Ukraine include the loss on disposal for the sale of SoftwareOne Russia (TCHF -29,655), additional bad debts in connection with clients in Russia (TCHF -3,537) and further one-time expenses (TCHF -2,022).

Additional information for business lines

Even if the regions are the operating segments, SoftwareOne internally also reports total revenue, contribution margin and EBITDA by business lines 'Software & Cloud Marketplace', 'Software & Cloud Services' and 'Corporate', which includes non-operational group costs, to the CODM.

The business line view presents a breakdown of total revenue, directly attributable delivery costs, and indirectly attributable other operating costs such as sales and marketing costs as well as general and admin costs.

The column 'Adjustments' includes costs affecting comparability in operating expenses and are therefore adjusted in internal reporting and an adjustment for the upfront recognition of multi-year licensing contracts in which the end customer has the right to change the software reseller during the contract term. In contrast to the segment reporting, the IFRS 16 adjustment and minor reconciliation items are allocated to the business lines 'Software & Cloud Marketplace' and 'Software & Cloud Services'.

Business line view 2023

in CHF 1,000

Software & Cloud Marketplace

Software & Cloud Services

Corporate

Total business unit

Adjustments

Allocation of delivery costs

Total

 

 

 

 

 

 

 

 

Total revenue

549,750

461,154

</