SoftwareOne Holding AG (‘the company’) and its subsidiaries (together ‘the group’ or ‘SoftwareOne’) is a leading software and cloud service 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’.

These interim condensed consolidated financial statements for the six months ended 30 June 2024 were authorised for issue by the Board of Directors on 20 August 2024.

Basis of presentation

The interim condensed consolidated financial statements for the six months ended 30 June 2024 have been prepared in accordance with IAS 34 ‘Interim Financial Reporting’.

The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the group’s annual financial statements as of 31 December 2023 approved by the Board of Directors on 18 March 2024.

New standards, interpretations and amendments adopted by the group

The accounting policies applied in these interim condensed consolidated financial statements are the same as those applied in the group’s consolidated financial statements as of and for the year ended 31 December 2023 except for changes effective from 1 January 2024.

As of 1 January 2024, the following amendments to the IFRS Accounting Standards entered into force:

• 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

The amendments do not have a significant impact on the group. SoftwareOne has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

Pillar Two income taxes

SoftwareOne applies the 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 is 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.

Separation of the reporting segment EMEA into DACH and rEMEA

SoftwareOne modified the breakdown of its segments in January 2024 and separated EMEA into DACH, encompassing Germany, Austria and Switzerland, and rEMEA, encompassing Rest of Europe, including Mauritius and South Africa and excluding DACH. The change in the breakdown of the financial information reflects the focus on two clearly differentiated geographical markets within Europe, the level of decision-making for both markets within the group and the relative importance of the profits and assets of the DACH segment.

As a result, the group reallocated the goodwill previously allocated to EMEA between DACH and rEMEA. The split was done based on the relative value of the recoverable amount. The following table shows the composition of goodwill by CGU after the reallocation:

Foreign currency translation

The following exchange rates were used:

Seasonality of operations

The results of SoftwareOne group are subject to significant seasonality effects. Total revenue peaks towards the end of the second quarter as a result of year-end campaigns by Microsoft, our most important software vendor, whose fiscal year ends on 30 June, and towards the end of the fourth quarter of the financial year, driven by the IT budget cycle of many of our customers.

During the period to June 2024, no business combinations occurred. The group has finalised the purchase accounting of acquisitions that took place in 2023.

Acquisitions in 2023

On 21 December 2023, SoftwareOne acquired 100% of Novis Euforia S.L., Spain ('Novis'), a SAP and cloud services company specialised in migrating and converting SAP environments to SAP S/4HANA and the cloud. During the period to 30 June 2024, the group adjusted the purchase accounting. In April 2024, a subsequent purchase price adjustment of TCHF 742 was made which led to an increase in goodwill to TCHF 4,367. There were no other changes in the final fair values of acquired assets and liabilities compared to the provisional amounts disclosed in the Annual Report 2023.

Reconciliation of carrying amount of goodwill

The change in carrying values for goodwill from 1 January 2024 to 30 June 2024 are set forth below:

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 on the basis of 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.

There have been a transfer from level 3 to level 2 between 1 January 2024 and 30 June 2024. No transfers of the hierarchy levels have been made between 1 January 2023 and 30 June 2023.

The following table discloses financial assets and liabilities measured at fair value:

The group’s interest-bearing instruments with variable interest are cash, bank overdrafts, bank loans and a multiple currency revolving credit facility. An interest rate risk exists due to changes in market interest rates. Since May 2024, the group manages the risk of changes in the interest rate on the basis of limits using interest rate derivatives as part of the defined risk strategy. The underlying transactions are designated as cash flow hedges. They are expected to affect profit and loss within the next 30 months (end of December 26). 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.

Financial assets consist of an investment in listed equity instruments. In the period to 30 June 2024, the group recognised a fair value gain of TCHF 21,574 in finance income (comparative period: TCHF 1,644). 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. Therefore, refer to section 4.1 Financial risk factors in the Annual Report 2023. The market price of the underlying asset has risen compared to 31 December 2023 and is above the agreed threshold. Thus, SoftwareOne recorded a cash inflow of TCHF 10,114 which is recognized as a financial liability and classified as investing cashflow. The financial liability for the receipts from swap contracts amounted to TCHF 37,944 at the end of the reporting period (comparative period: TCHF 27,050).

The change in carrying values associated with ‘Level 3’ contingent consideration liabilities from 31 December 2023 to 30 June 2024 is set forth below:

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

In the Software & Cloud Marketplace business a distinction is made between two types of software selling arrangements. In the direct business, the group’s obligation is only to arrange for another entity to provide the software license to the end customer and therefore receives an agency commission from the software provider. In the indirect business, the group is party to a contractual relationship between the software provider and the end customer. SoftwareOne provides pre-sales consulting services to end customers but is not primarily responsible for fulfilling the promise to provide the software or cloud solution. SoftwareOne invoices the end customer and receives the considerations from the end customer. In addition, SoftwareOne is compensated by the software provider to place orders and manage customer purchases on behalf of the end customer. SoftwareOne acts as an agent in both types of software selling arrangements and, hence, recognises revenue in the net amount, i.e. the agency fee or the difference between the consideration received from the end customer and cost of software purchased.

For management purposes, SoftwareOne is organised by geographical areas. The below breakdown of revenue follows the regional clusters by the group’s operating segments, refer to Note 10 Segment reporting.

Revenue is broken down as follows:

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

The dividend approved in 2024 was TCHF 55,241 or CHF 0.36 per share (excluding treasury shares; prior year TCHF 54,315, or CHF 0.35 per share). The dividend was paid out of the capital contribution reserve of SoftwareOne Holding AG and thus deducted from share premium in these interim condensed consolidated financial statements.

In the first half of 2024, SoftwareOne granted new awards under the Long-term Incentive Plan (‘LTIP24’). In addition, arrangements that were launched in previous years, the Employee Share Purchase Plan and the Long-term Incentive Plan (‘LTIP22’ and ‘LTIP23’) still exist.

SoftwareOne recognised total share-based payment expenses of TCHF 6,231 for the six months ended 30 June 2024 (comparative period: TCHF 4,334). The following table discloses how the expenses are allocated to the existing share-based payment arrangements:

SoftwareOne has recognised an increase in equity in the balance sheet of TCHF 6,218 for share-based payment (comparative period: TCHF 4,271). The difference in share-based payments recorded in the interim condensed consolidated income statement compared to the related expenses recognised in equity is due to foreign exchange gains of TCHF 13 (comparative period: TCHF 63).

Long-term Incentive Plan

The LTIP24 grants the Executive Board, the Executive Leadership Team and selected key employees so-called performance share unit (PSU) subscription rights. In the first half of 2024, SoftwareOne granted new awards under this plan (‘LTIP24’).

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 revenue growth, 40% EBITDA margin and 20% on relative total shareholder return (rTSR). In all variables, the target factor is 1.00, 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 of >= 33% to a vesting factor of 2.0. The rTSR vesting factor distributes linearly between the target ranges. The award cycle (service period) is 34 months from the contractual grant date.

The LTIP24 is valued using a Monte Carlo simulation.

In 2024, 1,044,725 PSUs were granted at a fair value of CHF 15.34 per PSU. The term of the PSUs starts on 29 February 2024 (valuation date) and ends on 15 March 2027 (end of the vesting period).

As an internationally operating group, SoftwareOne is aware of proceedings, or the threat of proceedings, against it and others in respect of private claims by customers and other third parties. In addition, the group is subject to other claims and legal proceedings, as well as investigations carried out by various law enforcement authorities. With respect to the above-mentioned claims, regulatory matters, and any related proceedings, SoftwareOne will bear the related costs, including costs necessary to resolve them.

There are no significant changes for the contingent liabilities disclosed in Note 25 Contingencies of the Consolidated Financial Statements 2023.

For management purposes, the group is organised by geographical areas. After the separation of the operating segment EMEA into DACH and rEMEA, the following regional clusters are the group’s operating segments:

• DACH (Germany, Austria and Switzerland)
• rEMEA (Rest of 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 interim condensed 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 in 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 commercial and operational excellence programme and the discontinuance of the MTWO business, one-time expenses for the strategic review, extraordinary bad debt expenses 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.

For the six months ended 30 June 2024

The most relevant reconciliation items in the column 'Other' break down as follows:

For the six months ended 30 June 2023

The most relevant reconciliation items in the column 'Other' break down as follows:

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 external and internal 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'.

For the six months ended 30 June 2024

For the six months ended 30 June 2023

Additional geographical information

Germany, the US, Switzerland and the Netherlands are the main geographical markets for SoftwareOne and represent approximately 48% (comparative period: 49%) of total revenue. Revenue is reported based on the customer's headquarter domicile:

No transactions with one single external customer exceed 10% of consolidated revenue of the group.

From the balance sheet date until the interim condensed consolidated financial statements were approved by the Board of Directors on 20 August 2024, the following significant events occurred:

Acquisitions

On 8 August 2024, SoftwareOne acquired 100% of Medalsoft International Co. Ltd., a cloud application solutions provider based in China after signing the purchase agreement in February 2024. The acquisition furthers SoftwareOne’s growth strategy in the attractive APAC region, bringing a differentiated portfolio and delivery capabilities to serve multi-national clients on the Microsoft Cloud. The upfront purchase price amounts to CNY 120 million (CHF 15 million). In addition, an earn-out of a maximum of CNY 90 million (CHF 11 million) was agreed, which is contingent on continuing employment of the selling shareholders. No disclosures are made in accordance with IFRS 3 due to the recent acquisition dates and purchase accounting, as no company figures were available at the time of publication of this report.