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Notes to the financial statements of Sonova Holding AG as of March 31, 2019

1. General information

The financial statements of Sonova Holding AG, with registered office in Stäfa, comply with the requirements of Swiss Law on Accounting and Financial Reporting (32nd title of the Swiss Code of Obligations, ‘SCO’). The company does not have any employees.

2. Accounting principles

2.1 Financial income/expenses

Financial income/expenses consists primarily of realized/unrealized foreign exchange gains and losses as well as interest income/expenses.

2.2 Financial assets

Financial assets contain loans to third parties as well as to Group companies and are recognized at cost less adjustments for foreign currency losses and impairment of value. Loans granted in foreign currency are translated at balance sheet date.

2.3 Investments

Investments consists mainly of participations in fully consolidated Group companies. They are in general subject to individual valuation. Certain investments are subject to a group valuation approach due to their homogeneity in nature.

2.4 Bonds

Bonds are valued at nominal value. Any bond premium/discount is accrued/capitalized and released/amortized linearly over the term.

2.5 Treasury shares

Treasury shares are recognized at cost and deducted from shareholders’ equity. The gain or loss from sale is recognized in the income statement as financial gain or financial loss.

3. Information on income statement and balance sheet items

3.1 Bonds

On October 11, 2016, the Sonova Group issued bonds in three tranches with different coupons and terms:

  • A two year variable rate bond (floating rate note) with a nominal value of CHF 150 million (ISIN CH0340912135) issued at 100.40% with interest at 3-month CHF Libor plus 50 bps p.a. paid quarterly. The loan paid an interest between 0.00% p.a. (floor) and 0.05% p.a. (cap) and was repaid on October 11, 2018.
  • A three year fixed-rate bond with a nominal value of CHF 250 million (ISIN CH0340912143) issued at 100.15% with 0.00% interest payment and maturity on October 11, 2019 (disclosed under short-term liabilities).
  • A five year fixed-rate bond with a nominal value of CHF 360 million (ISIN CH0340912150) issued at 100% with interest of 0.01% p.a. and maturity on October 11, 2021. Interests will be paid on an annual basis (disclosed under long-term liabilities).

3.2 Treasury shares

Out of total treasury shares amounting to 966,324 shares on March 31, 2019, 932,750 shares were purchased by the company as part of the share buyback program. The average selling price amounted to CHF 123.74 and the average purchase price to CHF 173.33.

Number/CHF million

 

 

 

Number

 

Treasury shares at cost

Balance April 1, 2018

 

3,622

 

0.5

Purchase of treasury shares from share buyback

 

932,750

 

160.7

Purchase of treasury shares

 

368,000

 

64.7

Sale/Transfer of treasury shares

 

(338,048)

 

(41.8)

Loss from sale of treasury shares

 

 

 

(17.3)

Balance March 31, 2019

 

966,324

 

166.9

3.3 Contingent liabilities

CHF million

 

31.3.2019

 

31.3.2018

Letters of comfort given on behalf of Group companies

 

11.6

 

0.0

Guarantees given in respect of rental obligations of Group companies

 

0.5

 

1.2

The Swiss Sonova entities form a VAT group and, hence, every company participating in the group is jointly and severally liable for VAT debt of other group participants. Further Sonova Group companies participating in the cash pool are jointly and severally liable for any debit position or outstanding overdraft in connection with them.

3.4 List of investments

Company name

 

Activity

 

Domicile

 

Share/paid-in capital 1) Local currency 1,000

 

Shares held by Sonova Holding

 

 

 

 

 

 

 

 

 

 

 

Switzerland

 

 

 

 

 

 

 

 

 

 

Sonova AG

 

A,B,C,D

 

Stäfa

 

CHF

 

2,500

 

100%

Phonak AG

 

A

 

Stäfa

 

CHF

 

100

 

100%

Phonak Communications AG

 

B, C, D

 

Murten

 

CHF

 

500

 

100%

Unitron Hearing GmbH

 

B

 

Stäfa

 

CHF

 

20

 

100%

Verve Hearing Systems AG

 

A

 

Stäfa

 

CHF

 

100

 

100%

 

 

 

 

 

 

 

 

 

 

 

EMEA (excluding Switzerland)

 

 

 

 

 

 

 

 

 

 

Sonova Audiological Care Austria GmbH

 

B

 

Wals-Himmelreich (AT)

 

EUR

 

450

 

100%

Sonova Belgium NV

 

A, B

 

Asse Zellik (BE)

 

EUR

 

15,311

 

100%

Sonova Holding GmbH

 

A

 

Fellbach-Oeffingen (DE)

 

EUR

 

153

 

85% 2)

Sonova Denmark A/S

 

B

 

Middelfart (DK)

 

DKK

 

11,075

 

100%

Sonova Ibérica S.A.U.

 

B

 

Alicante (ES)

 

EUR

 

7,000

 

100%

Sonova Audiological Care France SAS

 

B

 

Cahors (FR)

 

EUR

 

28,800

 

15% 2)

Sonova France SAS

 

B

 

Bron-Lyon (FR)

 

EUR

 

1,000

 

30% 2)

SCI Du Triangle De Bron

 

A

 

Bron-Lyon (FR)

 

EUR

 

46

 

100%

Sonova Hungary Korlátolt Felelösségü Társaság

 

B

 

Budapest (HU)

 

HUF

 

5,000

 

100%

Sonova Italia S.R.L.

 

B

 

Milan (IT)

 

EUR

 

1,040

 

100%

Sonova Nederland B.V.

 

B

 

Vianen (NL)

 

EUR

 

227

 

100%

Sonova Norway AS

 

B

 

Oslo (NO)

 

NOK

 

1,854

 

49% 2)

Sonova Polska Sp. Z o.o.

 

B

 

Warsaw (PL)

 

PLN

 

100

 

100%

Warsaw Service Center Sp.Z.o.o.

 

A

 

Warsaw (PL)

 

PLN

 

100

 

100%

Phonak CIS Ltd.

 

B

 

Moscow (RU)

 

RUB

 

4,000

 

100%

Sonova Nordic AB

 

B

 

Stockholm (SE)

 

SEK

 

200

 

85% 2)

Sonova Sweden AB

 

B

 

Stockholm (SE)

 

SEK

 

100

 

100%

Sonova UK Ltd.

 

B

 

Warrington (UK)

 

GBP

 

2,500

 

100%

Boots Hearing Care Ltd.

 

B

 

Conwy (UK)

 

GBP

 

0 3)

 

51%

For significant indirect investments refer to Note 7.6 of the consolidated financial statements of Sonova Holding AG.

Description:

A Holding/Finance: The entity is a holding or finance company.

B Sales: The entity performs sales and marketing activities for the group.

C Production: This entity performs manufacturing for the group.

D Research: This entity performs research and development activities for the group.

1) Share/paid in capital may not reflect the taxable share/paid-in capital amount and does not include any paid-in surplus.

2) The remaining shares are held by a subsidiary of Sonova Holding AG.

3) GBP 133

Company name

 

Activity

 

Domicile

 

Share/paid-in capital 1) Local currency 1,000

 

Shares held by Sonova Holding

 

 

 

 

 

 

 

 

 

 

 

Americas

 

 

 

 

 

 

 

 

 

 

CAS Argosy Participações Ltda.

 

B

 

São Paulo (BR)

 

BRL

 

37,106

 

100%

National Hearing Services Inc.

 

B

 

Victoria BC (CA)

 

CAD

 

0 3)

 

100%

Sonova Canada Inc.

 

B

 

Mississauga (CA)

 

CAD

 

0 3)

 

85% 2)

Phonak Mexicana S.A. de C.V.

 

B

 

Mexico DF (MX)

 

MXN

 

94,050

 

85% 2)

AudioNova Mexico S.A. de C.V.

 

B

 

Mexico DF (MX)

 

MXN

 

66,100

 

99% 2)

Sonova United States Hearing Instruments, LLC

 

B

 

Warrenville (US)

 

USD

 

0 3)

 

85% 2)

Sound Pharmaceuticals, Inc.

 

A

 

Seattle (US)

 

USD

 

13,105

 

31%

 

 

 

 

 

 

 

 

 

 

 

Asia/Pacific

 

 

 

 

 

 

 

 

 

 

Advanced Bionics Medical Instruments (Suzhou) Co., Ltd.

 

B

 

Suzhou (CN)

 

CNY

 

4,617

 

70% 2)

Sonova Hearing (Suzhou) Co., Ltd.

 

C

 

Suzhou (CN)

 

CNY

 

46,249

 

100%

Sichuan i-Hear Co., Ltd.

 

A

 

Chengdu (CN)

 

CNY

 

42,802

 

100%

Sonova (Shanghai) Co., Ltd

 

B

 

Shanghai (CN)

 

CNY

 

20,041

 

100%

Sonova India Private Limited

 

B

 

Mumbai (IN)

 

INR

 

2,439

 

64% 2)

Sonova Japan Co., Ltd.

 

B

 

Tokyo (JP)

 

JPY

 

10,000

 

100%

Sonova Korea Ltd.

 

B

 

Seoul (KR)

 

KRW

 

50,000

 

100%

Sonova New Zealand (Wholesale) Ltd.

 

B

 

Auckland (NZ)

 

NZD

 

250

 

100%

Sonova Singapore Pte. Ltd.

 

B

 

Singapore (SG)

 

SGD

 

250

 

100%

Sonova Taiwan Pte. Ltd.

 

B

 

Zhonge City (TW)

 

TWD

 

3,100

 

100%

Sonova Operation Center Vietnam Co., Ltd.

 

C

 

Binh Duong (VN)

 

VND

 

36,156,000

 

100%

Sonova Vietnam Company Limited

 

B

 

Ho Chi Minh City (VN)

 

VND

 

2,088,000

 

70% 2)

For significant indirect investments refer to Note 7.6 of the consolidated financial statements of Sonova Holding AG.

Description:

A Holding/Finance: The entity is a holding or finance company.

B Sales: The entity performs sales and marketing activities for the group.

C Production: This entity performs manufacturing for the group.

1) Share/paid in capital may not reflect the taxable share/paid-in capital amount and does not include any paid-in surplus.

2) The remaining shares are held by a subsidiary of Sonova Holding AG.

3) Shares without par value

3.5 Significant shareholders

At year-end, the following significant shareholders were listed in the share register (with shareholdings in excess of 3% of the issued share capital). Significant shareholders may also hold non-registered shares, which are reported under “Not registered”.

 

 

31.3.2019

 

31.3.2018

Beda Diethelm

 

10.19%

 

10.19%

Chase Nominees Ltd. 1)

 

9.04%

 

8.59%

Family of Hans-Ueli Rihs

 

5.67%

 

5.71%

Nortrust Nominees Ltd. 1)

 

5.82%

 

4.41%

Bank of New York Mellon Nominee 1)

 

4.17%

 

<3.00%

Fidelity Funds

 

3.43%

 

<3.00%

Andy Rihs 2)

 

<3.00%

 

3.08%

Registered shareholders with less than 3%

 

29.59%

 

35.93%

Not registered

 

32.10%

 

32.09%

1) Registered without voting rights.

2) Andy Rihs deceased on April 18, 2018.

3.6 Shareholdings and participations of the Board of Directors and the Management Board

 

 

31.03.2019

 

31.03.2018

 

 

Shares

 

Restricted Shares 1) 3)

 

PSUs/RSUs 3)

 

Options (incl. SARs) 3)

 

Shares

 

Restricted Shares 2) 3)

 

PSUs/RSUs 3)

 

Options (incl. SARs) 3)

Board of Directors

 

67,313

 

65,395

 

7,152

 

165,577

 

42,720

 

66,126

 

 

 

2,558

Management Board

 

47,672

 

 

 

47,140

 

436,309

 

62,892

 

 

 

56,137

 

613,440

Total

 

114,985

 

65,395

 

54,292

 

601,886

 

105,612

 

66,126

 

56,137

 

615,998

1) These shares are subject to a restriction period which varies from June 1, 2019 to June 1, 2024 depending on the grant date.

2) These shares are subject to a restriction period which varies from June 1, 2018 to June 1, 2023 depending on the grant date.

3) For further details see also Note 7.4 in the consolidated financial statements.

For further details to shareholdings in the company by members of the Board of Directors and by members of the Management Board, in accordance with Swiss Code of Obligation article 663c, refer to the compensation report of Sonova Holding AG.