Notes to the financial statements of Sonova Holding AG as of March 31, 2021

2.1 Financial income/expenses

Financial income/expenses consists of gains and losses from sale/transfer of shares in relation to long-term incentive plans, 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 consist mainly of participations in fully consolidated Group companies. They are subject to individual valuation.

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 shareholdersʼ equity. The gain or loss from sale is recognized in the income statement as financial gain or financial loss.

3.1 Bonds

As of March 31, 2021, the Group has the following bonds/US Private Placement outstanding: 

3.2 Treasury shares

On August 31, 2018, Sonova Holding AG announced that its Board of Directors approved a share buyback program of up to CHF 1.5 billion (but for a maximum of 11,759,560 registered shares). The program started in October 2018 for a period of up to 36 months. The shares were planned to be repurchased for the purpose of a capital reduction, subject to approval by future Annual General Shareholdersʼ Meetings. Effective March 16, 2020, Sonova Holding AG suspended the Groupʼs share buyback program. This precautionary measure reflected the short-term uncertainties regarding the financial impact of the global spread of the novel coronavirus (COVID-19). On May 19, 2020 the Board of Directors decided to amend the purpose of the treasury shares from the share buyback, allowing the re-use of these treasury shares. The stock dividend (417,110 shares) distributed in financial year 2020/21 was sourced from Sonova shares which were repurchased by Sonova under the share buyback program 2018 – 2021. A further 200,000 shares bought under the share buyback program were used for the transfer and sale of treasury shares in connection with the EEAP programs. The remaining 1,225,980 treasury shares as of March 31, 2021, initially bought under the share buyback program, are intended to be cancelled (proposal to the Annual Shareholdersʼ Meeting June 15, 2021).

3.3 Contingent liabilities

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

3.5 Significant shareholders

The following overview shows the significant shareholders as of March 31, 2021 based on shareholdings recorded in the share register and notifications on the SIX Swiss Exchange online reporting platform. Significant shareholders may also hold non-registered shares.

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

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.

3.7 Events after the balance sheet date

On May 7, 2021 the Group announced that it signed an agreement to acquire the Consumer Division from Sennheiser electronic GmbH & Co. KG (Sennheiser). The product offering of the Consumer Division includes premium headphones – especially in the True Wireless segment – as well as audiophile headphones, enhanced hearing solutions and soundbars. They are sold through a well-established distribution network by Sennheiserʼs own subsidiaries and long-established trading partners in more than 50 countries, both online and in-store, further expanding Sonovaʼs channel presence and customer base. The Sennheiser Consumer Division, with currently around 600 employees contributing to this business area worldwide, generates sales of around EUR 250 million annually. The purchase price for the Sennheiser Consumer Division amounts to EUR 200 million, which will be financed through the existing cash balance. A licensing agreement on customary terms for the Sennheiser brand will be in place in perpetuity. Closing is foreseen in the second half of calendar year 2021 after obtaining the relevant regulatory approvals.

Besides the above mentioned transaction there have been no material events after the balance sheet date.