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Consolidation principles

General

The consolidated financial statements of TX Group AG, Werdstrasse 21, Zurich (Switzerland), and its subsidiaries are prepared in compliance with Swiss company law and in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB). The consolidation is based on the individual financial statements of the consolidated companies as of 31 December, which are prepared according to uniform accounting principles. All standards issued by the IASB and all interpretations issued by the International Financial Reporting Interpretations Committee that were in force by the balance sheet date have been considered during the preparation of the consolidated financial statements.

The preparation of the consolidated financial statements requires that the Management Board and the Board of Directors make estimates and assumptions that impact the amounts of the assets and liabilities, contingent liabilities, as well as the expenditures and income disclosed in the consolidated financial statements for the reporting period. These estimates and assumptions not only take past experience into account, but also developments in the state of the economy, and are mentioned wherever relevant in the Notes. As they are subject to risks and uncertainties, the actual results may differ from these estimates.

In particular, the estimates and assumptions applied to the areas listed below had a material impact on the consolidated financial statements in the reporting year. The estimates made are set out in detail in the Notes provided.

  • Capitalisation of loss carryforwards (Notes 11 and 12)

  • Impairment testing of goodwill and intangible assets with an indefinite useful life (Note 22)

  • Assessment of financial risks (Note 34)

The consolidated financial statements were approved by the Board of Directors on 02 March 2021. The Board of Directors proposes that the Annual General Meeting of 09 April 2021 approves the consolidated financial statements.

Changes in accounting policies in 2020 and thereafter

TX Group applied the following new and revised standards and interpretations for the first time in the financial statements for 2020.

  • IFRS 3, “Amendments regarding the definition of a business” (amendment to IFRS 3, “Business Combinations”)

  • IAS 1 / IAS 8, “Definition of Material” (amendment to IAS 1, “Presentation of Financial Statements” and IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors”)

  • IAS 39 / IFRS 9 / IFRS 7, “Interest Rate Benchmark Reform” (amendment to IAS 39 “Financial Instruments: Recognition and Measurement”, IFRS 9, “Financial Instruments” and IFRS 7 “Financial Instruments: Disclosures”)

Their first-time application did not lead to any material changes in the consolidation and measurement principles or in the assets or income situation. The introduction of the revised standards, to be applied from 2021, is not expected to have any material impact on the consolidated financial statements either. The new and revised standards and interpretations that are to be applied to the consolidated financial statements for the first time in 2020, or those that are to be applied later, were not applied earlier than required (including the amendment to IFRS 16 “Leases – Covid-19-Related Rent Concessions”, which became applicable to the financial year starting from 1 June 2020).

Restatement
  • Segment information: As of 1 January 2020, a decentralised organisational structure was formed under the umbrella of TX Group comprising four largely self-contained companies. The segment information from the previous year has therefore been adapted to the new segment structure. More detailed information on the segments can be found in the “Operational reporting and market conditions” section and in Note 2 “Segment information”.

  • Income statement: TX Group divides revenues in the income statement according to its core competencies with regard to the type of service. As a result of the transformation in the media industry, new lines of business have become more important to TX Group. In order to reflect these developments, the consolidated income statement now shows revenues in greater detail. The allocation of revenues and expenses to the items reported has also been revised and in some cases adjusted. In particular, external salaries are now shown as services under the “costs of materials and services” item, as opposed to under personnel expenses. The previous year’s disclosures were adjusted accordingly.

Group of consolidated companies

All companies over which TX Group AG exercises control either directly or indirectly are included in the consolidated financial statements. Companies acquired during the reporting year are included in the consolidated financial statements as of the date on which control was assumed, and companies sold are excluded from the consolidated financial statements as of the date on which control was surrendered.

Consolidation method

The consolidated financial statements comprise the financial statements of the parent company and the companies it controls. The company gains control if it:

  • can exercise power of disposal over the associated companies,

  • is exposed to fluctuations in returns as a result of its investments, and

  • is able to influence returns on the basis of its power of disposal.

The assets, liabilities, revenues and expenses of the companies included in the group of consolidated companies are accounted for in their entirety using the full consolidation method. The non-controlling interests in equity and net income (loss) are disclosed separately in the balance sheet and the income statement.

Joint ventures in which TX Group AG directly or indirectly holds 50 per cent of the voting rights or over whose financial and operational decisions it exercises control based on agreements entered into with partners, thereby owning rights to the net assets of the joint venture, are accounted for using the equity method.

Investments in companies in which TX Group AG directly or indirectly holds less than 50 per cent of the voting rights (associates) and over whose financial or operational decisions it does not exercise any control but over which it has significant influence are also accounted for using the equity method.

The recognition of joint ventures and associates in the consolidated financial statements is explained under investments in associates and joint ventures.

Capital consolidation

The share of equity of consolidated companies is accounted for using the acquisition method. There is the option with regard to any business combination of measuring the non-controlling interests at fair value or according to the proportion of assets acquired. In the case of business combinations that are achieved in stages, the fair value of the previously held equity interest is remeasured to fair value at the acquisition date. Any gains or losses and any costs incurred in relation to the acquisition are directly recognised in the income statement.

Treatment of intercompany profits

Profits on intragroup sales not yet realised through sales to third parties as well as gains from the intragroup transfer of property, plant and equipment and investments in subsidiaries are eliminated in the consolidation.

Foreign currency translation

The consolidated financial statements of TX Group are presented in CHF. Monetary items in foreign currency in the individual financial statements are translated at the exchange rate applicable on the balance sheet date. Foreign currency transactions executed during the financial year are recognised at the average monthly exchange rate. The resulting exchange rate differences are recognised directly in the income statement. Assets and liabilities of subsidiaries whose functional currency is not the CHF are converted in the consolidated financial statements using the rate on the reporting date, while items in the income statement are converted using the average rate.