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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 Group Management 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 for goodwill and intangible assets with an indefinite useful life ( Note 22)

  • Assessment of financial risks ( Note 35)

The consolidated financial statements were approved by the Board of Directors on 25 February 2022. The Board of Directors proposes that the Annual General Meeting of 8 April 2022 approves the consolidated financial statements.

Changes in accounting policies in 2021 and thereafter

TX Group applied the following new and revised standards and interpretations for the first time in the financial statements for 2021.

  • 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”) – 2021

  • “Leases” (extension of practical expedient for rent concessions) – 2021

  • Their first-time application did not lead to any material changes in the consolidation and accounting policies or in the assets or income situation. The introduction of the revised standards, to be applied from 2022, 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 2021 or later were not applied earlier than required.

    Restatement

    As of 1 January 2020, the internal and external classification of revenues across seven categories has been harmonised. On the basis of a further analysis of revenues, there was an adjustment from 1 January 2021 to the allocation of individual transactions to revenue categories with the aim of harmonising external reporting with the internal view used for management purposes. The previous year was adjusted accordingly. Restatement of the disclosures of the revenues for 2020 only involves a transfer within revenue categories and has no other effect on the consolidated income statement or on other elements of financial reporting. The following effects were taken into account in the restatement:

    • The sale of classified advertising in the publishing area is now reported as revenues from classifieds and services (previously advertising revenue). The reclassification for 2020 amounts to CHF 31.8 million.

    • Revenues from logistics were reported under other operating revenues in the previous year and will be disclosed from 1 January 2021 under revenue from print and logistic operations (previously referred to as print revenue). The reclassification amounts to CHF 12.7 million.

    The individual revenue categories are now disclosed in detail in segment reporting.

    For the first time, with the financial statements for 2021, consolidated cash flows are being determined and disclosed using the indirect method. The indirect method is the preferred method under the accounting standard (IAS 7.19), is widely used and shows any change in net working capital. 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 over the investee,

    • is exposed or has rights to variable returns from its involvement with the investee, and

    • is able to use its power over the investee to affect the amount of the investor’s returns.

    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 the 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 price on the reporting date, while items in the income statement are converted using the average price.