Notes to the consolidated financial statements

1 Significant accounting policies

1.1 Basis of preparation

Autoneum Holding Ltd (“the Company”) was incorporated on December 2, 2010 as a Swiss corporation domiciled in Winterthur. The Company has been listed on the SIX Swiss Exchange (AUTN, ISIN: CH0127480363) since May 13, 2011. Autoneum Holding Ltd together with its subsidiaries will henceforth be referred to as “Autoneum Group”, “Group” or “Autoneum”. A list of subsidiaries, associated companies and non-consolidated investments of Autoneum Group can be found in note 36.

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS). The conso­lidated financial statements are based on his­toric cost, with the exception of specific fi­nancial instruments, which are measured at fair value. The consolidated financial statements were authorized for issue by the Board of Directors on March 6, 2018 and are subject to approval by the Annual General Meeting of shareholders on March 28, 2018.

The consolidated financial statements are published exclusively in English. Due to rounding, numbers presented throughout this report may not add up precisely to the totals provided. All ratios and variances are calculated using the underlying amount rather than the presented rounded amount.

1.2 Significant accounting judgments, estimates and assumptions

The preparation of the Group’s consolidated financial statements requires management to make judgments, estimates and assumptions that affect the application of the Group’s accounting policies and the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities in future periods. Other disclosures relating to the Group’s exposure to risks and uncertainties includes the risk management process (refer to note 2) and the sensitivity analyses of defined benefit plans (refer to note 25).

Judgments

In the process of applying the Group’s ac­­counting policies, management has made the following judgment in connection with the consolidation of entities in which the Group holds less than the majority of voting rights.

Assessing whether Autoneum has control over an entity includes all facts and circumstances that may indicate that the Group is able to direct the relevant activities and key decisions. Autoneum concludes that it has control over certain entities in which it holds 50% or more (refer to note 23), based on specific rights allocated. Facts and circumstances indicating that Autoneum controls an entity may change and lead to a reassessment of the management’s conclusion.

Estimates and assumptions

Key assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment in the year ending December 31, 2017 include the following:

Impairment losses on tangible assets are assessed based on estimated cash flows, which may vary from actual cash flows. Important assumptions to consider are useful lives, growth rates, achievable margins as well as discount rates (refer to note 13).

Development costs must meet several criteria to be recognized as an intangible asset. Technical and financial resources must be available to ensure the completion of the development, and the costs attributed to the development must be reliably measured. Due to rapid technological changes, the required proof of future economic benefits could not be sufficiently supported and therefore no development costs could be capitalized as intangible assets in the reporting period. The assessment of whether these recognition criteria are met requires significant management judgment.

When assessing inventories, estimates for their recoverability based on the expected consumption of the corresponding item are considered. The valuation adjustments for inventories are determined for each item using a coverage analysis. The parameters are checked annually and modified if necessary. Changes in sales or other circumstances can accordingly lead to an adjustment of the book value (refer to note 18).

For defined benefit plans, actuarial valuations which are the basis for the employee benefit assets and liabilities in the balance sheet are carried out regularly. These calculations are based on statistical and actuarial assumptions. In particular, the present value of the defined benefit obligation is affected by assumptions such as discount rate, expected future salary growth and the life expectancy. Other assumptions for the valuation are derived from statistical data such as mortality tables and staff turnover rates. Actuaries are independent from Autoneum. Assumptions may differ significantly from actual results. These deviations can ultimately have an effect on the employee benefit assets or liabil­ities in future periods (refer to note 25).

In the course of the ordinary operating activities of Autoneum Group, obligations from guarantee and warranty, litigation and tax risk, and environmental risk can arise. Provisions for these obligations are measured on the basis of estimated future cash outflow. The outcome of these business transactions may result in claims against Autoneum that may be below or above the related provisions. Provisions for obligations from guarantee and warranty are recognized when damage has occurred and the related cash outflow can be estimated reliably, but a material uncertainty concerning the kind of damage and the kind of compensation exists. Provisions for litigation and tax risk comprise complex cases that include material uncertainties. Environ­mental provisions are recognized for the expected costs for the cleanup and reconstruction of contaminated sites that are interdependent of many uncertainties, such as Autoneum’s share of the cost or the applicable approach for determining these costs. The financial impact of these cases for future periods can only be estimated, because uncertainties relating to amount and date of cash outflow exist (refer to note 26).

Assumptions in relation to income taxes include interpretations of the tax regulations in place in the relevant countries. The adequacy of these interpretations is assessed by the tax authorities. This can result, at a later stage, in changes in the income tax expenses. To determine whether a deferred income tax asset on tax loss carryforwards may be recognized requires judgment in assessing whether there will be future taxable profits against which these tax loss carryforwards can be offset (refer to note 11).

1.3 Scope and methods of consolidation

The consolidated financial statements of Autoneum Holding Ltd include the Company and its subsidiaries. Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affe­­ct those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control is lost. Acquisitions are accounted for using the acquisition method. Intercompany transactions are eliminated.

If Autoneum does not have control over entities but significant influence, which is us­u­ally the case if Autoneum holds interests of between 20% and 50%, these invest­ments are classified as associated companies and accounted for using the equity method. Interests of less than 20% where Autoneum does not have significant influence are classified as non-consolidated investments and are accounted for at fair value. The subsidiaries, associated companies and non-consolidated in­vestments are listed in note 36.

1.4 Foreign currency translation

Items included in the financial statements of each Group company are measured using the currency of the primary economic environment in which the company operates (“functional currency”). The consolidated financial statements are prepared in Swiss francs, which is the functional currency and the reporting currency of Autoneum Holding Ltd.

Transactions in foreign currencies are translated into the functional currency by applying the exchange rates prevailing on the date of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities de­nomi­nated in foreign currencies are recognized in the income statement.

For consolidation purposes, items in the balance sheet of foreign subsidiaries are translated at year-end exchange rates, while income statement items are translated at average rates for the period. The resulting currency translation differences are recognized in other compre­hensive income and, in the event of a disposal of a foreign operation, transferred to the income statement as part of the gain or loss from disposal.

1.5 Tangible assets

Tangible assets are stated at historical cost less accumulated depreciation, which is recognized on a straight-line basis over the estimated use­­ful life of the asset. Historical cost includes expenditures that are directly attributable to the acquisition of the assets. Useful life is determined according to the expected utilization of each asset. The relevant ranges are as follows:

Buildings 20–50 years

Machinery and plant equipment 5–15 years

Data processing equipment 4–8 years

Vehicles and furniture 3–10 years

Components of certain assets with different useful lives are depreciated separately. Gains or losses arising from the disposal of tangible assets are recognized in the income statement. Costs of maintenance and repair are charged to the income statement as incurred. The residual values and useful lives of tangible assets are reviewed, and adjusted if appropriate, at each balance sheet date.

1.6 Leases

Leased assets where Autoneum substantially bears all the risks and rewards of ownership (finance leases) are capitalized. Assets held under such finance leases are depreciated over the shorter of their estimated useful life or the lease term. The corresponding lease obli­gations, excluding finance charges, are included in borrowings. Lease installments are divided into an interest and a principal component. All other leases are classified as operating leases. Payments in respect of operating leases are charged to the income statement on a straight-line basis over the duration of the lease.

1.7 Intangible assets

Intangible assets such as product licenses, patents and trademark rights as well as software acquired from third parties are included in the balance sheet at acquisition cost and are amortized on a straight-line basis over a period of up to eight years. The residual values and useful lives of intangible assets are reviewed, and adjusted if appropriate, at each balance sheet date. Autoneum has neither in the current reporting period nor in the prior period intangible assets that have an indefinite useful life re­corded in the balance sheet. Autoneum has no goodwill capitalized in the balance sheet.

1.8 Impairment of assets

Tan­gible assets and intangible assets are tested for impairment if there are indications that, due to changed circumstances, their carrying value may no longer be fully recoverable. If such a situation arises, the recoverable amount is determined. This is the higher of its value in use and its fair value less cost to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount is below the carrying amount, a corresponding impairment loss is recognized in the income statement. Where the recoverable amount cannot be determined for an individual asset, it is determined for the cash-generating unit to which the asset belongs. To determine the value of an asset, estimates of the expected future cash flows from both usage and disposal are made.

1.9 Research and development

Research costs are recognized in the income statement when incurred. Development costs for major projects are capitalized as intangible assets if the cost can be measured reliably, if it can be demonstrated that the project is tech­nically feasible and is expected to generate future economic benefits, and if Autoneum plans to provide sufficient resources in order to complete the development and to use or sell the intan­gible asset.

1.10 Financial instruments

All financial assets not carried at fair value through profit or loss are initially recognized at fair value plus transaction costs. Financial assets carried at fair value through profit or loss are initially recognized at fair value, and transaction costs are expensed in the income statement.

Subsequent valuation depends on the category into which the financial assets are classified. Autoneum distinguishes between the following categories:

Financial assets at fair value through profit or loss include financial assets held for trading and those that are designated as such at inception. Assets in this category are presented as current assets if they are either held for trading or are expected to be realized within twelve months after the balance sheet date. For sub­sequent valuation, changes in fair value are recognized in the income statement. Derivative financial instruments with positive replacement value and marketable securities are assigned to this category.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than twelve months after the balance sheet date, in which case they are presented as non-current assets. Subsequently, they are valued at amortized cost less impairment losses.

Available for sale financial assets are non-­derivative financial assets that are either classified as such or not assigned to any of the above categories. They are measured at market value as of the balance sheet date. Changes in the value are recorded in other comprehensive income prior to sale, and reclassified to the income statement when they are sold. Any impairment is charged to the income statement immediately. They are included in non-current assets unless management intends the disposal within twelve months after the balance sheet date.

Autoneum has no financial instruments that are classified as held-to-maturity.

Financial liabilities at fair value through profit or loss are either held for trading purposes or designated as such. At their initial recog­nition and subsequently, financial liabilities at fair value through profit or loss are measured at fair value. Transaction costs directly identifiable to the purchase of these liabilities are immediately expensed. Derivative financial instruments with negative replacement values are assigned to this category.

All other financial liabilities are measured at amortized cost. Mainly trade payables, borrowings and other liabilities are assigned to this category. They are recognized initially at fair value, net of transaction costs incurred. Subsequently, these financial liabilities are stated at amortized cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the income statement over the period of the obligation using the effective interest method.

1.11 Inventories

Raw materials, consumables and purchased parts are valued at the lower of average cost or net realizable value. Semi-finished goods and fi­­­n­­ished goods are valued at the lower of manufacturing cost or net realizable value. Valuation adjustments are made for obsolete materials and excess stock.

1.12 Trade receivables

Trade receivables are classified as loans and receivables and are stated at amortized cost, which usually equals the original invoice value less any impairment loss. The loss is measured as the difference between the invoiced amount and the expected payment. The allowances are established based on maturity structure and identifiable solvency risks.

1.13 Cash and cash equivalents

Cash and cash equivalents include bank accounts and time deposits with original maturities from the date of acquisition of up to three months.

1.14 Equity

Ordinary shares are classified as equity since the shares are non-redeemable and any dividends are discretionary.

When shares are repurchased, the amount of the consideration paid is recognized as a deduction from equity and presented as a separate component in equity. When treasury shares are sold or reissued subsequently, the amount received is recognized as an increase in equity and the resulting surplus or deficit on the transaction is recognized in retained earnings.

1.15 Provisions

Provisions are recognized when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated. Provisions are discounted if the impact is significant.

1.16 Income taxes

Income taxes comprise both current and deferred income taxes. Normally income taxes are recognized in the income statement, unless they are linked to a position that is recognized directly in equity or in other comprehensive income. In this case, the income taxes are also recognized directly in equity or in other com­prehensive income.

Current income taxes are calculated and accrued on the basis of taxable income for the year. Deferred income taxes on temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and amounts determined for local tax purposes are calculated using the lia­bility method. Deferred income taxes are measured at the tax rate expected to be applied to temporary differences when they reverse, using tax rates enacted or substantially enacted at the reporting date. Deferred income tax assets and liabilities are offset to the extent that an entity has a legally enforceable right to offset current income taxes, and the deferred income taxes relate to income taxes levied by the same taxation authority and relate to the same taxable entity.

Temporary differences resulting from investments in Group companies are not considered if Autoneum is able to control the timing of the reversal of the temporary differences and if it is probable that these temporary differences will not reverse in future.

The tax impact of losses and deductible temporary differences is capitalized to the extent it appears probable that such losses will be offset in the future by taxable income.

1.17 Employee benefits

Employee pension plans are operated by certain subsidiaries, depending upon the level of coverage provided by the government pension facilities in the various countries in which they are present. Some are provided by independent pension funds. If there is no independent pension fund, the respective obligations are shown in the balance sheet under employee benefit liabilities. As a rule, pensions are funded by employees’ and employer’s contributions. Pension plans exist on the basis of both defined contribution and defined benefit.

Pension liabilities arising from defined bene­fit plans are calculated annually by independent actuaries using the projected unit credit method. The discount rate used for the calculation is based on interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension obligation. Remeasurement gains or losses are recognized in other comprehensive income. Pension cost relating to services rendered in the reporting period are recognized in the income statement as current service cost. Pension cost relating to services rendered in previous periods as a result of new or amended pen­sion benefits are recognized in the income statement as past service cost. The net interest expenses or income on the net defined benefit liability or asset for the period is determined by applying the discount rate used to measure the defined benefit obligation at the beginning of the period to the then net de­fined benefit liability or asset, taking into account any changes in the net defined benefit liability (asset) during the period as a result of contributions and benefit payments. The net interest expenses or income is recognized in financial expenses or income. The fair value of plan ­assets is deducted from the defined benefit obligations. Any asset resulting from this calculation is only capitalized up to an amount not exceeding benefits from future contribution reductions or refunds.

In the case of defined contribution plans, the contributions are recognized as expense in the period in which they incurred.

1.18 Share-based payments

Share-based payments to members of the Board of Directors, the Executive Board and senior management are measured at fair value at the grant date, and recognized in the income statement over the vesting period. The fair value is assessed based on the current market price and taking into account a discount for dividends that will not be collected by the beneficiary because the transfer of the shares is deferred. For share-based payments that are settled with equity instruments, a correspon­ding increase in equity is recognized.

1.19 Revenue recognition

Revenue comprises the fair value of the consideration received or receivable for the sale of goods and rendering of services in the ordinary course of the Group’s activities. Revenue is shown net of value-added tax, returns, rebates and discounts and after eliminating revenue within the Group. The Group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement. The Group recognizes revenue when the amount of revenue can be reliably measured, it is probable that future eco­­nomic benefits will flow to the entity and specific criteria have been met for each of the Group’s activities as described below.

Sales of goods: Revenue from the sale of goods is recognized when the significant risks and rewards of ownership of the goods have passed to the buyer, usually on delivery of the goods. Goods include mainly produced components and systems for optimal protection against noise and heat sold to customers. Revenue is recorded based on the price specified in the sales contracts, net of estimated discounts, sales tax or value-added tax as well as credit notes for goods returned. Accumulated experience is used to estimate and provide for the discounts and returns.

Rendering of services: The Group is in­volved in the design phase of new models and in the further development of existing vehicles and therefore performs simulations and tests for its customers. Revenue from rendering of ser­vices is recognized in the accounting period in which the services are rendered. For fixed-price contracts, revenue is recognized based on the actual service provided to the end of the reporting period as a proportion of the total services to be provided. Estimates of revenues, costs or extent of progress toward completion are revised if circumstances change. Any re­sulting increases or decreases in estimated revenues or costs are reflected in profit or loss in the period in which the circumstances that give rise to the revision become known by management.

1.20 Financing costs

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualified asset are capitalized as a part of the acquisition costs of the qualified asset. All other financing costs are recognized directly in the income statement.

1.21 Non-current assets (or disposal groups) held for sale and discontinued operations

Non-current assets (or disposal groups) are classified as assets held for sale when their carrying amount is to be recovered principally through a sale transaction and a sale is considered highly probable. Management must be committed to the sale, which should be expected to qualify for recognition as completed sale within one year from the date of classification. The assets must be available for immediate sale in their present condition. Assets held for sale are measured at the lower of their carrying amount at the date of their first recognition as held for sale and fair value less costs to sell. Such assets are no longer depreciated or amortized systematically. A possible impairment is included in profit or loss. A discontinued operation is a substantial component of the Group that either has been disposed of or is classified as held for sale.

1.22 Definition of non-GAAP measures

EBIT as a subtotal includes all income and expenses before addition/deduction of financial income, financial expenses, share of profit of associated companies and income taxes. EBITDA as a subtotal includes EBIT before deduction of depreciation and impairment of tangible assets as well as amortization and impairment of intangible assets.

1.23 Changes in accounting policies

Adopted changes in accounting policies

The adoption of the amendments to IAS 7 (disclosure initiative) resulted in additional disclosures about the Group’s financing activities (refer to note 24). The adoption of the remaining new and revised standards had no effect on the consolidated financial statements 2017.

Future changes in accounting policies

The following new and revised standards and interpretations have been issued, but are not yet effective. They have not been applied early in these consolidated financial statements. However, a preliminary assessment has been conducted by Group Management, and the expected impact of each standard and interpretation is presented in the table below.

IFRS 9 “Financial Instruments” includes revised guidance on the classification and measurement of financial assets and financial liabilities, including a new expected credit loss model for calcu­lating impairment as well as general hedge accounting requirements. It also carries forward the guidance on recognition and derecognition of financial instruments from IAS 39. The Group expects no material impact on the consolidated financial statements.

IFRS 15 “Revenue from Contracts with Customers” establishes a comprehensive framework for determining whether, how much and when revenue is recognized based on a five-step approach. Under IFRS 15, an entity recognizes revenue when control of the promised goods and services is transferred to the customer at an amount that reflects the consideration to which the entity expects to be entitled. It replaces existing revenue recognition guidance, including IAS 18, IAS 11 and IFRIC 13. Autoneum will implement the new standard as of January 1, 2018 and will apply the full retrospective method. The resultant impact of the conversion will be recognized in retained earnings as of January 1, 2018 and the prior year financial information will be restated. Autoneum expects an increase of around CHF 70 millions in retained earnings as of January 1, 2018 resulting from the conversion, which will consist mainly from pre-production costs that will be capitalized as “costs to fulfil a contract”. The impact on profit or loss is expected to be minor. Instead of an immediate recognition in the income statement of pre-production costs, these costs will be recognized delayed, over the underlying production term. The impact of the implementation of IFRS 15 to future results depends mainly on the amount of the future new business acquired and the respective pre-production costs.

IFRS 16 “Leases” brings most leases on the balance sheet for lessees under a single model, eliminating the distinction between operating and finance leases. For lessors, however, the accounting remains largely unchanged. Under IFRS 16, a lessee recognizes a right-of-use asset and a lease liability. The right-of-use asset is treated similarly to other non-financial assets and depreciated accordingly. The lease liability is initially measured at the present value of the lease payments payable over the lease term, discounted at the rate implicit in the lease if this rate can be readily determined. If the rate cannot be readily determined, the lessee’s incremental borrowing rate should be used. IFRS 16 supersedes IAS 17 “Leases” and related interpretations. The Group expects that the application of IFRS 16 will result in an increase in tangible assets and borrowings based on the existing operating lease agreements (refer to note 28).

Effective date

Planned application by Autoneum

New standards and interpretations

IFRS 15 Revenue from contracts with customers and related clarifications to IFRS 15 Revenue from contracts with customers1

January 1, 2018

January 1, 2018

IFRS 9 Financial instruments3

January 1, 2018

January 1, 2018

IFRIC 22 Foreign currency transactions and advance consideration3

January 1, 2018

January 1, 2018

IFRS 16 Leases1

January 1, 2019

January 1, 2019

IFRIC 23 Uncertainty over income tax treatments3

January 1, 2019

January 1, 2019

IFRS 17 Insurance contracts3

January 1, 2021

January 1, 2021

Revisions and amendments of standards and interpretations

Annual improvements to IFRS standards 2014–2016 cycle3

– IFRS 1 First-time adoption of international financial reporting standards

January 1, 2018

January 1, 2018

– IAS 28 Investments in associates and joint ventures

January 1, 2018

January 1, 2018

Classification and measurement of share-based payment transactions (amendments to IFRS 2)3

January 1, 2018

January 1, 2018

Applying IFRS 9 Financial instruments with IFRS 4 Insurance contracts (amendments to IFRS 4)3

January 1, 2018

January 1, 2018

Transfer of investment property (amendments to IAS 40)3

January 1, 2018

January 1, 2018

Prepayment features with negative compensation (amendments to IFRS 9)3

January 1, 2019

January 1, 2019

Long-term interests in associates and joint ventures (amendments to IAS 28)3

January 1, 2019

January 1, 2019

Annual improvements to IFRS standards 2015–2017 cycle3

– IFRS 3 Business combination

January 1, 2019

January 1, 2019

– IFRS 11 Joint arrangements

January 1, 2019

January 1, 2019

– IAS 12 Income taxes

January 1, 2019

January 1, 2019

– IAS 23 Borrowings costs

January 1, 2019

January 1, 2019

Plan amendment, curtailment or settlement (amendments to IAS 19)3

January 1, 2019

January 1, 2019

  1. 1 The impact on the consolidated financial statements cannot yet be determined with sufficient reliability.
  2. 2 The impact on the consolidated financial statements is expected to result in additional disclosures or changes in presentation.
  3. 3 No impact or no significant impact is expected on the consolidated financial statements.

2 Risk management

Autoneum maintains an Internal Control System with the objective of ensuring effectiveness and efficiency of operations, reliability of financial reporting and compliance with applicable laws and regulations. The Internal Control System is an important part of the risk manage­ment system.

The process of risk management is governed by the regulation “Autoneum risk management system”, which was adopted by the Board of Directors. The regulation defines the main categories of risk, which serve as a basis of the risk management, and the bodies that deal within the Group with the various risk. In addition, the regulation defines the procedures for detecting, reporting and managing risk and the criteria for qualitative and quantitative risk assessment.

The regulation defines the following main risk categories: strategic risk, operational risk, financial risk, capital risk, litigation and other risk (e.g. political, legal, organizational, environmental and work safety risk).

Besides the financial and capital risk (refer to paragraphs 2.1 and 2.2 respectively), the following risks within the main risk categories are a focus of Autoneum:

  • Strategic risk: This risk results on the one hand from different markets in which Autoneum is operating (local aspects, legal regulations, degree of maturity of markets). On the other hand, it results from the share of the customers in Autoneum’s revenue, as well as from the technical and regulatory requirements on Autoneum products.
  • Operational risk: This risk results from the technical development of orders until end of production, from the need for cost-efficient production and the possibility of interruptions in production.
  • Environmental and work safety risk.

Strategic risk resulting from developments in the relevant markets and of the products offered therein is assessed as part of the strategic planning and the financial planning processes. Strategic risk and operational risk are regularly reviewed at the monthly meetings within the Business Groups and with the CEO and the CFO of the Group. These meetings also deal with other risks impacting actual performance against budget, in order to identify and implement corrective measures.

Risks resulting from acquisitions, divestments or other major projects are monitored at Group level within the framework of competencies and approvals for the respective project. Quarterly review reports were prepared for the attention of the Board of Directors.

Specific risks are addressed by periodic reports in dedicated bodies. Such reports cover environmental and work safety risk at the various sites, treasury risk and risk from legal actions and compliance.

An aggregate review of all identified risks and of the instruments and measures to address them is performed on a semi-annual basis by the Risk Council, consisting of representatives of all Business Groups and Corporate functions. The review results are reported to the Board of Directors and Group Executive Board.

2.1 Financial risk

As a result of its worldwide activities, Autoneum is exposed to various financial risks, such as credit risk, liquidity risk and market risk (foreign exchange risk, interest rate risk and price risk). Autoneum’s financial risk management aims to minimize the potential adverse impact of the development of the financial markets on the Group’s financial performance and to secure its financial stability. This may include the use of derivative financial instruments to hedge certain risk exposures. Financial risks are identified primarily locally and evaluated and managed centrally by Group Treasury in close cooperation with the Group’s legal units.

Credit risk

Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions, as well as from exposures to customers, including outstanding receivables and committed transactions. Credit risk may result in a financial loss if one party in a transaction is unable or unwilling to meet its obligations. It is Autoneum’s objective to limit the impact of a default. The maximum risk of these positions corresponds to the book values of loans and receivables and derivative financial instruments and is disclosed in note 30.

Credit risk of financial counterparties is monitored centrally by Group Treasury. Significant relationships with banks and financial institutions are basically only entered into with counterparties rated not lower than “A” (according to Standard & Poor’s). At the date of reporting, management does not expect any losses from non-performance by financial institutions where funds are invested.

Autoneum maintains business relationships with all significant automotive manufacturers and, compared to the industry sector, has a geographically broad, diversified customer portfolio. No customer accounted for more than 16.9% (2016: 19.2%) of Autoneum’s revenue. The Group monitors the creditworthiness of its key customers by using independent ratings (if available) and by taking into account their financial position, past experience and other factors. The related credit risk is considered as low at the date of reporting.

The credit quality of financial assets that are neither past due nor impaired at the balance sheet date can be assessed by reference to external credit ratings, if available, or to historical information about counterparty default rates (refer to note 19).

Liquidity risk

The objective of liquidity risk management is to ensure that sufficient financial resources are available at any point in time in order to be able to completely and timely fulfill all payment obligations of the Group. As part of an integral budgeting and forecasting process, Group Treasury centrally monitors the planned liquidity position of the Group. Group Treasury com­pares the planned liquidity requirements with the available funds to detect shortages in a timely manner. The liquidity risk management of Autoneum includes the maintenance of sufficient liquidity reserves and the availability of funding through an adequate amount of credit lines.

Beside several smaller bilateral credit facilities with banks, Autoneum maintains a credit agreement for the medium- and long-term financing with a group of banks in the amount of CHF 150.0 million, which expires on December 31, 2022. Furthermore, a bond in the amount of CHF 75.0 million with maturity as of July 4, 2023 and a bond in the amount of CHF 100.0 million with maturity as of December 8, 2025 have been issued, both of which are listed at the SIX Swiss Exchange (refer to note 24).

The following table shows the contractual maturities of Autoneum’s financial liabilities (including interest).

Financial liabilities at December 31, 2017

Carrying amount

Contractual undiscounted cash flows

CHF million

Less than 1 year

1 to 5 years

More than 5 years

Total cash flow

Bonds

174.4

2.0

7.9

179.2

189.1

Bank debts

85.9

41.1

45.0

86.1

Finance leasing obligations

20.8

1.4

6.7

24.0

32.1

Other borrowings

7.6

5.2

0.9

3.0

9.1

Trade payables

261.7

261.7

261.7

Accrued expenses

59.6

59.6

59.6

Other payables

19.3

19.3

19.3

Total

629.4

390.3

60.5

206.2

657.0

Financial liabilities at December 31, 2016

Carrying amount

Contractual undiscounted cash flows

CHF million

Less than 1 year

1 to 5 years

More than 5 years

Total cash flow

Bonds

199.5

131.3

3.4

76.7

211.4

Bank debts

7.1

5.6

1.6

7.2

Other borrowings

2.1

0.2

1.6

1.0

2.8

Trade payables

253.8

253.8

253.8

Accrued expenses

52.3

52.3

52.3

Other payables

35.4

24.2

11.3

35.4

Total

550.2

467.4

17.9

77.6

563.0

Foreign exchange risk

Due to the global nature of its activities, the Group is exposed to foreign exchange risk. Foreign exchange risk arises from investments in foreign subsidiaries (translation risk) as well as from transactions and financial assets or financial liabilities that are denominated in a currency other than the functional currency of a legal unit (transaction risk). In order to hedge transaction risk that cannot be eliminated through offsetting transactions in the same foreign currency (natural hedging), subsidiaries may use forward contracts, which are usually traded with banks via Group Treasury. The transaction risk from foreign currencies is monitored periodically.

The subsidiaries’ cash holdings with banks are denominated mostly in the functional currency of the subsidiary. The majority of the business transacted in Autoneum’s subsidiaries is also in their functional currency. At the reporting date, the Group held financial instruments which were denominated in currencies other than the functional currency of the respective Group company as follows:

CHF million

Assets 31.12.2017

Liabilities 31.12.2017

Assets 31.12.2016

Liabilities 31.12.2016

EUR

55.4

32.5

40.5

24.6

USD

34.3

11.8

23.2

19.5

Other

0.8

1.0

0.7

2.3

Total

90.5

45.2

64.4

46.4

The Group is exposed to foreign exchange risk mostly against the euro and the US dollar. The currency-related sensitivity of the Group against these two currencies is shown in the following table:

CHF million

Reasonable shift

Impact on net result

Impact on equity

December 31, 2017

EUR/CHF

+/–10%

+/–10.9

+/–19.6

USD/CHF

+/–10%

+/–9.2

+/–52.3

December 31, 2016

EUR/CHF

+/–2%

+/–0.6

+/–1.3

USD/CHF

+/–2%

+/–0.8

+/–5.8

The impact on net result is mainly due to foreign exchange gains and losses on trade receiv­ables and trade payables as well as the translation of the profit or loss of foreign subsidiaries into Swiss francs for consolidation purposes. The impact on equity additionally includes currency translation adjustments arising from the translation of the net investment in foreign subsidiaries.

Interest rate risk

The interest rate risk of the Group relates to interest-bearing assets and liabilities. Floating interest rate positions are subject to cash flow interest risk. Fixed-interest positions are subject to fair value interest risk if measured at fair value. In general, Autoneum aims to maintain, in consideration of seasonal fluctuations, a balanced relation between fixed and floating interest-bearing financial liabilities as disclosed in note 24. The two bonds issued at fixed interest rates are not subject to any interest rate risk, whereas the long-term credit agreement with floating interest rates is subject to a cash flow interest risk.

The Group analyzes the interest rate risk on a net basis. No hedging of the interest rate risk was performed in the reporting period or in the prior period. Based on the interest-bearing assets and liabilities that existed at December 31, 2017, a 100 basis point higher level of the money market interest rates would lead to a CHF 0.1 million (2016: CHF 0.1 million) lower net result as well as equity of the Group on an annual basis. A 100 basis point lower level of the money market interest rates would impact neither net result nor equity of the Group on an annual basis in both the reporting year and the prior year.

Price risk

Holding marketable securities exposes Autoneum to a risk of price fluctuation. Since Autoneum held neither significant amounts of shares (except for treasury shares) nor options at the end of the reporting period, no sensitivity analysis of fair value risk is prepared.

2.2 Capital risk

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for the shareholders and benefits for other stakeholders, and to maintain an optimally leveraged capital structure in order to reduce the cost of capital. Autoneum aims to maintain a stable investment grade rating as perceived by bank partners and debt investors.

Autoneum Group therefore targets a healthy balance sheet with an adequate portion of equity. In the mid-term, Autoneum aims for an equity ratio above 40%. As of December 31, 2017 the equity ratio equaled 39.6% (2016: 38.4%). For the next few years, the dividend policy will depend on a number of factors, such as net profit and the financial situation of the Group, the demand for capital and liquidity, the general business environment as well as legal and contractual restrictions. Subject to the foregoing, the Group intends to distribute at least 30% of its net profit attributable to shareholders of Autoneum Holding Ltd. Dividends, if any, are expected to be declared and paid in Swiss francs.

3 Change in scope of consolidation and significant transactions

On September 30, 2017 Autoneum sold its production facility in Betim, Brazil, to the automotive supplier STS Group, headquartered in Hallbergmoos, Germany. With this transaction, the Group has adapted its South American production capacity to long-term market demand. STS took over the plant with its 90 employees and has continued to supply the existing customer base. In 2017, during the nine months until disposal, the facility in Betim contributed third-party revenue in the amount of CHF 5.9 million. CHF 0.6 million of the total selling price of CHF 3.3 million has been received in 2017, the remainder is payable in five installments until 2022. The loss from disposal of business in the amount of CHF 0.1 million is recorded in 2017. The disclosed transaction details below are provisional subject to the final acceptance of the post-closing purchase price adjustment.

In 2016, Autoneum’s US-American subsidiary UGN Inc. sold its business in Chicago Heights, USA, to an affiliate of Angeles Equity Partners, LLC, headquartered in Los Angeles, USA, on February 2, 2016.

CHF million

Betim September 30, 2017

Chicago Heights February 2, 2016

Tangible assets

1.5

5.8

Other non-current assets

0.2

Inventories

0.2

1.2

Trade receivables and other current assets

1.5

4.0

Cash and cash equivalents

0.9

Trade payables and other current liabilities

–1.0

–1.8

Net assets disposed of

3.4

9.2

Selling price received

0.6

44.4

Selling price deferred

2.7

Net assets disposed of

–3.4

–9.2

Directly attributable costs

–0.1

–2.0

Gain and loss from disposal of subsidiary or business

–0.1

33.2

Proceeds from disposal of subsidiary or business, net of cash disposed of

–0.4

42.4

On January 31, 2017 Autoneum acquired the remaining 40% interest in Autoneum Korea Ltd., Incheon, Korea, for a consideration of CHF 0.4 million from the minority shareholder SH Global Ltd., Iksan, Korea. The subsidiary is now fully owned by Autoneum. The difference between the carrying amount of non-controlling interests and the consideration paid to the minority shareholder was recognized as a decrease in equity attributable to the owners of Autoneum.

On January 31, 2017 Autoneum disposed of its 49% interest in the associated company SHN Co., Ltd., Daegu, Korea to the majority shareholder SH Global Ltd., Iksan, Korea, which liquidated the company. A total consideration of CHF 0.4 million was paid to the majority shareholder and recorded as loss from disposal of associated companies (refer to note 10).

In 2017, the Group newly established Autoneum Hungary Ltd., Komárom, Hungary; Autoneum (Changsha) Co., Ltd., Changsha, China; Autoneum (Pinghu) Co., Ltd., Pinghu, China; Autoneum (Yantai) Co., Ltd., Yantai, China and Autoneum (Tianjin) Co., Ltd., Tianjin, China.

4 Segment information

Segment information is based on Autoneum Group’s internal organization and management structure as well as on the internal financial reporting to the Group Executive Board and the Board of Directors. The chief operating decision maker is the CEO.

Autoneum is the globally leading automobile supplier in acoustic and thermal management for vehicles. Autoneum develops and produces multifunctional and lightweight components and systems for noise and heat protection and thereby enhances vehicle comfort.

The reporting is based on the following four reportable segments (Business Groups): BG Europe, BG North America, BG Asia and BG SAMEA (South America, Middle East and Africa). Corporate and elimination include Autoneum Holding Ltd and the corporate center with its respective legal entities, an operation that produces parts for Autoneum’s manufacturing lines, investments in associates, and inter-segment elimination. Transactions between the Business Groups are made on the same basis as with independent third parties.

Segment information 2017

CHF million

BG Europe

BG North America

BG Asia

BG SAMEA

Total segments

Corporate and elimination

Total Group

Third-party revenue

880.9

966.3

235.5

112.4

2 195.0

8.0

2 203.0

Inter-segment revenue

6.4

0.4

1.7

8.5

–8.5

Revenue

887.2

966.3

235.9

114.1

2 203.5

–0.5

2 203.0

EBITDA

102.2

97.9

37.0

5.0

242.1

13.8

255.9

in % of revenue

11.5%

10.1%

15.7%

4.4%

11.0%

n/a

11.6%

Depreciation, amortization and impairment

–27.3

–34.7

–9.6

–4.1

–75.7

–2.2

–77.9

EBIT

74.9

63.2

27.4

0.9

166.4

11.6

178.0

in % of revenue

8.4%

6.5%

11.6%

0.8%

7.6%

n/a

8.1%

Assets at December 311

513.8

611.6

210.1

77.1

1 412.6

71.7

1 484.3

Liabilities at December 31

386.4

308.5

101.8

57.7

854.4

42.7

897.1

Additions in tangible and intangible assets

37.6

113.0

33.7

6.4

190.7

7.4

198.1

Employees at December 312

4 163

4 442

2 102

953

11 660

473

12 133

  1. 1 Assets in Corporate and elimination include investments in associated companies in the amount of CHF 14.1 million. In 2017, Autoneum did not increase its investments in associated companies, refer to note 15.
  2. 2 Full-time equivalents including temporary employees (excluding apprentices).

Segment information 2016

CHF million

BG Europe

BG North America

BG Asia

BG SAMEA

Total segments

Corporate and elimination

Total Group

Third-party revenue

824.5

1 018.0

210.5

92.8

2 145.8

6.8

2 152.6

Inter-segment revenue

9.0

0.7

0.1

0.7

10.5

–10.5

Revenue

833.4

1 018.7

210.7

93.5

2 156.3

–3.7

2 152.6

EBITDA1

84.2

148.7

36.1

–4.9

264.0

14.1

278.1

in % of revenue

10.1%

14.6%

17.1%

–5.3%

12.2%

n/a

12.9%

Depreciation, amortization and impairment

–25.4

–29.6

–8.4

–8.4

–71.9

–1.7

–73.6

EBIT1,2

58.7

119.1

27.7

–13.4

192.1

12.4

204.5

in % of revenue

7.0%

11.7%

13.1%

–14.3%

8.9%

n/a

9.5%

Assets at December 313

425.8

583.6

155.4

74.1

1 238.9

58.9

1 297.8

Liabilities at December 31

325.6

266.3

68.1

49.7

709.7

89.1

798.8

Additions in tangible and intangible assets

32.7

74.7

19.0

6.5

132.9

5.5

138.4

Employees at December 314

4 082

4 340

1 848

1 005

11 275

450

11 725

  1. 1 EBITDA and EBIT in BG North America include the gain from disposal of the UGN business in Chicago Heights, USA, in the amount of CHF 33.2 million.
  2. 2 EBIT in BG SAMEA includes an impairment loss in the amount of CHF 4.3 million due to the adaptation of the South American production capacity.
  3. 3 Assets in Corporate and elimination include investments in associated companies in the amount of CHF 11.0 million. In 2016, Autoneum did not increase its investments in associated companies, refer to note 15.
  4. 4 Full-time equivalents including temporary employees (excluding apprentices).

Revenue and non-current assets by country

CHF million

Revenue1 2017

Revenue1 2016

Non-current assets2 31.12.2017

Non-current assets2 31.12.2016

USA

713.5

748.7

261.2

213.4

China

218.9

195.4

79.5

53.1

Germany

205.4

183.0

22.6

19.4

Great Britain

175.2

179.0

16.8

13.8

Canada

149.1

163.5

9.1

10.2

Spain

140.5

146.3

16.6

13.0

France

133.4

130.5

22.7

22.4

Mexico

103.1

104.7

43.8

22.9

Switzerland3

0.5

3.0

51.7

46.9

Remaining countries

363.4

298.5

124.3

104.8

Total

2 203.0

2 152.6

648.2

519.9

  1. 1 Revenue is disclosed by location of customers.
  2. 2 Non-current assets consist of tangible assets, intangible assets and investments in associated companies.
  3. 3 Domicile of Autoneum Holding Ltd.

The following customers accounted for more than 10% of annual revenue in 2017 or 2016:

Revenue with major customers

CHF million

2017

2016

Ford

372.6

412.3

Honda

251.6

245.7

BMW

228.6

192.2

Information on revenue by product group is not available. The major customers generate revenue in all geographic segments.

5 Employee expenses

CHF million

2017

2016

Wages and salaries

–441.1

–421.0

Social security expenses

–89.0

–86.7

Pension expenses for defined contribution plans

–9.6

–9.9

Pension expenses for defined benefit plans

–5.7

–4.9

Other personnel expenses

–48.8

–47.4

Total

–594.1

–569.8

Autoneum started a long-term incentive plan (LTI) for the management in 2012. Part of Autoneum’s net profit is allocated to beneficiaries defined in advance by granting them shares of Autoneum Holding Ltd. The shares become property of the beneficiaries after a vesting period of 35 months, if the beneficiaries are then still employed by an Autoneum company. Immediate vesting occurs in case of death or retirement of the beneficiary. In case of employment termination, shares not yet vested lapse without compensation. Exceptions are possible at the discre­tion of the Nomination and Compensation Committee. The first vesting date was in spring 2015. Employee expenses resulting from share-based compensation in course of the LTI are recognized over the vesting period. 2 797 shares (2016: 4 109 shares) valued at CHF 277.75 (2016: CHF 224.50) were granted in 2017, and expenses of CHF 0.6 million (2016: CHF 0.8 million) were recognized in wages and salaries.

Members of the Board of Directors receive part of their remuneration in Autoneum shares. 3 569 shares (2016: 3 178 shares) valued at CHF 280.50 (2016: CHF 235.87) were granted in 2017, and expenses of CHF 1.0 million (2016: CHF 0.7 million) were recognized in wages and salaries.

Members of the Group Executive Board receive part of their remuneration in Autoneum shares. 6 124 shares (2016: 5 801 shares) valued at a weighted average share price of CHF 291.88 (2016: CHF 266.30) were granted in 2017, and expenses of CHF 1.8 million (2016: CHF 1.5 million) were recognized in wages and salaries.

6 Other expenses

CHF million

2017

2016

Energy, maintenance and repairs

–155.1

–156.6

Marketing and distribution expenses

–58.4

–55.9

Operating leasing expenses

–42.7

–37.9

Audit and consulting expenses

–21.6

–22.5

IT and office expenses

–20.9

–20.1

Insurance and other charges

–17.3

–13.9

Loss from disposal of subsidiary or business

–0.1

Miscellaneous expenses

–60.9

–45.7

Total

–377.1

–352.6

7 Other income

CHF million

2017

2016

Gain from disposal of subsidiary or business

33.2

Gain from disposal of tangible assets

2.9

Rental income

1.3

1.1

Miscellaneous income

28.2

14.6

Total

29.5

51.8

Miscellaneous income contains mainly income generated with by-products arising during the manufacturing process and income from release of unused provisions.

8 Depreciation, amortization and impairment

CHF million

2017

2016

Depreciation of tangible assets

–73.4

–66.7

Impairment of tangible assets

–2.3

–0.7

Amortization of intangible assets

–2.2

–1.9

Impairment of assets of disposal group classified as held for sale1

–4.3

Total

–77.9

–73.6

  1. 1 Refer to note 21.

9 Financial income

CHF million

2017

2016

Interest income

2.2

1.5

Dividend income

0.9

0.4

Net foreign exchange gains

1.0

Other financial income

0.2

0.2

Total

4.4

2.1

10 Financial expenses

CHF million

2017

2016

Interest expenses1

–11.3

–12.5

Net foreign exchange losses

–2.8

Loss from disposal of investments in associated companies

–0.4

Other financial expenses

–0.2

–0.2

Total

–12.0

–15.5

  1. 1 Thereof CHF 0.2 million (2016: CHF 0.8 million) amortization of transaction costs and CHF 1.6 million (2016: CHF 0.9 million) interest expenses for defined benefit pension plans.

11 Income taxes

CHF million

2017

2016

Current income taxes

–39.2

–63.3

Deferred income taxes

–16.1

2.9

Total

–55.3

–60.4

Reconciliation between expected and actual income tax expenses:

CHF million

2017

2016

Profit before taxes

173.8

194.2

Average applicable income tax rate

27.6%

29.8%

Expected income tax expenses

–48.0

–57.8

Non-taxable income and non-deductible expenses

–1.8

–0.4

Current income taxes from prior periods

2.6

–0.5

Utilization of previously unrecognized tax loss carryforwards

7.2

4.1

Change in value adjustments/first time recognition of temporary differences

–14.3

0.3

Non-recoverable withholding taxes

–4.9

–5.3

Income taxes at other income tax rates or taxable base

1.0

–1.2

Impact of changes in income tax rates

2.1

–0.2

Other effects

0.9

0.6

Income tax expenses

–55.3

–60.4

The change in the average applicable income tax rate is mainly due to the different geographic composition of profit or loss before taxes.

Deferred income tax assets and liabilities pertain to the following balance sheet line items:

CHF million

Deferred income tax assets 31.12.2017

Deferred income tax liabilities 31.12.2017

Deferred income tax assets 31.12.2016

Deferred income tax liabilities 31.12.2016

Non-current assets

5.7

25.4

1.8

16.7

Inventories

3.3

0.8

5.9

0.8

Other assets

2.5

1.7

4.3

11.5

Employee benefit liabilities

2.3

0.9

9.4

Provisions

2.9

0.4

3.6

1.3

Other liabilities

5.6

3.3

5.6

5.4

Tax loss carryforwards and tax credits

18.1

29.7

Subtotal

40.5

32.6

60.2

35.7

Offsetting

–14.8

–14.8

–25.0

–25.0

Total

25.7

17.8

35.2

10.7

The decrease in the net deferred income tax assets by CHF 16.6 million (2016: increase by CHF 3.5 million) relates to the deferred income tax expenses recognized in the consolidated income statement of CHF 16.1 million (2016: deferred income tax income of CHF 2.9 million), to the deferred income tax expenses recognized in other comprehensive income of CHF 1.7 million (2016: deferred income tax income of CHF 1.0 million) and to a currency translation adjustment of CHF 1.2 million (2016: CHF –0.4 million).

No deferred income tax assets have been recognized from deductible temporary differences in the amount of CHF 82.1 million (2016: CHF 66.4 million). At the reporting date, no tax loss carryforwards (2016: nil) are recognized for Group companies that incurred losses in 2017 or 2016 (2016 or 2015) supported by increased future profitability and synergies as a result of restructuring.

The table below discloses tax loss carryforwards by their year of expiry:

CHF million

Recognized1 31.12.2017

Non-recognized2 31.12.2017

Recognized1 31.12.2016

Non-recognized2 31.12.2016

Less than 3 years

1.5

1.6

In 3 to 7 years

1.5

9.1

8.4

Thereafter

67.8

286.0

39.2

289.2

Total

67.8

288.9

48.3

299.2

  1. 1 Tax loss carryforwards for which deferred income tax assets are recognized.
  2. 2 Tax loss carryforwards for which no deferred income tax assets are recognized.

The tax loss carryforwards for which no deferred income tax assets were recognized originate from countries with a deferred income tax rate between 17% and 31% (2016: between 17% and 35%).

The table below discloses tax credits by their year of expiry:

CHF million

Recognized1 31.12.2017

Non-recognized2 31.12.2017

Recognized1 31.12.2016

Non-recognized2 31.12.2016

Less than 3 years

In 3 to 7 years

Thereafter

3.3

16.3

18.1

Total

3.3

16.3

18.1

  1. 1 Tax credits for which deferred income tax assets are recognized.
  2. 2 Tax credits for which no deferred income tax assets are recognized.

12 Earnings per share

2017

2016

Net profit attributable to shareholders of AUTN1

CHF million

91.3

95.8

Average number of shares outstanding

Number of shares

4 656 670

4 648 581

Average number of shares outstanding diluted

Number of shares

4 665 783

4 654 735

Basic earnings per share

CHF

19.61

20.61

Diluted earnings per share

CHF

19.57

20.58

  1. 1 The LTI does not lead to a dilution effect in profit attributable to shareholders of Autoneum Holding Ltd.

The average number of shares outstanding is calculated based on the number of shares issued less the weighted average number of treasury shares held. The shares vested but not yet transferred in course of the management’s long-term incentive plan (LTI) and performance related bonus leads to a diluted average number of shares outstanding.

13 Tangible assets

CHF million

Land and buildings

Machinery and plant equipment

Data processing equipment

Vehicles and furniture

Tangible assets under construction

Total

Cost at January 1, 2017

240.6

978.5

12.5

17.5

124.9

1 374.1

Additions

21.5

26.6

1.5

1.4

142.7

193.6

Disposals

–0.4

–9.0

–0.1

–0.6

–10.1

Reclassification

6.4

83.9

1.0

5.4

–96.8

Currency translation adjustment

8.8

24.1

0.7

0.6

0.7

34.8

Cost at December 31, 2017

277.0

1 104.1

15.6

24.3

171.5

1 592.5

Accumulated depreciation and impairment at January 1, 2017

–130.4

–722.1

–9.3

–12.3

–874.1

Depreciation

–8.5

–61.3

–1.5

–2.2

–73.4

Impairment

–1.0

–1.2

–2.3

Disposals

0.3

8.7

0.1

0.6

9.7

Currency translation adjustment

–5.8

–22.5

–0.6

–0.6

–29.5

Accumulated depreciation and impairment at December 31, 2017

–145.4

–798.3

–11.4

–14.5

–969.5

Net book value at January 1, 2017

110.2

256.4

3.2

5.2

124.9

500.0

Net book value at December 31, 2017

131.6

305.8

4.2

9.8

171.5

623.0

CHF million

Land and buildings

Machinery and plant equipment

Data processing equipment

Vehicles and furniture

Tangible assets under construction

Total

Cost at January 1, 2016

233.0

909.9

12.0

16.1

98.3

1 269.3

Additions

1.2

12.4

0.7

0.4

122.7

137.5

Disposals

–6.4

–21.5

–1.1

–0.7

–29.7

Reclassification

13.8

78.3

0.9

1.7

–94.8

Reclassification to assets of disposal group

–1.1

–7.6

–0.1

–0.1

–0.3

–9.2

Currency translation adjustment

0.1

7.0

0.1

–1.0

6.2

Cost at December 31, 2016

240.6

978.5

12.5

17.5

124.9

1 374.1

Accumulated depreciation and impairment at January 1, 2016

–128.0

–686.8

–9.3

–11.7

–835.8

Depreciation

–8.0

–56.3

–1.2

–1.3

–66.7

Impairment

–0.7

–0.7

Disposals

5.2

21.3

1.1

0.7

28.2

Reclassification to assets of disposal group

0.7

3.4

0.1

0.1

4.2

Currency translation adjustment

–0.2

–3.1

–3.2

Accumulated depreciation and impairment at December 31, 2016

–130.4

–722.1

–9.3

–12.3

–874.1

Net book value at January 1, 2016

105.0

223.1

2.7

4.4

98.3

433.5

Net book value at December 31, 2016

110.2

256.4

3.2

5.2

124.9

500.0

Additions in tangible assets comprise mainly investments in production facilities.

Tangible assets with a book value of CHF 20.5 million were financed by long-term leasing contracts as of December 31, 2017 (2016: nil). No borrowing costs were capitalized in both the reporting year and the prior year.

Tangible assets in the amount of CHF 0.8 million (2016: CHF 0.6 million) are pledged as security for financial liabilities.

14 Intangible assets

CHF million

2017

2016

Cost at January 1

14.7

14.0

Additions

4.4

0.9

Currency translation adjustment

0.2

–0.1

Cost at December 31

19.3

14.7

Accumulated amortization at January 1

–5.9

–4.1

Amortization

–2.2

–1.9

Currency translation adjustment

0.1

Accumulated amortization at December 31

–8.2

–5.9

Net book value at January 1

8.8

9.8

Net book value at December 31

11.2

8.8

Intangible assets comprise mainly investments in a new ERP system.

No development costs were capitalized in 2017 and 2016. In 2017, an amount of CHF 77.6 million was spent on research and development (2016: CHF 64.5 million). In an increasingly costcompetitive environment, the Autoneum Group invests in innovative materials and products, and in new efficient production technologies to support vehicle manufacturers in meeting challenging targets in acoustic comfort, fuel consumption and environmental emissions. The focus of the Group is in the development of lightweight and acoustically efficient solutions for vehicle engine bay, underbody, interior floor and body treatment.

15 Investments in associated companies

Investments in associated companies comprise the 30% share in SRN Sound Proof Co., Ltd., Chonburi, Thailand, and the 25% share in Wuhan Nittoku Autoneum Sound-Proof Co. Ltd., Wuhan, China. On January 31, 2017 Autoneum disposed of its 49% interest in the associated company SHN Co., Ltd., Daegu, Korea, to the majority shareholder SH Global Ltd., Iksan, Korea (refer to note 3). The investments in associated companies are measured using the equity method. The net book value of investments in associated companies changed as follows:

CHF million

2017

2016

Net book value at January 1

11.0

8.3

Share of profit of associated companies

3.4

3.1

Dividends received

–0.7

–0.4

Currency translation adjustment

0.5

–0.1

Net book value at December 31

14.1

11.0

16 Financial assets

CHF million

31.12.2017

31.12.2016

Investments in non-consolidated companies

64.3

34.4

Loans

8.0

5.7

Other financial assets

5.7

3.4

Total non-current portion

78.0

43.5

Loans

1.1

0.5

Marketable securities

1.6

Time deposits with original maturities between 3 and 12 months

1.5

Total current portion

2.8

1.9

17 Other assets

CHF million

31.12.2017

31.12.2016

Other receivables

36.1

46.0

Total non-current portion

36.1

46.0

Non-income tax receivables

29.7

29.0

Deferred expenses

12.5

6.5

Advance payments to suppliers

7.8

4.6

Fair value of derivative financial instruments

1.4

0.3

Accrued income

0.1

Other receivables

9.8

22.8

Total current portion

61.3

63.3

18 Inventories

CHF million

31.12.2017

31.12.2016

Raw materials and consumables

32.0

30.1

Purchased parts

1.5

1.6

Finished goods

34.4

25.3

Work in progress

149.1

94.5

Allowance

–3.2

–3.2

Total

213.9

148.2

19 Trade receivables

CHF million

31.12.2017

31.12.2016

Trade receivables nominal

303.8

286.4

Allowance for doubtful trade receivables

–2.4

–10.3

Total

301.4

276.1

The following table summarizes the movement in the allowance for doubtful trade receivables:

CHF million

2017

2016

Allowance at January 1

–10.3

–9.8

Additions

–0.3

–2.5

Utilization

1.5

1.4

Release

0.1

0.8

Reclassification1

6.6

Currency translation adjustment

0.1

–0.3

Allowance at December 31

–2.4

–10.3

  1. 1 Reclassification of estimated future customer price reductions to other current provisions.

The table below sets forth the aging of trade receivables and the allowance for doubtful trade receivables, showing amounts that are not yet due as well as an analysis of overdue amounts. Trade receivables that are neither due nor impaired are expected to be settled within the agreed payment terms.

CHF million

Nominal 31.12.2017

Allowance 31.12.2017

Nominal 31.12.2016

Allowance 31.12.2016

Not due

269.9

–0.2

253.6

–7.6

Overdue 1 to 89 days

29.5

–0.6

29.1

–0.8

Overdue 90 to 179 days

1.7

–0.2

1.0

–0.3

Overdue 180 to 359 days

1.1

–0.2

1.0

–0.3

Thereafter

1.6

–1.2

1.7

–1.4

Total

303.8

–2.4

286.4

–10.3

Trade receivables comprise receivables due from customers with the following credit rating (Standard & Poor’s long-term issuer rating):

CHF million

31.12.2017

31.12.2016

A– or higher

91.7

76.4

BBB– to BBB+

132.5

101.5

BB+ or lower

40.2

87.1

Not rated

37.0

11.1

Total

301.4

276.1

At December 31, 2017 no trade receivables are pledged as security for financial liabilities (2016: nil). Trade receivables with a book value of CHF 1.4 million (2016: CHF 0.5 million) were sold to third parties based on factoring agreements and no material risks remain with Autoneum.

20 Cash and cash equivalents

CHF million

31.12.2017

31.12.2016

Cash at banks

103.8

148.6

Time deposits with original maturities up to 3 months

1.2

Total

103.8

149.8

21 Assets and liabilities of disposal group classified as held for sale

On September 30, 2017 Autoneum sold its production facility in Betim, Brazil, to the automotive supplier STS Group, headquartered in Hallbergmoos, Germany. With this transaction, the Group adapted its South American production capacity to long-term market demand. The related assets and liabilities were classified as held for sale as of December 31, 2016.

CHF million

31.12.2016

Tangible assets

0.7

Non-current assets

0.7

Inventories

0.3

Trade receivables

0.7

Current assets

0.9

Assets of disposal group classified as held for sale

1.6

Trade payables

0.5

Other liabilities

0.1

Current liabilities

0.7

Liabilities of disposal group classified as held for sale

0.7

There were no cumulative income or expenses included in other comprehensive income relating to the assets and liabilities of the disposal group classified as held for sale.

22 Shareholders’ equity

Since the founding of Autoneum Holding Ltd on December 2, 2010 the number of registered shares has remained unchanged at 4 672 363, each with a nominal value of CHF 0.05 per share. The share capital amounts to CHF 233 618 and is composed as follows:

31.12.2017

31.12.2016

Shares outstanding

Number of shares

4 653 918

4 652 535

Treasury shares

Number of shares

18 445

19 828

Total shares issued

Number of shares

4 672 363

4 672 363

Nominal value per share

CHF

0.05

0.05

Share capital

CHF

233 618

233 618

Share capital

The holders of shares are entitled to receive dividends and are entitled to one vote per share at general meetings of the Company.

Conditional share capital

For issuing convertible bonds, warranty bonds, and for granting shareholder options, the share capital can be increased by a maximum of 700 000 fully paid-up registered shares with a par value of CHF 0.05 up to a maximum value of CHF 35 000. Furthermore, for the issuance of shares to employees of subsidiaries, the share capital can be increased by a maximum of 250 000 fully paid-up registered shares with a par value of CHF 0.05 up to a maximum value of CHF 12 500.

Treasury shares

The following transactions with treasury shares were performed during the financial year:

2017 in shares

2017 in CHF million

2016 in shares

2016 in CHF million

Treasury shares at January 1

19 828

2.4

37 612

4.3

Purchase of treasury shares

9 382

2.3

530

0.1

Transfer of treasury shares

–10 765

–1.3

–18 314

–2.1

Treasury shares at December 31

18 445

3.3

19 828

2.4

Capital reserves

Capital reserves originate from the contribution of the Autoneum companies to the Group in the course of the separation in 2011.

Available for sale reserves

The available for sale reserves contain changes in the fair value of non-consolidated investments. The reserves will be reclassified to the income statement at disposal.

Retained earnings

Retained earnings include accumulated earnings since the Group was established in December 2010.

Currency translation adjustment

The currency translation adjustment comprises all foreign exchange differences arising from the translation of the financial statements of foreign entities included in the consolidated financial statements.

Changes resulting from other comprehensive income

The table below discloses changes resulting from other comprehensive income to each component of equity:

Other comprehensive income 2017

CHF million

Available for sale reserves

Retained earnings

Currency transl. adjustm.

Total

Attributable to non-controlling interests

Total equity

Currency translation adjustment

2.4

2.4

–3.3

–0.9

Change in fair value of financial instruments available for sale

15.2

15.2

15.2

Income taxes

Total items that will be reclassified to income statement

15.2

2.4

17.6

–3.3

14.3

Remeasurement of defined benefit pension plans

7.4

7.4

7.4

Income taxes

–1.7

–1.7

–1.7

Total items that will not be reclassified to income statement

5.7

5.7

5.7

Total

15.2

5.7

2.4

23.3

–3.3

20.0

Other comprehensive income 2016

CHF million

Available for sale reserves

Retained earnings

Currency transl. adjustm.

Total

Attributable to non-controlling interests

Total equity

Currency translation adjustment

6.3

6.3

0.2

6.5

Change in fair value of financial instruments available for sale

13.3

13.3

13.3

Income taxes

Total items that will be reclassified to income statement

13.3

6.3

19.6

0.2

19.8

Remeasurement of defined benefit pension plans

–5.1

–5.1

–5.1

Income taxes

1.0

1.0

1.0

Total items that will not be reclassified to income statement

–4.2

–4.2

–4.2

Total

13.3

–4.2

6.3

15.4

0.2

15.6

23 Non-controlling interests

The non-controlling interests derive from UGN Inc., USA; Autoneum Erkurt Otomotive AS, Bursa, Turkey; Tianjin Autoneum Nittoku Sound-Proof Co. Ltd., Tianjin, China; Autoneum Nittoku (Guangzhou) Sound-Proof Co. Ltd., Guangzhou, China; Autoneum Nittoku Sound Proof Products India Pvt. Ltd., Chennai, India; Autoneum Feltex (Pty) Ltd., Durban, South Africa; Autoneum Portugal Lda., Setúbal, Portugal; and Autoneum Korea Ltd., Incheon, Korea (until acquisition of the remaining 40% interest from the minority shareholder on January 31, 2017, refer to note 3). Due to disclosure restrictions in shareholder agreements, information on significant non-controlling interests is only disclosed on an aggregated level.

The table below sets out aggregated financial information of the subsidiaries with non-­controlling interests:

CHF million

31.12.2017

31.12.2016

Non-current assets

221.4

184.2

Current assets

167.9

171.3

Non-current liabilities

–55.7

–36.7

Current liabilities

–110.7

–104.0

Net assets

222.9

214.7

Thereof non-controlling interests

107.9

104.7

2017

2016

Revenue

570.0

564.6

Net profit

59.7

79.7

Other comprehensive income

–6.1

0.3

Total comprehensive income

53.5

80.0

Thereof non-controlling interests

23.9

38.2

Cash flows from operating activities

75.3

71.8

Cash flows (used in)/from investing activities

–41.8

2.8

Cash flows used in financing activities

–46.5

–68.4

Net change in cash and cash equivalents

–13.1

6.2

24 Borrowings

CHF million

Bonds

Bank debts

Finance lease obligations

Other borrowings

Total

Borrowings at January 1, 2017

199.5

7.1

2.1

208.7

Proceeds

99.7

91.9

5.6

197.1

Repayment

–125.0

–13.1

–0.1

–138.2

Cash flows

–25.3

78.8

5.5

59.0

Additions

20.9

20.9

Increase in present value

0.2

0.2

0.4

Currency translation adjustment

–0.2

–0.2

Non-cash changes

0.2

20.8

21.1

Borrowings at December 31, 2017

174.4

85.9

20.8

7.6

288.8

Thereof non-current

174.4

45.0

20.5

2.6

242.5

Thereof current

40.9

0.3

5.0

46.2

CHF million

Bonds

Bank debts

Finance lease obligations

Other borrowings

Total

Borrowings at January 1, 2016

124.6

58.3

0.5

1.5

184.9

Proceeds

74.6

27.0

0.7

102.3

Repayment

–79.5

–0.5

–0.1

–80.1

Cash flows

74.6

–52.6

–0.5

0.6

22.2

Additions

Increase in present value

0.2

0.5

0.8

Currency translation adjustment

0.8

0.8

Non-cash changes

0.2

1.4

1.6

Borrowings at December 31, 2016

199.5

7.1

2.1

208.7

Thereof non-current

74.7

1.6

2.1

78.4

Thereof current

124.8

5.5

130.3

On December 14, 2012 Autoneum Holding Ltd issued a fixed-rate bond with a nominal value of CHF 125.0 million, which was listed on the SIX Swiss Exchange (AUT12, ISIN: CH0196770439). The bond carried a coupon rate of 4.375% and had a term of five years with a final maturity on December 14, 2017. On December 31, 2016 the market value of the bond was CHF 129.6 million.

On July 4, 2016 Autoneum Holding Ltd issued a fixed-rate bond with a nominal value of CHF 75.0 million, which is listed on the SIX Swiss Exchange (AUH16, ISIN: CH0326213904). The bond carries a coupon rate of 1.125% and has a term of seven years with a final maturity on July 4, 2023. On December 31, 2017 the market value of the bond was CHF 76.5 million (2016: CHF 75.4 million).

On December 8, 2017 Autoneum Holding Ltd issued a fixed-rate bond with a nominal value of CHF 100.0 million, which is listed on the SIX Swiss Exchange (AUT17, ISIN: CH0373476032). The bond carries a coupon rate of 1.125% and has a term of eight years with a final maturity on December 8, 2025. On December 31, 2017 the market value of the bond was CHF 100.9 million.

Autoneum maintains a long-term credit agreement with a banking syndicate in the amount of CHF 150.0 million, whereof CHF 45.0 million was drawn at year-end (2016: nil). The line of credit may partly be used as a guarantee facility. On December 7, 2017 the long-term credit agreement was amended and the final maturity date extended from December 31, 2019 to December 31, 2022. The interest rate is based on the LIBOR rate plus an applicable margin, which is determined based on the ratio of net debt to EBITDA. The credit agreement contains customary financial covenants, which include the ratio of net debt to EBITDA and a minimum economic equity. Compliance with financial covenants is checked quarterly and reported to the banking syndicate. In fiscal years 2017 and 2016, the financial covenants were met at all times.

In addition to the aforementioned bonds and the long-term credit agreement, local credit limits and borrowings with individual customary market conditions exist in several countries.

The borrowings are denominated in the following currencies:

CHF million

31.12.2017

31.12.2016

CHF

257.8

199.1

USD

22.4

4.7

CNY

5.2

1.2

Other

3.4

3.7

Total

288.8

208.7

25 Employee benefits

CHF million

31.12.2017

31.12.2016

Post-employment benefit liabilities

27.9

34.7

Other long-term employee benefits

6.0

2.3

Employee benefit liabilities

33.9

37.0

In the reporting period, total expenses for pensions in the amount of CHF 16.8 million have been recognized as employee expenses and interest expenses (2016: CHF 15.6 million).

Some employees participate in defined contribution plans whose insurance benefit results solely from the paid contributions and the return on investment on the plan asset. The other employees participate in defined benefit plans that are based upon direct benefits of the Autoneum Group.

Defined contribution plans

The expenses for defined contribution plans totaled CHF 9.6 million in the current reporting period (2016: CHF 9.9 million).

Defined benefit plans

Autoneum maintains defined benefit pension plans in Switzerland, Great Britain, the USA, Canada and the Netherlands. The most significant pension plans are those in Switzerland and the USA. Those plans sum up to 78.5% (2016: 79.3%) of the Group’s defined benefit obligation and to 78.4% (2016: 79.4%) of the Group’s plan assets.

The status of the defined benefit plans at year-end was as follows:

CHF million

2017

2016

Switzerland

Fair value of plan assets at December 31

125.1

113.9

Present value of defined benefit obligation at December 31

–129.9

–121.6

Deficit at December 31

–4.8

–7.6

USA

Fair value of plan assets at December 31

28.4

30.8

Present value of defined benefit obligation at December 31

–42.7

–48.0

Deficit at December 31

–14.3

–17.1

Other countries

Fair value of plan assets at December 31

42.3

37.7

Present value of defined benefit obligation at December 31

–47.2

–44.1

Deficit at December 31

–4.9

–6.5

Total deficit at December 31

–24.0

–31.2

Recognized in the balance sheet

as employee benefit assets

3.8

3.4

as employee benefit liabilities

27.9

34.7

Swiss pension plans

Pension plans are governed by the Swiss Federal Law on Occupational Retirement, Survivors’ and Disability Pension Plans (BVG). The Group’s pension plans are administered by separate legal foundations, which are funded by regular employee and company contributions. Plan participants are insured against the financial consequences of old age, disability and death. The most senior governing body of the pension plan is the Board of Trustees. The Board of Trustees is responsible for the investment of the plan assets. All investment decisions made by the Board of Trustees need to conform to the guidelines set out in a long-term investment strategy. This strategy is based on legal requirements, expected future contributions and expected future obligations and is reassessed at least once a year. All governing and administration bodies have an obligation to act in the interests of the plan participants. The final benefit is contribution-based with certain minimum guarantees. Due to these minimum guarantees, the Swiss plans are treated as defined benefit plans for the purposes of these IFRS financial statements, although they have many characteristics of defined contribution plans. Retirement benefits are based on the accumulated savings capital, which can either be drawn as a lifelong pension or as a lump-sum payment. The pension is calculated by multiplying the balance of the savings capital with the applicable conversion rate. The plan is exposed to actuarial risks, such as longevity risk, interest rate risk and market (investment) risk. In case of an underfunding, the Board of Trustees is required to take the necessary measures to ensure that full funding can be expected to be restored within a reasonable period. The measures may include increasing employee and company contributions, lowering the interest rate on retirement account balances or reducing prospective benefits.

US pension plans

Autoneum maintains five defined benefit pension plans in the USA. Four of those plans are funded and one plan is unfunded. The defined benefit plans in the USA have been closed to new members. New employees in the USA now join defined contribution plans. The defined benefit plans are subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA), which defines minimum standards such as the statutory minimum funded status.

Pension plans in other countries

Autoneum maintains defined benefit plans in Canada, Great Britain and in the Netherlands. The pension plan in Canada is open for all Canadian employees. The plan is funded, and the majority of the contributions are paid by the employer. The pension plan in Great Britain is funded and has been closed to new members. New employees join a defined contribution plan. The plan in the Netherlands is funded and has been closed to new members.

The movement in the defined benefit obligation over the year was as follows:

CHF million

2017

2016

Defined benefit obligation at January 1

213.7

207.6

Current service cost

6.7

6.9

Past service cost

–2.1

Interest expenses

4.1

4.5

Remeasurement gains and losses

5.6

7.5

Employee contributions

3.3

3.2

Settlements

–5.5

–3.8

Benefits paid

–7.7

–12.2

Currency translation adjustment

–0.5

2.0

Defined benefit obligation at December 31

219.8

213.7

The movement in the fair value of plan assets over the year was as follows:

CHF million

2017

2016

Fair value of plan assets at January 1

182.4

180.9

Interest income

2.5

3.6

Return on plan assets excluding interest income

13.1

2.4

Employer contributions

6.5

6.6

Employee contributions

3.3

3.2

Settlements

–4.4

–3.8

Benefits paid

–7.7

–12.2

Currency translation adjustment

1.8

Fair value of plan assets at December 31

195.8

182.4

The major categories of plan assets were as follows:

CHF million

31.12.2017

31.12.2016

Equity

88.4

79.1

Debt

58.9

61.5

Real estate

29.9

24.4

Cash

11.3

8.3

Other

7.2

9.2

Total

195.8

182.4

All equity and debt instruments are listed on a stock exchange.

The amounts recognized in the income statement were as follows:

CHF million

2017

2016

Current service cost

–6.7

–6.9

Past service cost

2.1

Gain on settlements

1.1

Net interest expenses

–1.6

–0.9

Pension expenses for defined benefit plans

–7.2

–5.7

Recognized in the income statement:

as employee expenses

–5.7

–4.9

as interest expenses

–1.6

–0.9

Prior year past service cost stems from amendments of Swiss pension plans.

The amounts recognized in the income statement result from plans in the following regions:

CHF million

2017

2016

Expenses for defined benefit plans in Switzerland

–5.5

–2.8

Expenses for defined benefit plans in the USA

–0.6

–1.5

Expenses for defined benefit plans in other countries

–1.2

–1.4

Total

–7.2

–5.7

The expected employer contributions for the Group’s defined benefit pension plans for 2018 amount to CHF 6.8 million. The expected benefit payments for 2018 are CHF 6.2 million.

The effect from remeasurement of the defined benefit pension plans recognized in other comprehensive income is as follows:

CHF million

2017

2016

Remeasurement gains and losses

from changes in demographic assumptions

0.6

2.1

from changes in financial assumptions

–2.6

–9.0

from experience adjustment

–3.6

–0.6

Return on plan assets excluding interest income

13.1

2.4

Total

7.4

–5.1

The table below discloses the main actuarial assumptions at year-end:

Weighted average of all pension plans

31.12.2017

31.12.2016

Discount rate

in %

1.8

2.0

Expected future salary growth

in %

0.6

0.6

Expected future pension growth

in %

0.1

0.1

Life expectancy for females at age of 65

in years

23.8

23.8

Life expectancy for males at age of 65

in years

21.8

21.7

At December 31, 2017 the weighted average duration of the defined benefit obligation was 16.4 years (2016: 16.7 years).

The table below shows the results of the sensitivity analysis. It was analyzed how expected changes in the discount rate, in future salary and pension growth, and in the life expectancy would impact the defined benefit obligation. Changes in these parameters would have the following­ effect on the defined benefit obligation:

CHF million

31.12.2017

31.12.2016

Increase in discount rate by 0.25 percentage point

–8.7

–8.6

Decrease in discount rate by 0.25 percentage point

9.3

9.2

Increase in future salary growth by 0.5 percentage point

2.3

3.2

Decrease in future salary growth by 0.5 percentage point

–2.4

–3.2

Increase in future pension increase by 0.25 percentage point

3.2

3.0

Decrease in future pension increase by 0.25 percentage point

–3.0

–2.8

Increase in life expectancy by one year

6.3

5.5

Decrease in life expectancy by one year

–5.8

–5.1

26 Provisions

CHF million

Guarantee and warranty

Litigation and tax risk

Environmental

Other

Total

Provisions at January 1, 2017

4.4

42.4

11.0

19.2

77.0

Additions

0.3

13.3

0.2

11.7

25.5

Utilization

–0.3

–9.9

–0.1

–10.2

–20.5

Release

–4.0

–4.3

–3.4

–5.4

–17.1

Reclassification

1.9

1.9

3.8

Currency translation adjustment

1.4

0.8

0.5

2.7

Provisions at December 31, 2017

0.3

44.9

8.5

17.7

71.4

Thereof non-current

23.1

8.3

6.0

37.4

Thereof current

0.3

21.8

0.2

11.7

34.0

Guarantee and warranty provisions are related to the production and supply of goods or services and are based on experience. The non-current guarantee and warranty provisions are expected to be used in one to two years.

Litigation and tax risk provisions comprise provisions for expected costs resulting from investigations and proceedings of government agencies, provisions for court cases, such as claims brought up by workers for health- or accident-related incidents, and provisions for tax risks. The majority of litigation and tax risk provisions are expected to be used within the next two to three years.

Environmental provisions contain the estimated costs for the cleanup of contaminated sites due to past industrial operations. The majority of provisions stem from legal entities within Business Group Europe. Long-term environmental provisions are expected to be used mainly over the next five to ten years.

Other provisions are made for contracts where the unavoidable costs to fulfill the obligation are greater than the expected economic benefits, as well as for other constructive or legal liabilities of Group companies. The disclosed reclassification mainly comprises estimated customer price reductions in the amount of CHF 6.6 million which were reclassified from the allowance for doubtful trade receivables to other current provisions (refer to note 19) and other long-term employee benefits in the amount of CHF 2.6 million which were reclassified to employee benefit liabilities (refer to note 25). The majority of other non-current provisions are expected to be used in two to three years.

27 Other liabilities

CHF million

31.12.2017

31.12.2016

Advance payments from customers

19.7

20.2

Deferred income

0.6

Other payables

0.6

11.3

Total non-current portion

20.9

31.5

Advance payments from customers

70.3

55.4

Accrued expenses

59.6

52.3

Accrued holidays and overtime

14.0

13.3

Non-income tax payables

15.7

19.3

Deferred income

1.9

Fair value of derivative financial instruments

0.8

Other payables

18.7

24.2

Total current portion

181.1

164.5

28 Other commitments

Some Group companies rent tangible assets under finance and operating lease agreements. The leases have varying terms, escalation clauses and renewal rights.

The future, cumulated minimum lease payments for operating leases and for finance leases are due as follows:

CHF million

Operating lease 31.12.2017

Finance lease 31.12.2017

Operating Lease 31.12.2016

Finance lease 31.12.2016

Less than 1 year

28.2

1.4

29.2

1 to 5 years

68.3

6.7

74.4

Thereafter

94.0

24.0

69.8

Total

190.5

32.1

173.4

In the reporting period, CHF 42.7 million was charged to the income statement as operating leasing expenses (2016: CHF 37.9 million).

At year-end, open commitments for investments in tangible assets summed up to CHF 32.6 million (2016: CHF 38.2 million).

29 Contingent liabilities


There are no single matters pending that Autoneum expects to be material in relation to the Group’s business, financial position or results of operations.

30 Financial instruments

The following tables summarize all financial instruments classified by categories according to IAS 39:

CHF million

31.12.2017

31.12.2016

Marketable securities1

1.6

Fair value of derivative financial instruments2

1.4

0.3

Total financial assets at fair value through profit or loss

3.1

0.3

Cash at banks

103.8

148.6

Time deposits with original maturities up to 3 months

1.2

Time deposits with original maturities between 3 and 12 months

1.5

Loans

9.2

6.1

Trade receivables

301.4

276.1

Other receivables

45.9

68.9

Accrued income

0.1

Other financial assets

5.7

3.4

Total loans and receivables

466.1

505.8

Investments in non-consolidated companies1

64.3

34.4

Total available-for-sale financial assets

64.3

34.4

Total

533.5

540.5

CHF million

31.12.2017

31.12.2016

Borrowings

288.8

208.7

Trade payables

261.7

253.8

Accrued expenses

59.6

52.3

Other payables

19.3

35.4

Total financial liabilities at amortized cost

629.4

550.2

Fair value of derivative financial instruments2

0.8

Total financial liabilities at fair value through profit or loss

0.8

Total

630.1

550.2

  1. 1 Measured at fair values that are based on quoted prices in active markets (level 1).
  2. 2 Measured at fair values that are calculated based on observable market data (level 2).

Borrowings comprise two bonds with a total net book value of CHF 174.4 million (2016: CHF 199.5 million) and a total fair value of CHF 177.3 million (2016: CHF 204.9 million) based on quoted prices in active markets. Refer to note 24 for further information. The book values of other financial instruments measured at amortized cost correspond to their fair values.

31 Related parties

Related parties are members of the Board of Directors and the Executive Board or close members of that person’s family, pension funds, associated companies as well as companies controlled by significant shareholders. At December 31, 2017 Artemis Beteiligungen I Ltd, Hergiswil, Switzerland, Centinox Holding Ltd, Hergiswil, Switzerland, and Michael Pieper, Hergiswil, Switzerland, held 20.52% (2016: 20.29%) of the shares of the Company and PCS Holding Ltd, Warth-Weiningen, Switzerland, and Peter Spuhler, Weiningen, Switzerland, held 17.19% (2016: 17.18%) of the shares of the Company.

The pension fund of an Autoneum Group entity granted a loan to the Company. The loan bears an interest rate of 0.35% and is due within six days upon cancellation of the agreement by either the lender or the borrower.

The following transactions were carried out with related parties:

CHF million

2017

2016

Consulting expenses to the law firm of the Chairman of the Board of Directors

0.1

Interest expenses to pension funds

Total

0.1

The total remuneration to the Board of Directors and to the Group Executive Board was as follows:

CHF million

2017

2016

Short-term benefits

4.4

4.8

Share-based payments

2.9

2.6

Post-employment benefits

0.1

0.1

Total

7.5

7.5

The compensation of the Board of Directors and of the Group Executive Board is disclosed in the Remuneration Report.

Year-end balances were as follows:

CHF million

31.12.2017

31.12.2016

Current borrowings due to pension funds

5.0

Bonus accruals for Group Executive Board

2.7

2.4

Total

7.7

2.4

32 Net debt

CHF million

31.12.2017

31.12.2016

Cash and cash equivalents

–103.8

–149.8

Time deposits with original maturities between 3 and 12 months

–1.5

Marketable securities

–1.6

Borrowings

288.8

208.7

Net debt

183.3

57.4

33 Exchange rates for currency translation


CHF

ISO code

Units

Average rate 2017

Average rate 2016

Year-end rate 2017

Year-end rate 2016

Argentine peso

ARS

100

5.92

6.70

5.17

6.42

Brazilian real

BRL

1

0.31

0.28

0.29

0.31

Canadian dollar

CAD

1

0.76

0.75

0.78

0.76

Chinese yuan

CNY

100

14.58

14.89

14.99

14.67

Czech koruna

CZK

100

4.23

4.03

4.58

3.97

Euro

EUR

1

1.11

1.09

1.17

1.07

Pound sterling

GBP

1

1.27

1.34

1.32

1.25

Indian rupee

INR

100

1.51

1.47

1.53

1.50

Mexican peso

MXN

100

5.20

5.32

4.95

4.93

Polish złoty

PLN

100

26.14

25.01

28.02

24.35

United States dollar

USD

1

0.99

0.99

0.98

1.02

34 Events after balance sheet date

There were no events between December 31, 2017 and March 6, 2018 which would necessitate adjustments to the book value of the Group’s assets or liabilities, or which require additional disclosure in the consolidated financial statements.

35 Proposal of the Board of Directors

For the year ended December 31, 2017 the Board of Directors proposes to the Annual General Meeting on March 28, 2018 a dividend of CHF 6.50 per share entitled to dividends. This represents a total distribution up to CHF 30.4 million. In 2017, a total dividend of CHF 30.3 million (CHF 6.50 per share entitled to dividends) was distributed to the shareholders of Autoneum Holding Ltd.

36 Subsidiaries, associated companies and non-consolidated investments

Switzerland

Autoneum Holding Ltd, Winterthur

CHF

0.2

100%

Autoneum International Ltd, Winterthur

CHF

7.0

100%

Autoneum Management Ltd, Winterthur

CHF

1.3

100%

Autoneum Switzerland Ltd, Sevelen

CHF

0.3

100%

Argentina

Autoneum Argentina SA, Córdoba

ARS

22.5

100%

Belgium

Autoneum Belgium N.V., Genk

EUR

8.0

100%

Brazil

Autoneum Brasil Têxteis Acústicos Ltda., São Paulo

BRL

201.6

100%

Canada

Autoneum Canada Ltd., Tillsonburg

CAD

100%

China

Autoneum (Chongqing) Sound-Proof Parts Co. Ltd., Chongqing

CNY

49.3

100%

Autoneum (Shenyang) Sound-Proof Parts Co. Ltd., Shenyang

CNY

49.2

100%

Autoneum (Shanghai) Management Co. Ltd., Shanghai

CNY

13.2

100%

Autoneum (Yantai) Sound-Proof Parts Co. Ltd., Yantai1

CNY

34.5

100%

Autoneum (Changsha) Management Co. Ltd., Changsha1

CNY

34.5

100%

Autoneum (Pinghu) Co. Ltd., Pinghu1

CNY

39.9

100%

Autoneum (Tianjin) Co. Ltd., Tianjin1

CNY

17.0

100%

Autoneum Nittoku (Guangzhou) Sound-Proof Co. Ltd., Guangzhou

CNY

75.8

51%

Tianjin Autoneum Nittoku Sound-Proof Co. Ltd., Tianjin

CNY

47.2

51%

Wuhan Nittoku Autoneum Sound-Proof Co. Ltd., Wuhan

CNY

89.6

25%

Czech Republic

Autoneum CZ s.r.o., Choceň

CZK

206.2

100%

France

Autoneum Holding France SAS, Lyon

EUR

39.8

100%

Autoneum France SAS, Aubergenville

EUR

8.0

100%

Germany

Autoneum Germany GmbH, Rossdorf

EUR

11.2

100%

Great Britain

Autoneum Great Britain Ltd., Stoke-on-Trent

GBP

41.8

100%

Hungary

Autoneum Hungary Ltd., Komárom1

EUR

100%

India

Autoneum India Pvt. Ltd., New Delhi

INR

571.4

100%

Autoneum Nittoku Sound Proof Products India Pvt. Ltd., Chennai

INR

220.0

51%

Indonesia

PT Tuffindo Nittoku Autoneum, Jakarta

IDR

90 370.0

9%

Italy

Porfima Uno S.r.l., Torino

EUR

100%

Japan

Nihon Tokushu Toryo Co. Ltd., Tokyo

JPY

4 753.0

13%

Korea

Autoneum Korea Ltd., Incheon

KRW

264.0

100%

Mexico

Autoneum Mexico, S. de R.L. de C.V., Hermosillo

MXN

100%

Autoneum Mexico Operations, S. de R.L. de C.V., San Luis Potosí

MXN

196.0

100%

Autoneum Mexico Servicios, S. de R.L. de C.V., San Luis Potosí

MXN

3.1

100%

UGN de Mexico, S. de R.L. de C.V., Silao

MXN

0.1

50%

Servicios de Acoustical Solutions, S. de R.L. de C.V., Silao

MXN

0.1

50%

Netherlands

Autoneum Netherland B.V., Weert

EUR

100%

Poland

Autoneum Poland Sp.z.o.o., Katowice

PLN

20.8

100%

Portugal

Autoneum Portugal Lda., Setúbal

EUR

0.6

87%

Russia

Autoneum Rus LLC, Ryazan

RUB

0.8

100%

South Africa

Autoneum Feltex (Pty) Ltd., Durban

ZAR

51%

Spain

Autoneum Spain S.A.U., Terrassa

EUR

5.8

100%

Thailand

SRN Sound Proof Co., Ltd., Chonburi

THB

100.0

30%

Summit & Autoneum (Thailand) Co., Ltd., Chonburi

THB

16.0

51%2

Turkey

Autoneum Erkurt Otomotive AS, Bursa

TRY

2.5

51%

USA

Autoneum America Corporation, Farmington Hills

USD

100%

Autoneum North America Inc., Farmington Hills

USD

100%

UGN Inc., Tinley Park

USD

50%

  1. 1 The company was established in 2017.
  2. 2 Autoneum has 49% of the capital rights.