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Net asset position

Balance sheet

In CHF million   31.12.2016   31.12.2015   Change
             
Assets
Cash and cash equivalents and current financial assets   506   409   23.7%
Trade and other receivables   2,532   2,535   –0.1%
Property, plant and equipment   10,177   9,855   3.3%
Goodwill   5,156   5,161   –0.1%
Other intangible assets   1,756   1,861   –5.6%
Associates and non-current financial assets   455   461   –1.3%
Income tax assets   299   375   –20.3%
Other current and non-current assets   573   492   16.5%
Total assets   21,454   21,149   1.4%
     
             
Liabilities and equity
Financial liabilities   8,496   8,593   –1.1%
Trade and other payables   1,896   1,768   7.2%
Defined benefit obligations   1,850   2,919   –36.6%
Provisions   962   1,139   –15.5%
Income tax liabilities   746   436   71.1%
Other current and non-current liabilities   982   1,052   –6.7%
Total liabilities   14,932   15,907   –6.1%
Share of equity attributable to equity holders of Swisscom Ltd   6,514   5,237   24.4%
Share of equity attributable to non-controlling interests   8   5   60.0%
Total equity   6,522   5,242   24.4%
Total liabilities and equity   21,454   21,149   1.4%
Equity ratio at end of year   30.4%   24.8%    

Total liabilities and equity rose by CHF 0.3 bil­lion or 1.4% to CHF 21.5 bil­lion, which was primarily due to higher capital expenditure.

In CHF million   31.12.2016   31.12.2015   Change
Property, plant and equipment   10,177   9,855   322
Goodwill   5,156   5,161   (5)
Other intangible assets   1,756   1,861   (105)
Other operating assets   3,105   3,027   78
Provisions   (962)   (1,139)   177
Other operating liabilities   (2,878)   (2,820)   (58)
Net operating assets   16,354   15,945   409
Cash and cash equivalents and financial assets   506   409   97
Financial liabilities   (8,496)   (8,593)   97
Defined benefit obligations   (1,850)   (2,919)   1,069
Income tax assets and liabilities, net   (447)   (61)   (386)
Investments in associates   193   223   (30)
Other assets, net   262   238   24
Equity   6,522   5,242   1,280

Fastweb

As at 31 December 2016, the carrying amount of Fastweb in Swisscom’s consolidated financial statements amounted to EUR 2.8bil­lion (CHF 3.0 bil­lion; CHF/EUR year-end exchange rate of 1.074). This includes goodwill with a net carrying amount of EUR 0.5 bil­lion. Swisscom raised financing in EUR, of which it designated EUR 1.24 bil­lion as an instrument for hedging Fastweb’s net assets. Fastweb’s cumulative currency translation losses of CHF 1.8 bil­lion (after tax) at the end of 2016 are recognised in equity in Swisscom’s consolidated financial statements.

Goodwill

The net carrying value of goodwill is CHF 5,156 million, the bulk of which relates to Swisscom Switzerland (CHF 4,582 million). This goodwill arose primarily in 2007 in connection with the repurchase of the 25% stake in Swisscom Mobile Ltd sold to Vodafone in 2001. Following the repurchase, the mobile, fixed-network and solutions businesses were organisationally combined and merged to create the new company Swisscom (Switzerland) Ltd. The valuation risk of this goodwill item is extremely low. The net carrying amount of Fastweb’s goodwill is EUR 492 million (CHF 529 million). Goodwill in respect of Other Operating Segments amounts to CHF 45 million.

Post-employment benefits

Defined benefit obligations presented in the consolidated financial statements are measured in accordance with International Financial Reporting Standards (IFRS). Net defined benefit obligations amount to CHF 1,850 million, which represents a CHF 1,069 million decline year-on-year. This is attributable primarily to the fact that IFRS now takes account of the division of funding gaps between employer and employee (risk sharing). The positive effect of the first-time application of risk sharing is CHF 0.9 bil­lion. In accordance with the Swiss accounting standards applicable to the pension fund (Swiss GAAP ARR), the surplus amounts to CHF 0.1 bil­lion, corresponding to a coverage ratio of around 101%. The main reasons for the difference compared with IFRS of CHF 1.9 bil­lion are the application of differing actuarial assumptions with regard to the discount rate, life expectancy or risk sharing (CHF 1.0 bil­lion), as well as a different actuarial measurement method (CHF 0.9 bil­lion). Unlike Swiss GAAP, IFRS measurement takes into account future salary, contribution and pension increases and early retirements.

Equity

Equity increased by CHF 1,280 million or 24.4% to CHF 6,522 million. The ratio of equity to total assets rose from 24.8% to 30.4%. The CHF 1,604 million in net income and net gains of CHF 831 million recognised directly in equity exceeded dividend payments of CHF 1,140 million to the shareholders of Swisscom Ltd. Net gains recognised directly in equity include non-cash actuarial gains from pension plans totalling CHF 1,162 million as well as unrealised losses of CHF 21 million resulting from currency translation of foreign Group companies. The CHF/EUR exchange rate fell from 1.084 at the end of 2015 to 1.074 at the end of 2016. On 31 December 2016, cumulative currency translation losses recognised in equity amounted to CHF 1,834 million (after tax).

Distributable reserves are calculated on the basis of equity reported in the separate financial statements of Swisscom Ltd in accordance with Swiss company-law financial-reporting standards, rather than on the basis of equity as disclosed in the consolidated balance sheet prepared in accordance with International Financial Reporting Standards (IFRS). On 31 December 2016, the equity of Swisscom Ltd totalled CHF 6,255 million. The difference between this amount and equity disclosed in the consolidated balance sheet is essentially due to earnings retained by subsidiaries as well as different accounting and valuation methods. Under Swiss company law, share capital and that part of the general reserves representing 20% of the share capital may not be distributed. On 31 December 2016, Swisscom Ltd held distributable reserves of CHF 6,193 million.