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Depreciation and amortisation, and non-operating results

In CHF million, except where indicated   31.3.2016   31.3.2015   Change
Operating income before depreciation and amortisation (EBITDA)   1,081   1,051   2.9%
Depreciation, amortisation and impairment losses   (546)   (507)   7.7%
Operating income (EBIT)   535   544   –1.7%
Net interest result   (39)   (47)   –17.0%
Other financial income and expense, net   (40)   (57)   –29.8%
Share of results of associates     5   –100.0%
Income before income taxes   456   445   2.5%
Income tax expense   (92)   (94)   –2.1%
Net income   364   351   3.7%
Share of net income attributable to equity holders of Swisscom Ltd   365   351   4.0%
Share of net income attributable to non-controlling interests   (1)    
             
Average number of shares outstanding (in million)   51.801   51.801  
Earnings per share (in CHF)   7.05   6.78   4.0%

Depreciation and amortisation increased by CHF 39 million or 7.7% to CHF 546 million in comparison with the prior year, mainly reflecting an increase in depreciation and amortisation at Swisscom Switzerland because of the high capital expenditure level. Intangible assets resulting from company acquisitions were capitalised for purchase price allocation purposes. Depreciation and amortisation for the first quarter of 2016 includes scheduled amortisation relating to company takeovers of CHF 35 million (prior year: CHF 29 million).

Net interest expense was CHF 8 million lower at CHF 39 million as a result of the lower average interest costs for financial debt. At CHF 40 million, other net financial expense improved by CHF 17 million mainly as a result of the better foreign exchange result. The net financial expense for the first quarter of 2016 includes foreign currency losses of CHF 4 million (prior year: CHF 27 million) and negative effects of CHF 26 million arising from the fair value adjustment of interest rate swaps (prior year: CHF 25 million).

Income tax expense amounted to CHF 92 million (prior year: CHF 94 million), corresponding to an effective income tax rate of 20.2% (prior year: 21.1%). Excluding non-recurring items, the long-term expectation continues to be that the income tax rate will be around 21%.

The lower operating income was more than offset by the improved net financial expense. Accor­dingly, Swisscom’s net income rose by CHF 13 million or 3.7% to CHF 364 million. Earnings per share is calculated based on the share of net income attributable to equity holders of Swisscom Ltd and the average number of shares outstanding. Earnings per share rose from CHF 6.78 to CHF 7.05.