Depreciation and amortisation, non-operating results

Due to the application of IFRS 16 Leases effective 1 January 2019, right-of-use assets are recognised and depreciated. The depreciation of right-of-use assets amounted to CHF 122 million in the first half of 2019. The depreciation and amortisation of property, plant and equipment and intangible assets increased by CHF 31 million or 2.9% year-on-year to CHF 1,111 million, mainly reflecting an increase in depreciation and amortisation at Swisscom Switzerland. Net interest expense excluding leasing declined from CHF 58 million to CHF 31 million as a result of lower average interest expense. Income tax expense was CHF 158 million (prior year: CHF 206 million), corresponding to an effective income tax rate of 16.8% (prior year: 20.7%). Income tax expense for the first half of 2019 includes positive tax effects of CHF 33 million resulting from the revaluation of deferred income tax items in connection with the adoption of the Swiss tax reform. The revaluation was in response to the federal and cantonal tax laws that came into force on 30 June 2019. Further changes to cantonal tax laws are expected to take effect during the course of the year and result in another tax rate reduction and additional positive tax effects from the valuation of deferred income tax items. Swisscom’s net income decreased by CHF 7 million or 0.9% to CHF 780 million, and earnings per share were down accordingly from CHF 15.25 to CHF 15.10.