2 Capital and financial risk management
The following chapter sets out the procedures and guidelines governing the active management of the capital structure and the financial risks to which Swisscom is exposed. Swisscom strives to achieve a robust equity basis, which enables it to guarantee its ability to continue as a going concern and to offer investors an appropriate return based on the risks assumed.
2.1 Capital management and equity
Debt
Swisscom’s debt situation is aligned with the limit on net debt in relation to the operating result before depreciation and amortisation (EBITDA) as set by the Federal Council in its financial targets. Swisscom also has a single A credit rating with rating agencies Standard & Poor’s and Moody’s. Swisscom aims to maintain this rating. During the year under review, the Federal Council adjusted the financial targets for Swisscom and set the limit for net debt at 2.4x EBITDA. Previously, the limit on net debt excluding lease liabilities was 2.1x EBITDA after lease expense.
Net debt comprises financial liabilities and lease liabilities less cash and cash equivalents, listed debt instruments, financial assets relating to financing and other current financial assets. The net debt to EBITDA ratio is as follows:
| In CHF million | 31.12.2022 | 31.12.2021 | ||
|---|---|---|---|---|
| In CHF millionNet debt | 31.12.20227,374 | 31.12.20217,706 | ||
| In CHF millionOperating income before depreciation and amortisation (EBITDA) | 31.12.20224,406 | 31.12.20214,478 | ||
| In CHF millionRatio net debt/EBITDA | 31.12.20221.7 | 31.12.20211.7 |
Equity ratio
Swisscom strives to achieve an equity ratio of a minimum of 30%. The equity ratio is computed as follows:
| In CHF million | 31.12.2022 | 31.12.2021 | ||
|---|---|---|---|---|
| In CHF millionEquity | 31.12.202211,171 | 31.12.202110,813 | ||
| In CHF millionTotal assets | 31.12.202224,620 | 31.12.202124,801 | ||
| In CHF millionEquity ratio in % | 31.12.202245.4 | 31.12.202143.6 |
Dividend policy
Swisscom pursues a dividend policy with a stable dividend, taking into account its financial situation and cash flow generation. Distributable reserves are not determined on the basis of the equity as reported in the consolidated financial statements but rather on the basis of equity as reported in the statutory financial statements of the parent company, Swisscom Ltd. As at 31 December 2022, Swisscom Ltd’s distributable reserves amounted to CHF 7,846 million. The dividend is proposed by the Board of Directors and must be approved by the Annual General Meeting of Shareholders. Treasury shares are not entitled to a dividend. Swisscom Ltd paid the following dividends in 2021 and 2022.
| In CHF million, except where indicated | 2022 | 2021 | ||
|---|---|---|---|---|
| In CHF million, except where indicatedNumber of registered shares eligible for dividend (in millions of shares) | 202251.802 | 202151.802 | ||
| In CHF million, except where indicatedOrdinary dividend per share (in CHF) | 202222.00 | 202122.00 | ||
| In CHF million, except where indicatedDividends paid | 20221,140 | 20211,140 |
The Board of Directors will propose the payment of an unchanged dividend of CHF 22 per share for the 2022 financial year to the Annual General Meeting of Shareholders of Swisscom Ltd on 28 March 2023. This results in a total dividend payment of CHF 1,140 million. The dividend payment is scheduled for 4 April 2023.
Earnings per share
| In CHF million, except where indicated | 2022 | 2021 | ||
|---|---|---|---|---|
| In CHF million, except where indicatedShare of net income attributable to equity holders of Swisscom Ltd | 20221,602 | 20211,832 | ||
| In CHF million, except where indicatedWeighted average number of shares outstanding (number) | 202251,800,968 | 202151,801,334 | ||
| In CHF million, except where indicatedBasic and diluted earnings per share (in CHF) | 202230.93 | 202135.37 |
Supplementary information on equity
Development of retained earnings and other reserves as well as comprehensive income 2022
In CHF million |
Retained earnings |
Foreign currency translation adjustments |
Hedging reserves |
Equity holders of Swisscom |
Non- controlling interests |
Total |
||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Balance at 1 January 2022 | 12,485 | (1,864) | 2 | 10,623 | 2 | 10,625 | ||||||
| Net income | 1,602 | – | – | 1,602 | 1 | 1,603 | ||||||
| Actuarial gains and losses from defined benefit pension plans | 48 | – | – | 48 | – | 48 | ||||||
| Change in fair value of equity instruments | (37) | – | – | (37) | – | (37) | ||||||
| Income tax expense | (8) | – | – | (8) | – | (8) | ||||||
| Items that will not be reclassified to income statement | 3 | – | – | 3 | – | 3 | ||||||
| Foreign currency translation adjustments of foreign subsidiaries | – | (103) | – | (103) | – | (103) | ||||||
| Fair value losses of cash flow hedges transferred to income statement | – | – | (5) | (5) | – | (5) | ||||||
| Equity-accounted investees | – | – | – | – | – | – | ||||||
| Income tax expense | – | 7 | 1 | 8 | – | 8 | ||||||
| Items that may be reclassified to income statement | – | (96) | (4) | (100) | – | (100) | ||||||
| Other comprehensive income | 3 | (96) | (4) | (97) | – | (97) | ||||||
| Comprehensive income | 1,605 | (96) | (4) | 1,505 | 1 | 1,506 | ||||||
| Dividends paid | (1,140) | – | – | (1,140) | (1) | (1,141) | ||||||
| Other changes | (8) | – | – | (8) | 1 | (7) | ||||||
| Balance at 31 December 2022 | 12,942 | (1,960) | (2) | 10,980 | 3 | 10,983 |
Development of retained earnings and other reserves as well as comprehensive income 2021
In CHF million |
Retained earnings |
Foreign currency translation adjustments |
Hedging reserves |
Equity holders of Swisscom |
Non- controlling interests |
Total |
||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Balance at 1 January 2021 | 11,085 | (1,791) | 8 | 9,302 | 1 | 9,303 | ||||||
| Net income | 1,832 | – | – | 1,832 | 1 | 1,833 | ||||||
| Actuarial gains and losses from defined benefit pension plans | 777 | – | – | 777 | – | 777 | ||||||
| Change in fair value of equity instruments | 84 | – | – | 84 | – | 84 | ||||||
| Income tax expense | (152) | – | – | (152) | – | (152) | ||||||
| Items that will not be reclassified to income statement | 709 | – | – | 709 | – | 709 | ||||||
| Foreign currency translation adjustments of foreign subsidiaries | – | (107) | – | (107) | – | (107) | ||||||
| Foreign currency translation losses of foreign subsidiaries transferred to income statement | – | 25 | – | 25 | – | 25 | ||||||
| Fair value losses of cash flow hedges transferred to income statement | – | – | (7) | (7) | – | (7) | ||||||
| Equity-accounted investees | – | 2 | – | 2 | – | 2 | ||||||
| Income tax expense | – | 7 | 1 | 8 | – | 8 | ||||||
| Items that may be reclassified to income statement | – | (73) | (6) | (79) | – | (79) | ||||||
| Other comprehensive income | 709 | (73) | (6) | 630 | – | 630 | ||||||
| Comprehensive income | 2,541 | (73) | (6) | 2,462 | 1 | 2,463 | ||||||
| Dividends paid | (1,140) | – | – | (1,140) | (1) | (1,141) | ||||||
| Other changes | (1) | – | – | (1) | 1 | – | ||||||
| Balance at 31 December 2021 | 12,485 | (1,864) | 2 | 10,623 | 2 | 10,625 |