Notes to the condensed consolidated semi-annual financial statements

1 Basis of preparation

The unaudited condensed consolidated semi-annual financial statements have been prepared in accordance with IAS 34 “Interim Financial Reporting”. They are based on the financial statements of the individual Group companies drawn up according to uniform accounting policies as of June 30, 2018. The condensed consolidated semi-annual financial statements are not subject to the same requirements as the consolidated annual financial statements. It is recommended to read the condensed consolidated semi-annual financial statements in conjunction with the consolidated financial statements as of December 31, 2017. The condensed consolidated semi-annual financial statements are published exclusively in English. The financial information disclosed in this report may not add up precisely to the disclosed totals due to rounding. Ratios and variances are calculated using the exact underlying amount and not the disclosed rounded amount. Autoneum’s business activities are not subject to pronounced seasonal fluctuations. The condensed consolidated semi-annual financial statements 2018 were authorized for issue by the Board of Directors on July 25, 2018.

2 Changes in accounting policies

Except as described below, the accounting policies applied in these condensed consolidated semi-annual financial statements are the same as those applied in the consolidated financial statements as of December 31, 2017.

The Group has initially adopted IFRS 9 “Financial Instruments” effective as of January 1, 2018. IFRS 9 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. Autoneum is mainly impacted in the area of valuation of trade receivables and contract assets, which is now assessed based on the customer’s credit rating as well as the maturity of the financial asset. In the course of the adoption of IFRS 9 as of January 1, 2018, trade receivables decreased by CHF 0.8 million, financial assets decreased by CHF 0.5 million, other assets decreased by CHF 0.2 million, deferred income tax assets increased by CHF 0.4 million, and the cumulative impact of CHF 1.2 million is recognized in retained earnings. In the course of the adoption of IFRS 9, Autoneum elected to classify its equity investments in Nihon Tokushu Toryo Co. Ltd., Tokyo, Japan into the category “at fair value through other comprehensive income” (FVOCI). Under this new category, the  cumulative change in fair value is reclassified from the fair value reserve to retained earnings on disposal of the investment, and is not recycled to profit or loss. The prior-year’s financial information has not been restated, as the impairment need on assets could not be assessed without the use of hindsight.

The Group has initially adopted IFRS 15 “Revenue from Contracts with Customers” effective as of January 1, 2018. IFRS 15 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 implemented the new standard as of January 1, 2018 using the full retrospective method. The resultant impact of the conversion is recognized in retained earnings as of January 1, 2017 and the prior-year’s financial information has been restated accordingly.

IFRS 15 requires that pre-production costs be capitalized as “costs to fulfill a contract”. Instead of an immediate recognition in the income statement, the costs are capitalized and recognized delayed over the period when revenue is recognized. The capitalized pre-production costs amount to CHF 86.6 million and are included in other assets (non-current) as of December 31, 2017. The Group capitalized pre-production costs of CHF 11.1 million and recognized pre-production costs from prior periods of CHF 9.2 million in the first half of 2017. Both transactions are recorded in the consolidated income statement in the line item “Material expenses”.

The implementation of IFRS 15 led to changes in the timing of recognition of costs and revenue for certain projects in which Autoneum sells the serial-production tool to the OEM. According to IFRS 15, both costs and revenue are recognized when Autoneum fulfills the respective performance obligation, which is at a clearly defined point in time. According to the accounting principles applied previously, costs and revenue were in some cases recognized over the serial production period. As a consequence, the line items “Other assets” (non-current and current) decreased by CHF 17.1 million as of December 31, 2017, which is mainly the result of deferred expenses that were reported as a part of other assets and are recognized as material expenses in the year 2017 or earlier, applying the new standard. Inventories decreased by CHF 6.9 million as of December 31, 2017, and the related costs are recognized in the year 2017 or earlier. Other liabilities (non-current and current) decreased by CHF 25.9 million as of December 31, 2017, which is mainly the result of deferred revenue that is recognized as revenue in the year 2017 or earlier, applying the new standard.

The adoption of IFRS 15 resulted in an increase in total equity of CHF 71.1 million as of December 31, 2017, which is net of deferred income taxes. The impact on the consolidated income statement and on the consolidated statement of comprehensive income is immaterial in relation to the Group’s results, as the effect of the change in the accounting for the pre-production costs is partly offset by the effect of the change in the timing of recognition of costs and revenue. The impact of the adoption of IFRS 15 to the first half-year 2018 is not materially different from the first half-year 2017.

A number of other new and revised standards and interpretations are effective as of January 1, 2018 but do not have a material effect on the Group’s consolidated financial statements.

The tables below show the restatement of the prior-year’s financial information due to the retrospective implementation of IFRS 15.

CHF million

Reported

IFRS 15

Restated

Consolidated income statement January – June 2017

Revenue

1 117.9

–2.0

1 116.0

Material expenses

–513.8

2.8

–511.0

EBIT

93.1

0.8

94.0

Profit before taxes

90.0

0.8

90.8

Income taxes

–28.9

–0.2

–29.1

Net profit

61.2

0.6

61.7

attributable to shareholders of Autoneum Holding Ltd

47.7

0.9

48.5

attributable to non-controlling interests

13.5

–0.3

13.2

Basic earnings per share in CHF

10.23

0.19

10.42

Diluted earnings per share in CHF

10.22

0.19

10.41

Consolidated statement of comprehensive income January – June 2017

Net profit

61.2

0.6

61.7

Currency translation adjustment

–20.2

–1.3

–21.5

Other comprehensive income

–13.7

–1.4

–15.1

Total comprehensive income

47.4

–0.7

46.6

attributable to shareholders of Autoneum Holding Ltd

39.4

–0.2

39.1

attributable to non-controlling interests

8.0

–0.5

7.5

Consolidated statement of cash flows January – June 2017

Net profit

61.2

0.6

61.7

Income tax expenses

28.9

0.2

29.1

Change in net working capital

–51.2

–1.6

–52.8

Change in other non-current assets

–3.5

–1.4

–4.8

Change in other non-current liabilities

–1.9

2.2

0.3

Remaining operating cash flow items

13.7

13.7

Cash flows from operating activities

47.3

47.3

Consolidated balance sheet as of December 31, 2017

Deferred income tax assets

25.7

–4.0

21.7

Other assets (non-current)

36.1

65.2

101.3

Inventories

213.9

–6.9

206.9

Other assets (current)

61.3

4.3

65.7

Remaining assets

1 147.3

1 147.3

Assets

1 484.3

58.6

1 542.9

Equity attributable to shareholders of Autoneum Holding Ltd

479.2

66.4

545.7

Equity attributable to non-controlling interests

107.9

4.7

112.6

Deferred income tax liabilities

17.8

15.8

33.5

Other liabilities (non-current)

20.9

–19.7

1.1

Provisions (current)

34.0

–2.3

31.7

Other liabilities (current)

181.1

–6.2

174.8

Remaining liabilities

643.4

643.4

Shareholders’ equity and liabilities

1 484.3

58.6

1 542.9

CHF million

Reported

IFRS 15

Restated

Consolidated balance sheet as of January 1, 2017

Deferred income tax assets

35.2

–2.1

33.1

Other assets (non-current)

46.0

58.3

104.3

Inventories

148.2

–0.6

147.6

Other assets (current)

63.3

–4.1

59.2

Remaining assets

1 005.1

1 005.1

Assets

1 297.8

51.6

1 349.3

Equity attributable to shareholders of Autoneum Holding Ltd

394.3

65.6

459.9

Equity attributable to non-controlling interests

104.7

4.0

108.7

Deferred income tax liabilities

10.7

15.9

26.5

Other liabilities (non-current)

31.5

–20.2

11.3

Provisions (current)

13.7

–1.8

11.9

Other liabilities (current)

164.5

–12.0

152.5

Remaining liabilities

578.5

578.5

Shareholders’ equity and liabilities

1 297.8

51.6

1 349.3

3 Change in scope of consolidation and significant transactions

On March 23, 2018 Autoneum acquired a 25% interest in ATN Auto Acoustics Inc., Kamioguchi, Japan, for a consideration of CHF 0.2 million from Toyota Boshoko Corporation, Kariya, Japan.

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. 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): 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 associated companies and inter-segment eliminations. Transactions between the Business Groups are made on the same basis as with independent third parties.

January – June 2018

CHF million

BG Europe

BG North America

BG Asia

BG SAMEA

Total segments

Corporate and elimination

Total Group

Third-party revenue

499.7

472.2

126.8

55.4

1 154.1

5.3

1 159.4

Inter-segment revenue

1.5

0.5

0.7

2.7

–2.7

Revenue

501.2

472.2

127.3

56.0

1 156.8

2.6

1 159.4

EBITDA

58.0

35.8

17.2

4.9

115.8

11.4

127.2

in % of revenue

11.6%

7.6%

13.5%

8.7%

10.0%

n/a

11.0%

Depreciation, amortization and impairment

–14.3

–17.4

–5.9

–1.8

–39.4

–1.4

–40.7

EBIT

43.7

18.4

11.3

3.1

76.5

10.0

86.4

in % of revenue

8.7%

3.9%

8.9%

5.5%

6.6%

n/a

7.5%

Assets at June 30

587.7

637.9

250.1

64.2

1 539.9

83.1

1 623.0

Liabilities at June 30

431.2

329.3

127.5

45.9

933.8

23.0

956.8

Additions in tangible and intangible assets

14.6

34.7

19.7

3.1

72.1

1.0

73.2

Employees at June 301

5 560

4 494

2 038

944

13 036

491

13 527

  1. 1 Full-time equivalents including temporary employees (excluding apprentices).

January – June 20171

CHF million

BG Europe

BG North America

BG Asia

BG SAMEA

Total segments

Corporate and elimination

Total Group

Third-party revenue

441.9

501.3

113.8

54.9

1 111.9

4.1

1 116.0

Inter-segment revenue

4.3

0.3

0.5

5.2

–5.2

Revenue

446.2

501.3

114.2

55.4

1 117.1

–1.1

1 116.0

EBITDA

49.7

52.1

18.7

2.1

122.6

7.5

130.1

in % of revenue

11.1%

10.4%

16.4%

3.8%

11.0%

n/a

11.7%

Depreciation, amortization and impairment

–12.7

–16.2

–4.5

–1.9

–35.2

–0.9

–36.1

EBIT

37.0

35.9

14.2

0.2

87.3

6.6

94.0

in % of revenue

8.3%

7.2%

12.5%

0.4%

7.8%

n/a

8.4%

Assets at June 30

526.5

547.7

175.6

77.0

1 326.9

66.2

1 393.1

Liabilities at June 30

389.6

250.5

74.3

60.6

775.0

52.9

827.8

Additions in tangible and intangible assets

8.5

41.3

15.0

2.1

66.9

1.8

68.7

Employees at June 302

5 045

4 169

1 945

1 039

12 198

431

12 629

  1. 1 Restated, refer to note 2.
  2. 2 Full-time equivalents including temporary employees (excluding apprentices).

5 Financial instruments

Neither significant changes in the fair value hierarchy nor in the fair value measurement assumptions of financial instruments occurred in the period under review. The Group did neither issue, repurchase nor repay Autoneum Bonds in the reporting period.

6 Exchange rates for currency translation

CHF

ISO code

Units

Average rate January – June 2018

Average rate January – June 2017

Closing rate June 30, 2018

Closing rate December 31, 2017

Euro

EUR

1

1.17

1.08

1.16

1.17

United States dollar

USD

1

0.97

0.99

0.99

0.98

7 Events after balance sheet date

There were no events between June 30, 2018 and July 25, 2018 which would necessitate adjustments to the book value of the Group’s assets or liabilities, or which require additional disclosure in the condensed consolidated semi-annual financial statements.