Notes to the consolidated financial statements
1 Segment information
The Group Executive Board is the Group’s chief operating decision maker and reviews the results from a product-related as well as a geographical perspective. Bellevue Group is focusing exclusively on the Asset Management business unit and therefore reports only one reportable segment. As of December 31, 2023, the segment consists of the operating business units Bellevue Asset Management and Bellevue Private Markets. The offering includes a broad-based range of investment funds as well as investment solutions for institutional, intermediary and private clients. Bellevue Asset Management has a clear focus on managing equity portfolios for selected sector and regional strategies, based on a fundamental and research-driven stock picking approach («bottom up»). A small part of the product range pursues a holistic asset management approach based on quantitative and experience-driven investment approaches. Bellevue Private Markets specializes in developing exclusive investment opportunities in unlisted companies for its investor group. In addition, it acts as investment advisor for private equity funds. This represents a further diversification of the investment universe with low correlation to the capital markets. The two business units operate in similar regions. Group Management monitors the results of the two business units both on a consolidated basis and separately.
The geographical breakdown of operating income is as follows:
CHF 1 000 | 01.01.–31.12.2023 | 01.01.–31.12.2022 | ||
Operating income | ||||
Switzerland | 71 490 | 81 598 | ||
United Kingdom | 8 662 | 10 717 | ||
Germany | 4 098 | 4 504 | ||
Other countries | – 2 359 | – 957 | ||
Total | 81 891 | 95 862 |
Non-current assets for this purpose consist of property and equipment as well as goodwill and other intangible assets:
CHF 1 000 | 31.12.2023 | 31.12.2022 | ||
Non-current assets | ||||
Switzerland | 33 967 | 34 805 | ||
Germany | 13 043 | 14 730 | ||
Other countries | 327 | 23 | ||
Total | 47 337 | 49 558 |
2 Details on the consolidated income statement
2.1 Revenues from asset management services
CHF 1 000 | 01.01.–31.12.2023 | 01.01.–31.12.2022 | ||
Management fees | 79 268 | 103 789 | ||
Performance fees | 1 995 | 184 | ||
Other commission income | 3 330 | 3 873 | ||
Fee and commission expense | – 2 800 | – 3 463 | ||
Revenues from asset management services | 81 793 | 104 383 |
Management fees are generated from asset management mandates with listed investment companies, regulated funds in various countries, private equity funds or institutional counterparties. The fees are mostly collected on a monthly basis.
Various funds and mandates as well as the exclusive investment opportunities of the investor group include performance fees. These are only taken into account when a formal claim exists and Bellevue Group has fulfilled its performance obligation. The definitions are set out in the respective legal documents and can be summarized as follows:
- Regulated funds: after the end of the calendar year
- Private equity funds: depending on the partnership agreement - in the case of distributions or closure of the fund
- Investment group: in the case of exits of investments
- Mandates: individual – quarterly or yearly
Other commission income includes transaction-related fees.
2.2 Net other income
CHF 1 000 | 01.01.–31.12.2023 | 01.01.–31.12.2022 | ||
Dividend income | 589 | 771 | ||
Interest income | 500 | 192 | ||
Interest expenses | – 92 | – 49 | ||
Net foreign exchange income/losses | – 18 | 389 | ||
Other | 34 | 178 | ||
Total net other income | 1 013 | 1 481 |
2.3 Personnel expenses
CHF 1 000 | 01.01.–31.12.2023 | 01.01.–31.12.2022 | ||
Fix and variable salaries | 37 943 | 41 588 | ||
Pension cost | 1 929 | 1 829 | ||
Other social benefits | 2 867 | 2 998 | ||
Other personnel expenses | 1 084 | 573 | ||
Total personnel expenses | 43 823 | 46 988 |
The compensation system for Bellevue Group employees is conceived to motivate employees at all operating units to do excellent work. It is a compensation model based on «personal ownership» and merit system principles. In setting fixed salaries, a restrained policy prevails from a business point of view. On the other hand, variable compensation is offered under an attractive ownership-oriented profit-sharing plan. This profit-sharing plan is tied directly to Bellevue Group’s operating results. Moreover, part of this bonus is paid in the form of restricted stock awards and shares of in-house products. This system is conducive to a culture of high performance with a long-term horizon.
The basis for calculating Bellevue Group’s variable compensation pool is adjusted consolidated earnings before taxes.
A fixed portion of the adjusted Group profit before taxes is allocated to the employees (total pool of variable compensation). Due to the direct link between the Group’s results and the total pool of variable compensation, there is a mechanism in place to ensure that variable compensation is commensurate with the Group’s operating performance (variabilization of profit-sharing).
2.4 Operating expenses
CHF 1 000 | 01.01.–31.12.2023 | 01.01.–31.12.2022 | ||
Occupancy and maintenance expenses | 717 | 1 036 | ||
IT and telecommunications | 4 676 | 3 873 | ||
Travel and representation, PR, advertising | 3 777 | 3 442 | ||
Consulting and audit fees | 1 667 | 2 327 | ||
Research expenses | 2 129 | 1 906 | ||
Other expenses | 1 396 | 1 472 | ||
Total other operating expenses | 14 362 | 14 056 |
2.5 Depreciation and amortization
CHF 1 000 | 01.01.–31.12.2023 | 01.01.–31.12.2022 | ||
Depreciation of property and equipment | 242 | 479 | ||
Depreciation of rights of use | 1 989 | 1 676 | ||
Depreciation of intangible assets | 1 432 | 1 469 | ||
Total Depreciation and amortization | 3 663 | 3 624 |
2.6 Tax
2.6.1 Income taxes
CHF 1 000 | 01.01.–31.12.2023 | 01.01.–31.12.2022 | ||
Current income taxes | 6 215 | 7 182 | ||
Deferred income taxes | – 1 395 | – 1 288 | ||
Total | 4 820 | 5 894 | ||
Tax income reconciliation | ||||
Pre-tax result | 20 043 | 31 194 | ||
Expected rate of income tax 1) | 19% | 19% | ||
Expected income tax | 3 808 | 5 927 | ||
Reasons for higher/lower amounts: | ||||
Difference between applicable local tax rates and assumed mixed tax rate | – 286 | – 359 | ||
Non-deductible expenses | 1 298 | 261 | ||
Tax income unrelated to accounting period | – | – | ||
Effect change in tax rates | – | 65 | ||
Total income taxes | 4 820 | 5 894 |
1)The expected income tax rate is a mixed tax rate estimated by considering all the different businesses of the Group.
CHF 1 000 | 01.01.–31.12.2023 | |||||
Tax effect of other comprehensive income | Amount before taxes | Tax income/ (expense) | Amount after taxes | |||
Currency translation adjustments | – 1 573 | – | – 1 573 | |||
Gains and losses arising on revaluation of financial assets at fair value through other comprehensive income | 31 | 8 | 39 | |||
Remeasurement of post-employment benefit obligations IAS 19 | 1 168 | – 221 | 947 | |||
Total | – 374 | – 213 | – 587 | |||
CHF 1 000 | 01.01.–31.12.2022 | |||||
Tax effect of other comprehensive income | Amount before taxes | Tax income/ (expense) | Amount after taxes | |||
Currency translation adjustments | – 1 754 | – | – 1 754 | |||
Gains and losses arising on revaluation of financial assets at fair value through other comprehensive income | – 227 | 43 | – 184 | |||
Remeasurement of post-employment benefit obligations IAS 19 | – 248 | 48 | – 200 | |||
Total | – 2 229 | 91 | – 2 138 | |||
2.6.2 Deferred tax assets
CHF 1 000 | Other | Total | ||
Balance as of 01.01.2022 | 501 | 501 | ||
Credited/(charged) | ||||
to profit or loss | – 107 | – 107 | ||
Currency translation adjustments | – 36 | – 36 | ||
Balance as of 31.12.2022 | 358 | 358 | ||
Balance as of 01.01.2023 | 358 | 358 | ||
Credited/(charged) | ||||
to profit or loss | – 25 | – 25 | ||
Currency translation adjustments | – 15 | – 15 | ||
Balance as of 31.12.2023 | 318 | 318 |
CHF 1 000 | 31.12.2023 | 31.12.2022 | ||
Expiry of unrecognized loss carryforwards | ||||
1 to 5 years | 821 | 629 | ||
More than 5 years | 4 114 | 1 566 | ||
Total | 4 935 | 2 195 |
The non-capitalized loss carryforwards originate mainly from Swiss subsidiaries. It is uncertain whether there will be an income tax benefit for Bellevue Group. Based on this fact, no deferred tax asset was capitalized.
2.6.3 Deferred tax liabilities
CHF 1 000 | Intangible assets | Assets from pension plans | Other 1) | Total | ||||
Balance as of 01.01.2022 | 1 357 | 173 | 3 805 | 5 335 | ||||
Charged/(credited) | ||||||||
to profit or loss | – 388 | 8 | – 1 015 | – 1 395 | ||||
to other comprehensive income | – | – 48 | – 43 | – 91 | ||||
Currency translation adjustments | – 31 | – | – 26 | – 57 | ||||
Balance as of 31.12.2022 | 938 | 133 | 2 721 | 3 792 | ||||
Balance as of 01.01.2023 | 938 | 133 | 2 721 | 3 792 | ||||
Charged/(credited) | ||||||||
to profit or loss | – 307 | 22 | – 1 136 | – 1 421 | ||||
to other comprehensive income | – | 221 | – 8 | 213 | ||||
Currency translation adjustments | – 26 | – | – 16 | – 42 | ||||
Balance as of 31.12.2023 | 605 | 376 | 1 561 | 2 542 |
1)Other deferred tax assets refer to the result of the adoption of IFRS 2 (share-based payment) and IAS 19 (other long-term employee benefits).
3 Details on the consolidated balance sheet
3.1 Financial assets and financial liabilities
3.1.1 Fair value of financial instruments
CHF 1 000 | 31.12.2023 | 31.12.2022 | ||
Book value | Book value | |||
Assets | ||||
Financial investments | ||||
Investments in own products | 22 622 | 25 063 | ||
Investments in own products to fulfill long-term incentive plans | 8 398 | 12 213 | ||
Other investments in equity instruments | 866 | 878 | ||
Financial assets at fair value through profit and loss | 31 886 | 38 154 | ||
Financial investments | ||||
Investments in own products | 6 129 | 5 076 | ||
Financial assets with OCI fair value measurement | 6 129 | 5 076 | ||
Total financial assets at fair value | 38 015 | 43 230 | ||
Liabilities | ||||
Other financial liabilities | – | 27 | ||
Financial liabilities at fair value through profit and loss | – | 27 | ||
Total financial liabilities at fair value | – | 27 |
The fair value of the other financial instruments (incl. time deposits of CHF 12.2 mn, previous period: none), which are measured at amortized cost, do not differ significantly from their book value and are mainly short-term.
3.1.2 Valuation methods of financial instruments
CHF 1 000 | Level 1 | Level 2 | Level 3 | Total | ||||
31.12.2023 Assets | ||||||||
Financial investments | ||||||||
Investments in own products | – | 22 223 | 6 528 | 28 751 | ||||
Investments in own products to fulfill long-term incentive plans | 8 398 | – | – | 8 398 | ||||
Other investments in equity instruments | 681 | – | 185 | 866 | ||||
Financial assets at fair value | 9 079 | 22 223 | 6 713 | 38 015 | ||||
CHF 1 000 | Level 1 | Level 2 | Level 3 | Total | ||||
31.12.2022 Assets | ||||||||
Financial investments | ||||||||
Investments in own products | 87 | 22 526 | 7 526 | 30 139 | ||||
Investments in own products to fulfill long-term incentive plans | 12 213 | – | – | 12 213 | ||||
Other investments in equity instruments | 554 | – | 324 | 878 | ||||
Financial assets at fair value | 12 854 | 22 526 | 7 850 | 43 230 | ||||
Liabilities | ||||||||
Other financial liabilities | – | 27 | – | 27 | ||||
Financial liabilities at fair value | – | 27 | – | 27 |
No transfer between levels of the fair value hierarchy took place in 2023 or in the previous period.
Level 1 instruments
If a financial instrument is traded in an active market, its fair value is based on listed market prices. In the fair value hierarchy prescribed in IFRS 13, this type of financial instrument is classified as a level 1 instrument. The fair value of these positions corresponds to the current price (e.g. settlement price or closing price) multiplied by the number of units of the financial instruments held.
Level 2 instruments
If there is no active market, the fair value is determined on the basis of valuation models or other generally accepted valuation methods (primarily option pricing and discounted cash flow models). If all the significant inputs can be observed directly or indirectly in the market, the instrument is classified as a level 2 instrument. The valuation models take account of the relevant parameters such as contract specifications, the market price of the underlying asset, foreign exchange rates, yield curves, default risks and volatility.
Level 3 instruments
If at least one significant input cannot be observed directly or indirectly in the market, the instrument is classified as a level 3 instrument. These instruments include private equity funds. The fair value of private equity funds is determined based on the last available net asset values, less necessary value adjustments according to own assessment.
3.1.3 Level 3 financial instruments
CHF 1 000 | 31.12.2023 | 31.12.2022 | ||
Financial investments | Financial investments | |||
Holdings at the beginning of the year as of 01.01. | 7 850 | 7 867 | ||
Investments | 1 106 | 1 775 | ||
Redemptions/Payments | – 162 | – 38 | ||
Losses recognized in the income statement | – 2 112 | – 1 527 | ||
Losses recognized in other comprehensive income | – 413 | – 227 | ||
Gains recognized in the income statement | – | – | ||
Gains recognized in other comprehensive income | 444 | – | ||
Total book value at balance sheet date | 6 713 | 7 850 | ||
Unrealized profit/losses from level 3 instruments which were held on the balance sheet date recorded in the income statement in the period | – 2 112 | – 1 527 |
Key assumptions for the valuation of level 3 financial instruments vary from investment to investment. The following table shows the effect on the valuation when these assumptions are changed:
Sensitivity analysis | Fair value | Key assumption | Changes in key assumption | Change in fair value in CHF 1 000 | ||||
Private equity funds | 6 713 | Net asset value | + 5 percentage points | 336 | ||||
- 5 percentage points | – 336 |
31.12.2023 | 31.12.2022 | |||
CHF 1 000 | Other financial liabilities | Other financial liabilities | ||
Holdings at the beginning of the year as of 01.01. | – | 27 | ||
Gains recognized in the income statement | – | – 27 | ||
Total book value at balance sheet date | – | – | ||
Unrealized profit/losses from level 3 instruments which were held on the balance sheet date and recorded in the income statement in the period | – | – |
The contingent purchase price payment from the acquisition of REALWERK AG in 2020 is included in the balance sheet item «Other financial liabilities» and represents the remaining purchase price liability owed. The valuation is mainly based on the underlying share purchase agreement provisions. In the first half year of 2021 a payment of TCHF 45 has taken place. The remaining liability was derecognized in profit or loss in the first half of 2022.
3.1.4 Derivative financial instruments
CHF 1 000 | Positive replacement value | Negative replacement value | Contract volume | |||
31.12.2023 | ||||||
Futures 1) | – | – | 3 316 | |||
Total | – | – | 3 316 | |||
31.12.2022 | ||||||
Forward contracts (OTC) 2) | – | 27 | 3 861 | |||
Futures 1) | – | – | 5 004 | |||
Total | – | 27 | 8 865 |
1)Level 1: listed on an active market
2)Level 2: valuated on the basis of models with observable input factors
Derivatives are used exclusively for economic hedging purposes and not as speculative investments. However, if derivatives do not meet the criteria for hedge accounting, they are classified as «Financial investments» and recognized at fair value through profit or loss for financial reporting purposes.
3.2 Trade and other receivables
CHF 1 000 | 31.12.2023 | 31.12.2022 | ||
Trade receivables | 6 877 | 10 456 | ||
Prepayments | 377 | 841 | ||
Other receivables | 474 | 831 | ||
Total | 7 728 | 12 128 |
3.3 Financial investments
CHF 1 000 | 31.12.2023 | 31.12.2022 | ||
Investments in own products | 28 751 | 30 139 | ||
Investments in own products to fulfill long-term incentive plans | 8 398 | 12 213 | ||
Other investments in equity instruments | 866 | 878 | ||
Time deposits | 12 210 | – | ||
Total | 50 225 | 43 230 | ||
Current | 43 511 | 35 380 | ||
Non-current | 6 714 | 7 850 | ||
Total | 50 225 | 43 230 |
3.4 Other assets
CHF 1 000 | 31.12.2023 | 31.12.2022 | ||
Assets related to other employee benefits | 7 466 | 12 768 | ||
Assets from pension plans | 1 986 | 706 | ||
Other | 1 105 | 1 506 | ||
Total | 10 557 | 14 980 | ||
Current | 4 390 | 8 241 | ||
Non-current | 6 167 | 6 739 | ||
Total | 10 557 | 14 980 |
3.5 Property and equipment
CHF 1 000 | IT equipment | Right of use | Other fixed assets | Total | ||||
Acquisition cost | ||||||||
Balance as of 01.01.2022 | 2 323 | 8 496 | 2 098 | 12 917 | ||||
Additions | – | 2 373 | 974 | 3 347 | ||||
Disposals | – 1 463 | – 1 897 | – 1 720 | – 5 080 | ||||
Foreign currency impact | – 2 | – 56 | – 8 | – 66 | ||||
Balance as of 31.12.2022 | 858 | 8 916 | 1 344 | 11 118 | ||||
Additions | – | 2 307 | 69 | 2 376 | ||||
Disposals | – | – 6 487 | – | – 6 487 | ||||
Foreign currency impact | – 2 | – 113 | – 15 | – 130 | ||||
Balance as of 31.12.2023 | 856 | 4 623 | 1 398 | 6 877 | ||||
Accumulated depreciation | ||||||||
Balance as of 01.01.2022 | – 2 073 | – 5 982 | – 1 829 | – 9 884 | ||||
Additions | – 251 | – 1 676 | – 228 | – 2 155 | ||||
Disposals | 1 464 | 1 896 | 1 714 | 5 074 | ||||
Foreign currency impact | 2 | 28 | 4 | 34 | ||||
Balance as of 31.12.2022 | – 858 | – 5 734 | – 339 | – 6 931 | ||||
Additions | – | – 1 989 | – 242 | – 2 231 | ||||
Disposals | – | 6 435 | – | 6 435 | ||||
Foreign currency impact | 2 | 30 | 4 | 36 | ||||
Balance as of 31.12.2023 | – 856 | – 1 258 | – 577 | – 2 691 | ||||
Net carrying values | ||||||||
Balance as of 01.01.2022 | 250 | 2 514 | 269 | 3 033 | ||||
Balance as of 31.12.2022 | – | 3 182 | 1 005 | 4 187 | ||||
Balance as of 31.12.2023 | – | 3 365 | 821 | 4 186 |
3.6 Goodwill and other intangible assets
CHF 1 000 | 31.12.2023 | 31.12.2022 | ||
Goodwill | 40 299 | 40 996 | ||
Other intangible assets | 2 852 | 4 375 | ||
Total | 43 151 | 45 371 |
CHF 1 000 | Total | |
Goodwill Acquisition cost | ||
Balance as of 01.01.2022 | 108 633 | |
Write-offs | – 1 542 | |
Foreign currency effect | – 1 274 | |
Balance as of 31.12.2022 | 105 817 | |
Foreign currency effect | – 1 550 | |
Balance as of 31.12.2023 | 104 267 | |
Accumulated valuation adjustments | ||
Balance as of 01.01.2022 | – 67 088 | |
Write-offs | 1 542 | |
Foreign currency effect | 725 | |
Balance as of 31.12.2022 | – 64 821 | |
Foreign currency effect | 853 | |
Balance as of 31.12.2023 | – 63 968 | |
Net carrying values | ||
Balance as of 01.01.2022 | 41 545 | |
Balance as of 31.12.2022 | 40 996 | |
Balance as of 31.12.2023 | 40 299 |
Bellevue Group basically examines the value of the goodwill annually, based on the estimated recoverable amount that can be obtained per each single cash-generating unit, or group of such units (depending on allocation). If events or a change of circumstances indicate a possible impairment, the test is carried out more frequently.
The recoverable amount is determined to be the value-in-use and is calculated using the discounted cash flow method. The projected free cash flows for the respective cash-generating units are estimated based on five-year financial plans. The business plans approved by management serve as the basis for these estimates of projected free cash flows. These cash flows are discounted to present value.
The following key parameters and their single components have been taken into account in the discounted cash flow method:
- Income on the average assets under management and the expected return on assets (management and performance fees)
- Transaction-related income
- Discount rate
An impairment test was carried out for all CGUs at the end of December 2023. The discount rate used in these calculations was 12.3% (31.12.2022: 12.3%) and the assumed growth rate was 1.5% (31.12.2022: 1%).
As of December 31, 2023, and December 31, 2022, Bellevue Group did not identify any impairment. The goodwill as of December 31, 2023 is attributable to the CGU-groups Bellevue Asset Management (Bellevue Asset Management AG, CHF 23.8 mn and Bellevue Asset Management (Deutschland) GmbH, CHF 10.7 mn) and Bellevue Private Markets (CHF 5.8 mn).
At the time of preparation of the consolidated financial statement, Bellevue Group’s management does not assume that a reasonably possible change in a parameter underlying the impairment test would lead to a goodwill impairment.
CHF 1 000 | Client base | Brand | Other | Total | ||||
Other intangible assets Acquisition cost | ||||||||
Balance as of 01.01.2022 | 48 259 | 356 | 372 | 48 987 | ||||
Disposals | – 969 | – | – | – 969 | ||||
Foreign currency effect | – 691 | – 12 | – | – 703 | ||||
Balance as of 31.12.2022 | 46 599 | 344 | 372 | 47 315 | ||||
Disposals | – | – | – 142 | – 142 | ||||
Foreign currency effect | – 834 | – 15 | – | – 849 | ||||
Balance as of 31.12.2023 | 45 765 | 329 | 230 | 46 324 | ||||
Accumulated valuation adjustments | ||||||||
Balance as of 01.01.2022 | – 42 519 | – 356 | – 159 | – 43 034 | ||||
Additions | – 1 376 | – | – 93 | – 1 469 | ||||
Disposals | 969 | – | – | 969 | ||||
Foreign currency effect | 582 | 12 | – | 594 | ||||
Balance as of 31.12.2022 | – 42 344 | – 344 | – 252 | – 42 940 | ||||
Additions | – 1 358 | – | – 74 | – 1 432 | ||||
Disposals | – | – | 142 | 142 | ||||
Foreign currency effect | 743 | 15 | – | 758 | ||||
Balance as of 31.12.2023 | – 42 959 | – 329 | – 184 | – 43 472 | ||||
Net carrying values | ||||||||
Balance as of 01.01.2022 | 5 740 | – | 213 | 5 953 | ||||
Balance as of 31.12.2022 | 4 255 | – | 120 | 4 375 | ||||
Balance as of 31.12.2023 | 2 806 | – | 46 | 2 852 |
The other intangible assets are amortized over a period of 5 to 15 years and are included in the impairment test described under «Goodwill» (see above).
As of December 31, 2023, and December 31, 2022, no impairment was recognized in the review of the residual values. The discount rate used for this purpose was currently between 13.6% and 14.3% (December 31, 2022: between 13.5% and 13.8%) and the applied growth rate between 1% and 2% (December 31, 2022: between 1% and 2%).
3.7 Trade and other payables
CHF 1 000 | 31.12.2023 | 31.12.2022 | ||
Trade payables | 419 | 567 | ||
Accrued expenses | 25 469 | 41 313 | ||
Other payables | 397 | 1 093 | ||
Total | 26 285 | 42 973 | ||
Current | 21 107 | 33 222 | ||
Non-current | 5 178 | 9 751 | ||
Total | 26 285 | 42 973 |
3.8 Employee benefit plans
There are pension plans for most of the employees at Bellevue Group. These plans provide benefits in the event of death, disability, retirement or termination of employment. There were no unfunded liabilities due to employee pension plans as at the balance sheet date (previous year: no liabilities either). In Switzerland, pension contributions are paid equally by the employer and the employee. The foundation board is composed of an equal number of employee and employer representatives. According to Swiss law and the pension regulations, foundation boards are obliged to act solely in the interest of the foundation and its beneficiaries (active workforce and recipients of pensions). Hence, the employer cannot single-handedly determine the benefits and the funding; all resolutions have to be agreed on by both sides. The members of the foundation board are responsible for defining the investment strategy, for deciding on amendments to the pension regulations, and in particular for determining the funding of the pension benefits.
In the events of death and disability, pension benefits are based on the insured salary. In the event of old age, they are based on pension assets. At the time of retirement, insured persons can choose between a life annuity, which includes a prospective spouse pension, and a lump sum payment. Apart from retirement benefits, pension benefits also include disability and surviving spouse or partner pensions. Furthermore, insured persons can improve their pension situation up to the regulatory maximum by paying in additional amounts, or withdraw money early to acquire property that they occupy themselves. At the time of termination of an employment contract, the vested benefits will be transferred to the pension plan of the new employer or a vested benefits scheme. This type of benefit can result in pension payments fluctuating considerably from year to year.
When determining the benefits, the minimum requirements of the Federal Act on Occupational Old Age, Survivors’ and Invalidity Pension Provision (OPA) and its implementing provisions must be considered. The LOB defines minimum insured salary and minimum retirement assets. The Federal Council determines the minimum interest on these minimum retirement assets at least every two years. In 2022, it amounts to 1% (previous year: 1%).
Due to the nature of the pension plans and the provisions of the OPA, the employer is exposed to actuarial risks. The risks of death, disability and longevity are largely covered by an insurance policy. The major remaining risks include investment risk, interest risk and the risk of the insurer adjusting the premiums.
All employer and employee contributions are determined by the foundation board. The employer is to bear a minimum of 50% of the required contributions. In the case of underfunding, both employer and employee are entitled to pay in amounts to close the funding gap.
CHF 1 000 | 31.12.2023 | 31.12.2022 | ||
Consolidated balance sheet | ||||
Fair value of plan assets | 47 069 | 45 030 | ||
Present value of pension obligations | – 43 893 | – 41 758 | ||
Assets not available to Company | – 1 190 | – 2 566 | ||
Pension plan assets | 1 986 | 706 |
The pension plan has a surplus that has not been fully recognized, on the basis that future economic benefit is only available to the Company in the form of a reduction in future contributions of CHF 1.3 mn and a cash refund of the employer contribution reserves of CHF 0.8 mn.
CHF 1 000 | 01.01.–31.12.2023 | 01.01.–31.12.2022 | ||
Pension cost recognized in the income statement | ||||
Service cost | ||||
Current service cost | – 1 731 | – 1 631 | ||
Past service cost (plan amendments) | – 76 | – | ||
Net interest expenses/income | 43 | 6 | ||
Administrative expenses | – 53 | – 53 | ||
Total pension cost for the period | – 1 817 | – 1 678 |
CHF 1 000 | 01.01.–31.12.2023 | 01.01.–31.12.2022 | ||
Revaluation components recorded in other comprehensive income | ||||
Actuarial gains/losses | ||||
Arising from changes in economic assumptions | – 2 417 | 2 069 | ||
Arising from experience | 677 | – 2 539 | ||
Return on plan assets (excluding amounts included in net interest expenses) | 1 474 | – 4 420 | ||
Changes in asset ceiling | 1 434 | 4 643 | ||
Total of amounts recognized in other comprehensive income | 1 168 | – 247 |
CHF 1 000 | 2023 | 2022 | ||
Development of pension obligations | ||||
At January 1 | – 41 758 | – 38 747 | ||
Current service cost | – 1 731 | – 1 631 | ||
Employee contributions | – 574 | – 515 | ||
Interest expenses on the present value of the obligations | – 917 | – 117 | ||
Pension payments and vested benefits | 4 055 | 1 433 | ||
Additions from admissions and voluntary contributions | – 1 152 | – 1 711 | ||
Plan amendments | – 76 | – | ||
Actuarial gains/losses | – 1 740 | – 470 | ||
At December 31 | – 43 893 | – 41 758 | ||
Development of plan assets | ||||
At January 1 | 45 030 | 46 846 | ||
Interest income | 1 018 | 146 | ||
Plan participants' contribution | 574 | 515 | ||
Company contributions | 1 929 | 1 718 | ||
Pension payments and vested benefits | – 4 055 | – 1 433 | ||
Additions from admissions and voluntary contributions | 1 152 | 1 711 | ||
Return on plan assets (excluding amounts in net interest) | 1 474 | – 4 420 | ||
Administration expense | – 53 | – 53 | ||
At December 31 | 47 069 | 45 030 | ||
Actual return on plan assets | 2 492 | – 4 274 |
CHF 1 000 | 31.12.2023 | 31.12.2022 | ||
Allocation of plan assets | ||||
Equities | ||||
Listed investments | 16 425 | 16 161 | ||
Bonds | ||||
Listed investments | 9 065 | 9 025 | ||
Real estate | ||||
Investments in funds | 4 084 | 3 223 | ||
Alternative investments | 5 565 | 5 372 | ||
Qualified insurance policies | 2 190 | 2 050 | ||
Liquidity | 9 740 | 9 199 | ||
Total | 47 069 | 45 030 |
The plan assets allocation as at December 31, 2023, as well as at December 31, 2022, do not include shares of Bellevue Group AG. The foundation board issues investment guidelines for the investment of plan assets. These guidelines include tactical asset allocation and benchmarks for comparing the results with a general investment universe. The plan assets are well diversified. In terms of diversification and security, the Swiss pension plan is subject to the provisions of the OPA. As a rule, bonds receive at least a rating of A.
The foundation board regularly reviews the selected investment strategy as to whether it meets the requirements of the pension plan and whether the risk budget is in line with the demographic structure. Adherence to investment guidelines as well as results achieved by investment advisors are reviewed on a quarterly basis. Furthermore, an external consultancy periodically examines the investment strategy with regard to whether it is effective and appropriate.
Through its defined benefit pension plan, the Company is exposed to a number of risks. These risks are shared between the employer, employees and the provider of the pension fund as the retirement benefits are currently financed over an insurance contract. The calculation of the defined benefit obligation allows for this risk sharing by reducing the defined benefit obligation related to employees. Further, the provider determines the level of conversion rates. Hence, the defined benefit obligation is based on the assumption that future conversion rates will change in line with the changes in future interest rates.
As at December 31, 2023, the retirement age for women was adjusted from 64 to 65 (due to a revision of the «Old Age and Survivors Insurance»). These adjustment result in a plan amendment and as a consequence in a past service cost loss of CHF 0.1 mn.
Defined-benefit obligations are distributed as follows:
CHF 1 000 | 31.12.2023 | 31.12.2022 | ||
Active workforce | 41 703 | 39 708 | ||
Pensioners | 2 190 | 2 050 | ||
Total | 43 893 | 41 758 |
The maturity of the obligation is 16.5 years as at December 31, 2023 (previous year: 15.8 years). The expected employer’s contributions for 2024 are estimated at CHF 1.6 mn.
31.12.2023 | 31.12.2022 | |||
Actuarial assumptions | ||||
Biometric assumptions | BVG 2020GT | BVG 2020GT | ||
Life expectancy at the age of 65 | ||||
Year of birth | 1958 | 1957 | ||
Men | 22.82 | 22.70 | ||
Women | 24.59 | 24.48 | ||
Year of birth | 1978 | 1977 | ||
Men | 25.07 | 24.97 | ||
Women | 26.58 | 26.49 | ||
Discount rate | 1.52% | 2.25% | ||
Expected rate of salary increases | 2.25% | 2.25% | ||
Expected rate of pension increases | 0.00% | 0.00% | ||
Interest on pension assets | 1.52% | 2.25% |
Changes to the present value of a defined-benefit obligation
CHF 1 000 | 31.12.2023 | 31.12.2022 | ||
+0.25% | +0.25% | |||
Assumed interest rate | – 1 610 | – 884 | ||
Salary development | 233 | 176 | ||
Interest on pension assets | 768 | 455 | ||
+1 year | +1 year | |||
Development of life expectancy | 602 | 247 |
The most important factors influencing the development of pension obligations are assumed interest rate, salary development, pension index and development of life expectancy.
3.9 Share capital
Number of shares | Par value CHF 1 000 | |||
Share Capital (registered shares) | ||||
Balance as of 01.01.2022 | 13 461 428 | 1 346 | ||
Balance as of 31.12.2022 | 13 461 428 | 1 346 | ||
Balance as of 31.12.2023 | 13 461 428 | 1 346 | ||
Conditional capital | ||||
Balance as of 01.01.2022 | 1 000 000 | 100 | ||
Balance as of 31.12.2022 | 1 000 000 | 100 | ||
Balance as of 31.12.2023 | – | – |
At the Annual General Meeting on March 21, 2023, the article on conditional capital was removed from the Articles of Association. As at December 31, 2023, there was neither conditional nor authorized capital nor a capital band.
3.10 Treasury shares
Number | CHF 1 000 | |||
Balance as of 01.01.2022 | 155 631 | 6 079 | ||
Purchases | 294 750 | 10 069 | ||
Disposals | – 208 305 | – 7 813 | ||
Balance as of 31.12.2022 | 242 076 | 8 335 | ||
Purchases | 214 649 | 5 674 | ||
Disposals | – 151 252 | – 5 184 | ||
Balance as of 31.12.2023 | 305 473 | 8 825 |
4 Significant estimates, assumptions and judgments
4.1 Estimates, assumptions and the exercising of discretion by management
In applying the accounting principles, management must make estimates, assumptions and discretionary decisions that influence the level of reported assets and liabilities, expense and income, as well as the disclosure of contingent assets and liabilities. Management reviews its estimates and assumptions on an ongoing basis and adjusts them according to new findings and conditions. This may, among other things, have a material impact on the following positions of the consolidated financial statements.
Income taxes
Bellevue Group AG and its subsidiaries are liable for income tax in most related countries. The current tax assets and current tax liabilities reported as at the balance sheet date as well as the resulting current tax expense for the period under review are based on estimates and assumptions and may therefore differ from the amounts determined in the future by the tax authorities.
Provisions
A provision is recorded if, as the result of a past event, Bellevue Group has a current liability as at the balance sheet date that will probably lead to an outflow of funds and if the amount of the liability can be reliably estimated. When determining whether a provision should be recorded and whether the amount is appropriate, best possible estimates and assumptions as at the balance sheet date are applied. These estimates and assumptions may be subject to change according to new findings and conditions.
Level 3 financial instruments (fair value)
Level 3 financial instruments are valued based on the inputs that are not based on observable market data. For details to the valuation methods applied for level 3 financial instruments refer to the notes to the consolidated financial statements on note 3.1.2 «Fair value financial instruments».
For details to the effect of significant changes on the assumptions behind the classification method for level 3 financial instruments refer the notes to the consolidated financial statements on note 3.1.3 «Level 3 financial instruments».
Pension plan
Management sets the actuarial assumptions and determines whether a pension plan surplus can be capitalized as an economic benefit for Bellevue Group. Pension costs are also subject to estimates and assumptions. The management believes that the assumptions and estimates which have been made are appropriate.
Review of goodwill and other intangible assets for impairment
Bellevue Group basically examines the value of the goodwill annually, based on the estimated recoverable amount that can be obtained per each single cash-generating unit, or group of such units (depending on allocation).
Established that an event or any circumstances cause a reduction in value of the goodwill, examinations will be performed more frequently.
The Group’s approach to determine the key assumptions and related growth expectations is based on management’s knowledge and reasonable expectations of future business, using internal and external market information, planned business initiatives and other reasonable intentions of management. For that purpose, the Group uses historical information by taking into consideration the current and expected market situations.
Changes in key assumptions: deviations of future actual results achieved vs forecasted/planned key assumptions, as well as future changes of any of the key assumptions based on a future different assessment of the development of relevant markets, and/or the businesses, may occur. Such deviations may result from changes in the market environment and the related profitability, required types and intensity of personnel resources, general and company specific driven personnel cost development and/or changes in the implementation of known or addition of new business initiatives and/or other internal and/or external factors. These changes may cause the value of the business to alter and therefore either increase or reduce the difference between the carrying value in the balance sheet and the unit’s recoverable amount or may even lead to a partial impairment of goodwill.
5 Risk management and risk control
5.1 Risk evaluation and risk policy
Risk management is based on the evaluation of risks by the Board of Directors and is ensuing risk policy, which is reviewed periodically. Independent risk control bodies monitor the risks at the individual operating unit level and at Group level. The Group Executive Board is informed on a regular basis about the assets, financial positions, liquidity and earnings of the Group and all related risks by means of financial and risk reporting procedures commensurate with each particular level of management. Risk reports are prepared at the individual operating unit level as well as at the Group level.
5.2 Market risk
Market risks arise through fluctuations in market pricing of interest rates, exchange rates and equities as well as the corresponding volatilities. Market risk management entails the identification, measurement, control and regulation of market risk exposure. This exposure primarily pertains to the financial investments.
Market risks are monitored by an independent function on a daily basis. Risk reports are prepared at the individual operating unit level as well as at Group level. Market risks are minimized through constant monitoring of risk.
Price change risks
The Group’s exposure to foreign exchange risk arises from financial assets held by the Group, which are either recognized at fair value through profit or loss or directly in equity. To manage the price risk, the Group diversifies the portfolio and partially hedges it with index futures or listed index options. Financial assets are mainly investments in own products (equities, investment funds and private equity funds) and other financial assets (equities, private equity funds and various). Investments in own products for the fulfillment of long-term incentive plans are held to secure liabilities from entitlements of such plans and are therefore considered as economic hedges. All positions in financial assets are valued at fair value. Wherever possible, stock market prices are automatically imported into our systems and used for valuation purposes. The positions are monitored on a daily basis. Any change in price is fully reflected in profit or loss or comprehensive income.
A change in fair value of 10% in relation to the year-end value (net after hedging) would result in a change in equity of CHF 5.0 mn (previous year: CHF 4.3 mn) for the financial assets measured at fair value, of which CHF 4.4 mn (previous year: CHF 3.8 mn) would be recognized in profit or loss.
Interest risk
The Group’s exposure to interest rate risk is marginal. On the one hand, the Group’s cash and cash equivalents available on demand bear interest at market rates and, on the other hand, the influence of debt interest is low due to the high equity ratio. If borrowings are necessary, these are short-term fixed loans that bear interest at market rates.
Currency risk
The Group's foreign currency risk consists of recognized assets and liabilities as well as future transactions (mainly management fees) that are denominated in a currency other than the functional currency of the Group company concerned. The Group deliberately refrains from hedging these currency risks. The net balance sheet items are as follows:
CHF 1 000 | CHF | EUR | USD | Other | ||||
Net position as of 31.12.2023 | 22 238 | 7 577 | 13 380 | |||||
10% change in fair value | +/– 4320 | |||||||
Net position as of 31.12.2022 | 22 736 | 9 665 | 177 | |||||
10% change in fair value | +/– 3258 |
5.3 Default risk
The Group is exposed to default risk, which is the risk that a counterparty is unable to pay the amount due in full when due. The Group measures default risk and expected default losses based on the probability of default, exposure at default and loss given default. In determining expected default losses, the Group considers both historical analysis and forward-looking information. The Group manages and controls its default risk by maintaining business relationships only with counterparties with an acceptable credit rating.
The following table shows the maximum credit risk exposure of Bellevue Group at the balance sheet date:
CHF 1 000 | 31.12.2023 | 31.12.2022 | ||
Cash and cash equivalents | 38 834 | 64 681 | ||
Trade and other receivables | 7 728 | 12 128 | ||
Financial investments | 12 210 | – | ||
Other assets | 1 105 | 1 506 | ||
Total | 59 877 | 78 315 |
As of December 31, 2023, there are no financial assets that are impaired (December 31, 2022: none) and there are no indications of material adverse effects on the credit quality of financial assets. In 2023, no impairments were identified on financial assets exposed to credit risk.
The following table provides an analysis of the maturity of financial assets with credit risk:
CHF 1 000 | Due within 3 months | Due within 3 to 12 months | Due between 1 and 5 years | Total | ||||
31.12.2023 | ||||||||
Cash and cash equivalents | 38 834 | – | – | 38 834 | ||||
Trade and other receivables | 7 305 | 423 | – | 7 728 | ||||
Financial investments | 12 210 | – | – | 12 210 | ||||
Other assets | 3 | – | 1 102 | 1 105 | ||||
Total | 58 352 | 423 | 1 102 | 59 877 | ||||
31.12.2022 | ||||||||
Cash and cash equivalents | 64 681 | – | – | 64 681 | ||||
Trade and other receivables | 11 186 | 942 | – | 12 128 | ||||
Other assets | 2 | – | 1 504 | 1 506 | ||||
Total | 75 869 | 942 | 1 504 | 78 315 |
As of December 31, 2023 and 2022, the ECL impairment model had no material impact as (i) the majority of financial assets are measured at fair value through profit or loss and the impairment requirements do not apply to such instruments; and (ii) the financial assets «at amortized cost» are mainly current. Consequently, no impairment loss has been recognized based on expected credit losses.
5.4 Liquidity risk
The CFO of Bellevue Group is responsible for managing liquidity and financing risks. Financing risks refer to the risk of Bellevue Group or one of its operating units being unable to refinance its current or anticipated obligations on an ongoing basis at acceptable conditions. Liquidity risks refer to the risk of Bellevue Group or one of its operating units being unable to fulfill its payment obligations when due. Whereas financing risks relate to the ability to finance business operations at all times, liquidity risks primarily concern the ability to ensure sufficient liquidity at any point in time.
Bellevue Group manages its liquidity and financing risks on an integrated basis at the consolidated level. Day-to-day liquidity management is performed at the level of the individual Group companies by functions responsible for this. Financing capacities are managed through appropriate diversification of funding sources and the provision of collateral, thereby reducing liquidity risks.
Risk management ensures that Bellevue Group always has sufficient liquidity to be able to fulfill its payment obligations, even in stress scenarios. The liquidity risk management system therefore comprises functional risk measurement and control systems to ensure its continuous ability to pay its obligations at any time. It also defines strategies and requirements for the management of liquidity risk under stress conditions as part of the defined liquidity risk tolerance. They mainly include risk mitigation measures, the holding of a liquidity buffer comprising highly liquid assets, and a contingency plan to manage any liquidity shortfalls. In the event of an unexpected tightening of liquidity, the Group can also access a portfolio of positions that retain their value and can easily be liquidated and has access to two existing credit lines at different banks.
The maturity structure of financial liabilities is as follows:
CHF 1 000 | Due within 3 months | Due within 3 to 12 months | Due between 1 and 5 years | Total | ||||
31.12.2023 | ||||||||
Trade and other payables | 15 891 | 5 216 | 5 178 | 26 285 | ||||
Leasing liabilities 1) | 544 | 1 639 | 1 628 | 3 811 | ||||
Total | 16 435 | 6 855 | 6 806 | 30 096 |
1)According to IFRS 7 B11D, the undiscounted contractual cash flows relating to the gross lease liabilities must be disclosed. The corresponding undiscounted cash flows differ from the amount recognized in the balance sheet because the amount is based on discounted cash flows.
CHF 1 000 | Due within 3 months | Due within 3 to 12 months | Due between 1 and 5 years | Total | ||||
31.12.2022 | ||||||||
Trade and other payables | 26 283 | 6 939 | 9 751 | 42 973 | ||||
Leasing liabilities 1) | 484 | 1 130 | 1 774 | 3 388 | ||||
Other financial liabilities | 27 | – | – | 27 | ||||
Total | 26 794 | 8 069 | 11 525 | 46 388 |
1)According to IFRS 7 B11D, the undiscounted contractual cash flows relating to the gross lease liabilities must be disclosed. The corresponding undiscounted cash flows differ from the amount recognized in the balance sheet because the amount is based on discounted cash flows.
5.5 Operational risk
Operational risks represent the risk of losses resulting from the inadequacy or failure of internal processes, people and systems or from external events.
All business activities entail operational risks, which are prevented, mitigated, transferred or even assumed based on cost/benefit considerations. During this process, potential legal, regulatory and compliance-related risks are taken into account, as are follow-on risks in the form of reputational risks.
The Group-wide process model represents the basis for the management of operational risks. As part of the systematic assessments that are performed annually, the operational risks in all critical processes and process entities are identified and evaluated. In addition, further attention is focused on core security topics such as data protection and business continuity management, which are guaranteed through the use of extra tools.
All measures to control operational risks from part of the Internal Control Systems (ICS).
5.6 Legal and compliance risks
Legal and compliance risks refer to risks related to legal and regulatory issues, primarily liability and default risks. These risks are minimized when processing orders by requiring standardized master agreements and individual agreements. Risk related to the acceptance of client assets and adherence to due diligence obligations are monitored at the respective operating unit level. When appropriate, external attorneys will be consulted to limit legal risks.
6 Major subsidiaries
31.12.2023 | 31.12.2022 | |||||||||||||
Share of | Share of | |||||||||||||
Company name | Domicile | Purpose | Currency | Share capital/Nominal capital | Capital | Voting rights | Capital | Voting rights | ||||||
Fully consolidated companies | ||||||||||||||
Bellevue Group AG | Küsnacht, Switzerland | Holding | CHF | 1 346 143 | Parent company | Parent company | ||||||||
Bellevue Asset Management AG | Küsnacht, Switzerland | Asset Management | CHF | 1 750 000 | 100% | 100% | 100% | 100% | ||||||
Bellevue Asset Management (Deutschland) GmbH | Frankfurt am Main, Germany | Asset Management | EUR | 540 000 | 100% | 100% | 100% | 100% | ||||||
Bellevue Asset Management (UK) Limited | London, UK | Asset Management | GBP | 50 000 | 100% | 100% | 100% | 100% | ||||||
Asset Management BaB N.V. | Curaçao | Asset Management | USD | 6 001 | 100% | 100% | 100% | 100% | ||||||
Bellevue Research Inc. | New York, USA | Research | USD | 100 | 100% | 100% | 100% | 100% | ||||||
BB Biotech Ventures GP | Guernsey | Investment Advisor | GBP | 10 000 | 100% | 100% | 100% | 100% | ||||||
BB Pureos Bioventures GP Limited | Guernsey | Investment Advisor | GBP | 60 000 | 99% | 99% | 99% | 99% | ||||||
Bellevue Private Markets AG | Zug, Switzerland | Investment Advisor | CHF | 1 000 000 | 100% | 100% | 100% | 100% | ||||||
adbodmer AG | Zug, Switzerland | Investment Advisor | CHF | 100 000 | 100% | 100% | 100% | 100% | ||||||
Bellevue Komplementär AG | Küsnacht, Switzerland | Asset Management | CHF | 200 000 | 100% | 100% | 100% | 100% | ||||||
Bellevue Private Markets Management I S.à.r.l. | Luxembourg | Asset Management | EUR | 12 000 | 100% | 100% | 100% | 100% | ||||||
Minority shareholders’ equity ownership of BB Pureos Bioventures GP Limited is 1%. Due to the non-materiality of this ownership with respect to the overall Bellevue Group’s equity and comprehensive income, no separate disclosure of minority shareholders has been published on the Group’s financial statements.
7 Guarantees and contingent liabilities
CHF 1 000 | 31.12.2023 | 31.12.2022 | ||
Rent deposit accounts in connection with leasing contracts | 1 144 | 1 178 | ||
Contingent liabilities | 3 468 | 4 731 |
8 Events after the balance sheet date
No events have occurred since the balance sheet date that would have a material impact on the information provided in the year 2023 consolidated financial statements and would therefore need to be disclosed.
9 Transactions with related companies and persons
9.1 Compensation paid to members of the Board of Directors and to members of the Group Executive Board
CHF 1 000 | 01.01.-31.12.2023 | 01.01.-31.12.2022 | ||||||
Board of Directors | Group Executive Board | Board of Directors | Group Executive Board | |||||
Fixed compensation | 721 | 764 | 613 | 1 018 | ||||
– in cash | 531 | 764 | 613 | 1 018 | ||||
– in shares 1) | 190 | – | – | – | ||||
Non-monetary benefit from voluntary stock purchase programs 2) | 14 | – | 34 | 63 | ||||
Short-term variable compensation | – | 611 | 147 | 915 | ||||
– in cash | – | 611 | – | 632 | ||||
– in shares 3) | – | – | 147 | 283 | ||||
– in shares with vesting period 4) | – | 665 | – | 1 136 | ||||
Long-term variable compensation | – | – 65 | – | – 110 | ||||
– in shares 5) | – | – 65 | – | – 110 | ||||
Total | 735 | 1 975 | 794 | 3 022 | ||||
1) The allocation is made in freely available shares
2) The purchase/allocation is made in 3 years blocked and discounted shares
3) The allocation is made in 4 years restricted shares
4) The allocation is made in 4 years restricted shares with one-year service period and right of redemption (taking into account the service/vesting period in accordance with IFRS 2)
5) Members of the Group Executive Board partially participate in an employee stock ownership plan in connection with the asset management mandate of BB Biotech AG. Within the scope of these plans, some of the members of the Group Executive Board are entitled to receive a maximum number of shares in BB Biotech AG. The actual number of shares awarded depends on various conditions. Awarded shares are subject to a three-year vesting period beginning on the date of grant. In addition, the actual number of shares distributed will depend on the achievement of certain performance targets over the subsequent three fiscal years in connection with the respective investment mandates. The cost of this employee program is recognized as long-term variable compensation.
The amounts listed for fixed and variable compensation also include any employer contributions to statutory or regulatory social security schemes.
In the financial years 2023 and 2022, no compensation was paid to related parties of members of the Board of Directors and Group Executive Board, nor to former members of the Board of Directors.
9.2 Transactions with related companies and persons
As of December 31, 2023 and 2022, there were neither receivables nor liabilities to related companies and persons.
10 Share-based payments
10.1. Variable compensation (share of profit) with service conditions
According to the rules for the payment of variable compensation set by the Board of Directors, higher variable compensation (>TCHF 200) is partly paid in blocked shares with a 1-year (pro rata) service condition. The cost of this portion of the variable compensation is recognized over the service period from the grant date. In 2023, TCHF 1 653 (2022: TCHF 1 140) of share-based compensation costs were recognized in personnel expenses.
10.2. Voluntary employee stock ownership plan
In 2023, the Board of Directors approved a voluntary employee stock option program for a total of 135 000 shares (2022: 100 000 shares). Depending on the management level, the Board of Directors, Executive Board and employees were offered a certain number of Bellevue Group AG shares at a discounted purchase price of CHF 18.00 per share (2022: CHF 23.75 per share). This corresponded to a discount of almost 25% on the volume-weighted average price of the quarter prior to the grant date of the entitlements. The difference between the market value at the effective grant date and the purchase price corresponds to a monetary benefit of TCHF 25 (2022: CHF 0.6 Mio.), which was recognized in personnel expenses. 23 169 rights (2022: 66 310 rights) were exercised, thereof 10 000 (2022: 4 500) by the Board of Directors. The members of the Group Executive Board didn't exercise any rights (2022: 8 200) in 2023.
11 Earnings per share
CHF 1 000 | 01.01.–31.12.2023 | 01.01.–31.12.2022 | ||
Group net profit | 15 223 | 25 300 | ||
Weighted average number of issued registered shares | 13 461 428 | 13 461 428 | ||
Less weighted average number of treasury shares | – 230 813 | – 170 904 | ||
Weighted average number of shares outstanding (undiluted) | 13 230 615 | 13 290 524 | ||
Weighted average number of shares outstanding (diluted) | 13 230 615 | 13 290 524 | ||
Earnings per share | ||||
Undiluted earnings per share (in CHF) | 1.15 | 1.90 | ||
Diluted earnings per share (in CHF) | 1.15 | 1.90 |
12 Dividend payment
The Board of Directors will propose a dividend distribution of CHF 1.15 per registered share to the Annual General Meeting of Bellevue Group AG on March 20, 2024. This corresponds to a total distribution of CHF 15.5 mn.
13 Approval of the consolidated financial statements
The Audit & Risk Committee discussed and approved the consolidated financial statements at its meeting on February 16, 2024, and the Board of Directors at its meeting on February 19, 2024. The consolidated financial statement will be submitted to the Annual General Meeting on March 20, 2024, for approval.
14 Summary of significant accounting policies
14.1. Company and business activity
Bellevue Group AG is a public limited company listed on the SIX Swiss Exchange and has its registered office at Seestrasse 16, 8700 Küsnacht/Switzerland. The company acts as a pure asset manager with a multi-boutique approach and specializes in investment themes that require an active investment style.
14.2 Accounting principles
The consolidated financial statements of Bellevue Group AG have been prepared in accordance with International Financial Reporting Standards (IFRS) and comply with the listing regulations of the Swiss Stock Exchange.
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. The application of the underlying principles is unchanged from the previous year, with the exception of the accounting standards newly applied in item 14.3.
14.3 New accounting standards used
The following new or revised standards and interpretations did not have any material impact on Bellevue Group when they were applied for the first time as of January 1, 2023:
To be applied as of | ||
IFRS 17: Insurance Contracts | 01.01.2023 | |
IAS 8 Amendments: Definition of Accounting Estimates | 01.01.2023 |
14.4 International Financial Reporting Standards and interpretations which will be introduced in 2024 or later
Based on early stage analysis, the following new standards and/or standards’ updates will not have a significant effect on Bellevue Group’s financial statements:
To be applied as of | ||
IAS 1 Amendments: Classification of Liabilities as Current or Non-current | 01.01.2024 | |
IFRS 16 Amendments: Lease Liability in a Sale and Leaseback | 01.01.2024 | |
IAS 7 / IFRS 7 Amendments: Supplier Finance Arrangements | 01.01.2024 |
14.5 Important accounting principles
14.5.1 Consolidation principles
Fully consolidated companies
The annual consolidated financial statements comprise the annual accounts of Bellevue Group AG and its subsidiaries. All companies that are directly or indirectly controlled by Bellevue Group AG are consolidated. Subsidiaries are fully consolidated from the date on which control is transferred to the Group, and deconsolidated from the date when control ceases.
Method of consolidation
The Group applies the acquisition method to account for business combinations. Under this method, the book value of the participation held by the parent company is offset against its share of the shareholders’ equity of the subsidiary at the time of the acquisition. The effects of intercompany transactions are eliminated during the preparation of the consolidated financial statements.
Business combinations
In a business combination, the acquirer obtains control of the net assets of one or more businesses. The business combination is accounted for using the acquisition method. This requires the recognition of the identifiable assets acquired, including previously unrecognized intangible assets, and liabilities assumed of the acquired business at their fair values at the acquisition date. Any excess of the consideration transferred over the net identifiable assets acquired is recognized as goodwill. Consideration transferred is assets or equity instruments issued that are measured at fair value at the acquisition date. Transaction costs are immediately charged to the income statement.
Contingent consideration, which is accounted for as part of the consideration transferred for the acquiree, is measured at fair value at the acquisition date. Subsequent changes in the fair value of contingent consideration are recognized in the income statement in accordance with IFRS 9.
14.5.2 General principles
Foreign currency translation
The items included in the financial accounts of each of the Group’s company are measured using the currency of the primary economic environment, in which the company operates (functional currency). The consolidated financial statements are presented in Swiss Francs, which is also the functional and presentation currency of Bellevue Group AG.
Assets and liabilities denominated in foreign currencies at foreign group member companies are converted into Swiss francs using the applicable exchange rates for the balance sheet date. For the income and cash flow statements, year-average exchange rates are used. The differences resulting from consolidation are booked directly in other comprehensive income.
In the individual year-end accounts of group member companies transactions are booked in foreign currency at the respective daily exchange rates. Monetary assets are translated at the respective daily exchange rate and any gains or losses are recognized in the income statement. Monetary items carried on the balance sheet at historical cost in a foreign currency are translated at the historical exchange rate.
The following exchange rates apply to the translation of significant currencies:
2023 | 2022 | |||||||
Year-end rate | Average rate | Year-end rate | Average rate | |||||
EUR | 0.92887 | 0.97071 | 0.98956 | 1.00295 | ||||
USD | 0.84140 | 0.89768 | 0.92450 | 0.95344 | ||||
GBP | 1.07160 | 1.11848 | 1.11870 | 1.17416 | ||||
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and current accounts as well as call money at banks with a maturity of less than three months. These are measured at nominal value, which corresponds to fair value due to the short-term maturities.
Accrual of income
The Group’s revenue consists mainly of asset management fees. A distinction is made between the following fees: Management fees result from the management of collective capital contributions and institutional asset management mandates. Performance fees are only recognized when all performance criteria have been met. Interest is accrued on an accrual basis.
14.5.3 Financial instruments
Initial recognition
Purchases and disposals of financial assets are recognized in the balance sheet on the trade date. At the time of initial recognition, financial assets or financial liabilities are classified in the respective category according to criteria set forth in IFRS 9 and measured at the fair value of the consideration given or received, including directly attributable transaction costs. In the case of trading portfolio assets and other financial instruments carried at fair value, transaction costs are immediately recognized in the income statement, except of value changes of financial instruments, which are recorded in the comprehensive income.
Determination of fair value
At initial recognition, the fair value of financial instruments is ascertained from quoted market prices provided that the financial instrument is traded on an active market (level 1). Whenever possible, the fair value of other financial instruments is determined using generally recognized valuation models (level 2). These models are based on input parameters other than level 1 that can be observed on the market. For a residue of financial instruments, there are no available market listings or valuation models or methods based on market prices. For such instruments, in-house valuation methods or models are used (level 3). In such cases, the fairness of the valuation is assured by clearly defined methods and processes and by independent checks.
Financial investments at amortized costs
Investments whereby the objective is to hold financial assets to collect contractual cash flows and for which the contractually agreed cash flows comprise only interest and the repayment of parts of the nominal value are entered on the balance sheet as amortized costs using the effective interest method. Any expected credit losses are deducted from the book value of the item.
Financial assets and liabilities from financial assets
Financial instruments that do not meet the criteria for recognition at amortized cost are recognized at fair value. The resulting income is reported under the item «Income from financial investments». Liabilities from financial assets are reported under the item «Other financial liabilities».
Investments at fair value with fair value changes recognized in other comprehensive income
Investments in equity instruments that are not held for trading purposes are carried fair value in the balance sheet. Changes in value are recognized in the income statement except in cases where Bellevue Group has irrevocably decided to recognized them at fair value through other comprehensive income.
Derivative financial instruments
Derivative financial instruments are recognized in the balance sheet under «Financial assets» or «Other financial liabilities». No offsetting takes place on the basis of master netting agreements. Realized and unrealized gains and losses are recognized in «Income from financial investments».
14.5.4 Other principles
Treasury shares
Bellevue Group AG shares held by Bellevue Group are designated as treasury shares and are deducted from shareholders’ equity at weighted average cost. Changes in fair value are not recognized. The difference between the sales proceeds of treasury shares and the corresponding acquisition cost is recorded in retained earnings.
Share-based payments
Bellevue Group maintains various share-based payment plans in the form of share plans for selected employees. When such payments are made to these employees, the fair value of these payments at grant date serves as the basis for calculating the personnel expenses. Share-based payments that are not subject to any further conditions are expensed immediately at grant date. Share-based payments that are subject to the completion of a service period or to other vesting conditions are expensed over the respective vesting period starting at grant date. The amount recognized as an expense is adjusted to reflect the number of share awards for which the related services and non-market performance vesting conditions are expected to be met.
Property and equipment
Property and equipment include leasehold improvements, information technology and telecommunications equipment, capitalized right of use from leases and other fixed assets. The acquisition or production costs of property and equipment are capitalized when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.
Bellevue Group mainly acts as a lessee in the context of the leasing of business premises. At the lease commencement date, a lease liability corresponding to the present value of lease payments over the lease term is recognized. The lease term basically corresponds to the non-cancellable period during which Bellevue Group has the right to use the business premises but it also takes account of the period covered by an option to extend the lease if Bellevue Group is reasonably certain to exercise that option, and the period covered by an option to terminate the lease if Bellevue Group is reasonably certain not to exercise that option.
At the same time as the lease liability is recognized, a right to use the underlying asset, which corresponds to the lease liability plus prepaid lease payments, directly attributable costs and any reinstatement obligations, is capitalized. After initial recognition, the interest component on the lease liability is accrued in the period in which it is incurred using the effective interest method and is recognized in «Net other income». The lease liability is adjusted to reflect interest recognized and lease payments made. The right-of-use asset is depreciated on a straight-line basis over the lease term. The depreciation charge and any impairment charge are recognized in the income statement in «Depreciation and amortization».
If there is any change to the lease term or if lease payments are adjusted to an index, the lease liability is remeasured. In the first case, the current incremental borrowing rate is used to calculate the present value; in the second case, the original incremental borrowing rate is used. The amount of the remeasurement of the lease liability is recognized as an adjustment to the right-of-use asset. Right-of-use assets are recognized in the balance sheet item «Property and equipment». The carrying amount of the right-of-use assets and changes in that value are shown in note 3.5. Lease liabilities related to leased office space are recognized in the balance sheet item «Lease liabilities». Bellevue Group applies the accounting exceptions for short-term leases and leased assets of low value. Neither a lease liability nor a right-of-use asset is recognized for these leases.
Property and equipment are depreciated on a straight-line basis over their estimated useful life as follows:
Leasehold improvements | max. 10 years | |
Information technology and communications equipment | max. 5 years | |
Rights of use | over leasing contract duration | |
Other fixed assets | max. 5 years |
Property and equipment are reviewed for impairment if events or circumstances indicate that the carrying amount may be impaired. If the carrying amount exceeds the realizable amount, an impairment loss is charged. Any reversals of impairments at a later date will be recognized in the income statement.
Goodwill and other intangible assets
Goodwill arises from the acquisition of subsidiaries and represents the future economic benefits from other assets acquired in a business combination that are not individually identified and are recognized separately. For the purposes of impairment testing, goodwill acquired in a business combination is allocated to each of the CGUs (cash-generating unit) or group’s of CGUs, that is expected to benefit for synergies from combination. Each unit or group of units to which goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the level of the CGU respectively group of CGUs, taking into account the internal reporting and management structure. Goodwill is capitalized and tested for impairment at least on an annual basis, or if events or changed circumstances indicate a potential impairment. The test is carried out more frequently to determine whether the book value exceeds its recoverable amount. The recoverable amount is the higher of fair value less costs to sell and the value in use. If the book value exceeds the recoverable amount an impairment loss is recorded.
Other intangible assets include client relationships and brands acquired during business combination as well as softwares. Such intangible assets are capitalized if their fair value can be reliably determined. They are amortized on a straight-line basis over their useful life of not more than 5 years (software), 10 to 15 years (client relationships) or 5 years (brands). Other intangible assets are reviewed for impairment if events or circumstances indicate that the carrying amount may not be recoverable. If the carrying amount exceeds the realizable amount, an impairment loss is charged. Any reversals of impairments at later date will be recognized in the income statement. At present, there are no other intangible assets with an indefinite useful life capitalized in Bellevue Group’s balance sheet.
Income taxes
The current income tax charge is calculated on the basis of the applicable tax laws enacted or substantially enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income and recognized as expense in the period in which the related profits are made. Receivables or liabilities related to current income taxes are reported in the balance sheet in the items «Current tax assets» or «Current tax liabilities». Tax effects arising from temporary differences between the carrying amounts of assets and liabilities in the balance sheet and their corresponding tax values are recognized as «Deferred tax assets» and «Deferred tax liabilities» respectively. Deferred tax assets arising from temporary differences and from tax loss carry forwards can be offset. Deferred tax assets and deferred tax liabilities are calculated at the tax rates expected to apply in the period in which the tax assets will be realized, or the tax liabilities settled. Tax receivables and tax liabilities are offset when they refer to the same taxable entity, fall under the same jurisdiction, and the enforceable rights to offset exists.
Current and deferred taxes are credited or charged directly to shareholders’ equity if the taxes are related to items that are credited or charged under other comprehensive income in the same or a different period.
Provisions
A provision is recognized if Bellevue Group has, as a result of a past event, a current liability at the balance sheet date that will probably lead to an outflow of funds and whose amount can be reliably estimated. If an outflow of funds is unlikely to occur, or the amount of the liability cannot be reliably estimated, a contingent liability is shown. If there is, as a result of a past event, a possible liability as at the balance sheet date whose existence depends on future developments that are not fully under Bellevue Group’s control, a contingent liability is likewise shown. The recognition and reversal of pro-visions are recognized under «Valuation adjustments and provisions» except for changes in actuarial pension provisions, which are recognized under «Other comprehensive income», with the exception of changes in actuarial provisions which are recorded in the income statement.
Pension funds
Bellevue Group maintains in Switzerland a defined-contribution pension plan. The pension fund is set up in accordance with Swiss defined-contribution regulations, but does not meet all of the criteria of a defined-contribution plan as defined by IAS 19. Therefore, this plan is treated as a defined-benefit plan.
Pension obligations are met exclusively with pension fund assets held by a pension foundation legally separated from and independent of Bellevue Group. It is managed by a Board of Trustees, consisting in equal parts of representatives of management and employees. The organization, operational management and financing of the pension fund are conducted in accordance with legal regulations, the foundation’s charter and applicable pension fund regulations. Employees and pensioners, or their survivors, receive legally determined benefits upon leaving the Company, during retirement, at death, and in the event of invalidity. These benefits are financed by employee’s and employer’s contributions.
For defined-benefit plans, pension costs are determined on the basis of different economic and demographic assumptions using the projected unit credit method. This method uses the number of service years until the key date. The assumptions to be evaluated by the Group include expectations of future salary development, long-term interest on retirement assets, retirement trends and life expectancy. The valuations are carried out by independent actuaries every year. The pension assets are valued annually at fair value.
Pension cost is composed of three components:
- Service cost, which is recorded as personnel expenses in the income statement;
- Net interest expenses, which are recorded in the position «Other financial income» in the income statement; and
- Revaluation components, which are recognized in the statement of comprehensive income.
Service cost encompasses the current service cost, past service cost, and gains and losses from non-routine plan settlements. Gains and losses from plan curtailments are treated the same way as past service cost. Employee contributions and third-party contributions reduce the service cost and are deducted from it, provided they are required by the benefit regulations or are the result of a factual obligation.
Net interest expenses are the result of the assumed interest rate multiplied by the pension obligations or the pension assets. Capital flows and changes of less than a year are included on a weighted basis.
Revaluation components include actuarial gains and losses from changes in the net present value of the pension obligations and the pension assets. Actuarial gains and losses are calculated on the basis of changes in assumptions and experience adjustments. Gains and losses on assets are the result of income on assets less the amounts contained in net interest expenses. The revaluation component also includes changes in unrecognized assets less effects included in net interest expenses. Revaluation components are recorded in the statement of comprehensive income and cannot be recycled. Amounts recorded in the statement of comprehensive income can be reallocated within equity.
Pension obligations or assets recorded in the consolidated financial statements correspond to the funding surplus or shortfall of the defined-benefit plans. However, pension assets are restricted to the net present value of the Group’s economic benefit from future curtailments or repayments. Pension obligations in Swiss benefit plans are currently valued on the basis of employers and employees sharing the risk.
15 Alternative Performance Indicators (unaudited)
CHF 1 000 | 01.01.–31.12.2023 | 01.01.–31.12.2022 | Change | |||
Income | 81 891 | 95 862 | – 13 971 | |||
Personnel expenses | – 43 823 | – 46 988 | +3 165 | |||
Other operating expenses | – 14 362 | – 14 056 | – 306 | |||
Operating expenses | – 58 185 | – 61 044 | +2 859 | |||
Operating profit | 23 706 | 34 818 | – 11 112 | |||
Depreciation and amortization | – 3 663 | – 3 624 | – 39 | |||
Group profit before tax | 20 043 | 31 194 | – 11 151 | |||
Taxes | – 4 820 | – 5 894 | +1 074 | |||
Group net profit | 15 223 | 25 300 | – 10 077 |