Annual Report 2005/06 THE WORLD OF SOUND - Sonova

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Consolidated Changes in EquityAttributable to equity holders of Phonak Holding AGSharecapitalSharepremiumRetainedearningsCumulativetranslationadjustmentTreasurysharesMinorityinterestTotalequity1,000 CHFBalance April 1, 2004 (as reported)3,273135,164238,190(23,577)(3,960)1,248350,338Effect of adopting IFRS 2 1)Balance April 1, 2004 (restated)Changes in accounting principles (IFRS 3)Tax on items taken directlyto the equityCurrency translation differencesTotal income and expense recognizeddirectly in equityConsolidated income after taxesTotal recognized income and expensefor the year3,273364135,528(364)237,8261074214995,02495,173(23,577)1,8831,8831,883(3,960)1,248(31)(31)832801350,338107421,8522,00195,85697,857Capital increase of Phonak Holding AGfrom conditional capital287,5327,560Share-based payments (IFRS 2) 1)Sale of treasury sharesPurchase of treasury sharesDividend paid by Phonak Holding AGBalance March 31, 20053,3011,8781,640146,578(13,074)319,925(21,694)3,960(319)(319)(136)1,9131,8785,600(319)(13,210)449,704Changes in minoritiesCurrency translation differencesTotal income and expense recognizeddirectly in equityConsolidated income after taxesTotal recognized income and expensefor the year171,447171,44719,78719,78719,787(567)(567)1,018451(567)19,78719,220172,465191,685Capital increase of Phonak Holding AGfrom conditional capitalShare-based payments (IFRS 2)Sale of treasury sharesPurchase of treasury sharesDividend paid by Phonak Holding AGBalance March 31, 2006173,3186,4301,275(241)154,042(19,840)471,532(1,907)6,312(8,176)(2,183)(133)2,2316,4471,2756,071(8,176)(19,973)627,0331)Adjustments in accordance with new IFRS accounting standards (see Note 32)The Notes are an integral part of the consolidated financial statementsConsolidated Financial Statements49
Notes to the ConsolidatedFinancial Statements1. Corporate informationThe Phonak Group (the “Group”) specializes in the development,manufacture, and distribution of technologically advancedhearing systems for adults and children with hearing impairment.The Group operates worldwide and distributes its products in over70 countries through its own distribution network and throughindependent distributors. The ultimate parent company is PhonakHolding AG, a limited liability company incorporated inSwitzerland. Phonak Holding AG’s registered office is locatedat Laubisrütistrasse 28, CH-8712 Stäfa, Switzerland.2. Changes in accounting policiesThe International Accounting Standards Board (IASB) issueda revised version of IAS 32 “Financial Instruments: Disclosure andPresentation”, a revised version of IAS 39 “Financial Instruments:Recognition and Measurement” and a general revision of itsInternational Accounting Standards (IAS) which included revisionsof 14 existing standards published in 2003. In 2004, the IASBpublished the standards IFRS 2 “Share-based payment”, IFRS 3“Business Combinations”, IFRS 4 “Insurance Contracts”,IFRS 5 “Non-Current Assets Held for Sale and DiscontinuedOperations”, IAS 36 “Impairment of Assets” and IAS 38“Intangible Assets” as well as further additions to IAS 39.The Phonak Group has applied these standards from April 1,2005, with the exception of IFRS 3, IAS 36 (revised) andIAS 38 (revised) which had already been applied in financialyear 2004/05.IAS 1 (revised) Presentation of Financial Statements.As well as introducing other changes, this revised standardrequires minority interests in consolidated entities to bepresented as a component of consolidated equity, rather thanas a separate category on the face of the balance sheet, andminority interests in the net income of consolidated entities tobe presented as a component of consolidated net income.In the course of the changes of IAS 1 (revised), sales-relatedcosts are no longer shown as a separate line in the consolidatedincome statement. Sales-related costs in the total amount ofCHF 28.1 million (previous year 26.7 million) have been nettedwith sales in the amount of CHF 19.4 million (previous year18.4 million), and reclassified to cost of sales CHF 2.0 million(previous year 1.9 million), sales and marketing CHF 4.8 million(previous year 4.5 million) and to general and administrationCHF 1.9 million (previous year 1.9 million).IFRS 2 Share-based Payment. This new standard requiresthat the fair value of all equity compensation plan awardsgranted to employees be estimated at grant date and recordedas an expense over the vesting period. The expense is chargedagainst the appropriate income statement heading. The standardrequires retrospective application, to all awards granted afterNovember 7, 2002 which had not vested prior to April 1, 2005,within certain transitional requirements. The impact of IFRS 2is detailed in Note 32.In addition, the Group decided to early adopt the amendmentto IAS 21 “The effects of Changes in Foreign Exchange Rates:Net investment in a Foreign Operation” which is effective sinceJanuary 1, 2006 and requires to record exchange differencesthat arise on all monetary items that form part of an entity’s netinvestment in a foreign operation in a separate component ofequity in the consolidated financial statement. In the last financialyear, only monetary items that were denominated in thefunctional currency of the borrower or lender were recognizeddirectly in equity.Changes in accounting policies that arise from the applicationof new or revised standards and interpretations areapplied retrospectively, unless otherwise specified in the transitionalrequirements of the particular standard or interpretation.Retrospective application requires that the results of thecomparative period and the opening balances of that period arerestated as if the new accounting policy had always been applied.The Phonak Group has assessed the impact of the otherrevised and newly applicable standards, and has concluded thatthey have no significant effect on the consolidated financialstatements, apart from additional disclosures.The following new or revised IFRS standards will becomeeffective for financial periods starting on or after January 1,2006 or 2007:50Consolidated Financial Statements
Page 1 and 2: Annual Report 2005/06Annual Report
Page 3 and 4: FIVE-YEAR KEY FIGURES(Consolidated)
Page 5 and 6: CHAIRMAN’S FOREWORDIn 2005/06, th
Page 7: Move with the melody
Page 10 and 11: digital entry-level product line, w
Page 12 and 13: MARKETSGeneral market developmentTh
Page 15 and 16: NEW TECHNOLOGIES AND PRODUCTSPlatfo
Page 17 and 18: OPERATIONS AND STAFFOperationsWithi
Page 19: Listen to life
Page 22 and 23: This report describes the principle
Page 24 and 25: Capital StructureChanges in capital
Page 26 and 27: Left to right: Robert F. Spoerry, D
Page 28 and 29: Andy Rihs (born in 1942) has been C
Page 30 and 31: Dr. Valentin Chapero Rueda (born in
Page 32 and 33: Share and option ownership of membe
Page 34 and 35: Highest total compensationThe highe
Page 36 and 37: Investor Relations CalendarJuly 6,
Page 39 and 40: SUSTAINABILITYPhonak’s management
Page 41 and 42: Our customers buy a better quality
Page 43 and 44: Corporate GovernancePhonak’s Boar
Page 45: Push your performance
Page 49 and 50: Consolidated Income Statement1,000
Page 51: Consolidated Statement of Cash Flow
Page 55 and 56: equity method, the investment in an
Page 57 and 58: Short-term debtsShort-term debts co
Page 59 and 60: Employee benefit plansPhonak has va
Page 61 and 62: 5. Segment informationProfit or los
Page 63 and 64: 6. Consolidated Income Statement by
Page 65 and 66: 9. Financial income/(expenses), net
Page 67 and 68: 11. Earnings per shareBasic earning
Page 69 and 70: 17. Inventories1,000 CHFRaw materia
Page 71 and 72: 19. Investments in associates and j
Page 73 and 74: GoodwillSoftwareIntangiblesrelating
Page 75 and 76: Among various other items, other pr
Page 77 and 78: 27. Other long-term liabilities1,00
Page 79 and 80: 29. Acquisition of subsidiariesDuri
Page 81 and 82: 30. Related-party transactionsManag
Page 83 and 84: The amount recognized in the consol
Page 85 and 86: Summary of outstanding and exercisa
Page 87 and 88: 35. Number of employeesAt March 31,
Page 89 and 90: 38. List of significant consolidate
Page 91: Cherish the cheers
Page 95 and 96: Income Statement1,000 CHFIncomeMana
Page 97 and 98: Notes to the Financial Statements1.
Page 99 and 100: 3.4 List of significant investments
Page 101 and 102: Appropriation of Available Earnings
Page 103:
Launch a laugh
Page 106 and 107:
Phonak ABHornsbruksgatan 28SE-117 3
Page 108 and 109:
ImpressumConceptLithographyPrinting
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Annual Report 2005/06 THE WORLD OF SOUND - Sonova

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