Annual Report 2005/06 THE WORLD OF SOUND - Sonova

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sheet. Loans are measured at amortized cost. Amortized cost isthe amount at which the financial asset is measured at initialrecognition minus principal repayments, plus or minus the cumulativeamortization using the effective interest method of anydifference between that initial amount and the maturity amount,minus any reduction for impairment or uncollectibility. Theeffective interest method is a method of calculating the amortizedcost of a financial asset and of allocating the interestincome over the relevant period. The effective interest rate is therate that exactly discounts estimated future cash paymentsor receipts through the expected life of the financial instrumentor, when appropriate, a shorter period to the net carrying amountof the financial asset.Held-to-maturity investmentsHeld-to-maturity investments are non-derivative financialassets with fixed or determinable payments and fixed maturitiesthat the Group’s Management has the intention and abilityto hold to maturity. Assets under this category that have a fixedmaturity are valued at amortised cost using the effective interestrate method.Available-for-sale financial assetsAvailable-for-sale financial assets are non-derivativefinancial assets that are designated in this category or notclassified in any of the other categories. They are includedin non-current assets unless Management intends to dispose ofthe investment within 12 months of the balance sheet date.Available-for-sale financial assets are initially measured attheir fair value. After initial recognition available-for-sale financialassets are measured at fair value with gains and losses beingrecognized as a separate component of equity until the investmentis derecognized or until the investment is determined to beimpaired at which time the cumulative gain or loss previouslyreported in equity is included in the income statement.The fair values of investments that are actively traded arebased on current bid prices. If the market for a financial asset isnot active fair value is determined using valuation techniques.Impairment of financial assetsA financial asset is impaired if its carrying amount is greaterthan its estimated recoverable amount. The Group assesses,at each balance sheet date, whether there is any objective evidencethat a financial asset may be impaired. If any suchevidence exists, the Group estimates the recoverable amount ofthat asset and recognizes any impairment loss in the incomestatement. If, in a subsequent period, the amount of the impairmentloss decreases and the decrease can be objectively relatedto an event occurring after the write-down, the write-down ofthe financial asset is reversed. The reversal generally will notresult in a carrying amount of the financial asset that exceedswhat amortized cost would have been, had the impairmentnot been recognized, at the date the write-down of the financialasset is reversed. The amount of the reversal is included in netprofit or loss for the financial year.3.7 Derivative financial instruments and hedgingThe Group regularly hedges its net exposure from expectedfuture cash in- and outflows in foreign currencies with forwardcontracts. Such contracts are not qualifying hedges and aretherefore not accounted for using hedge accounting. Gainsand losses on these transactions are taken directly to the incomestatement; the corresponding positive and negative replacementvalues are recognized on the balance sheet as financialassets/financial liabilities at fair value through profit or loss.Until November 2004, the Group entered into derivative contractsin order to hedge investments in foreign entities. Suchderivative contracts were designated as hedges, with changes intheir fair value recognized in equity. However, no net investmenthedge has been made since November 2004.4. Changes in Group StructureThe following changes in the Group structure (fullyconsolidated companies) have occurred in the last 2 financialyears:Financial year 2005/06:Acquisition of CAS Produtos Médicos Ltda., Brazil, as ofOctober 4, 2005Acquisition of Metro Hearing Inc., USA, as of November 1, 2005In addition to the two main acquisitions mentioned above,4 smaller entities have been acquired during the financial year2005/06.For more detailed information regarding the acquisitionsplease refer to Note 29.Financial year 2004/05:Unitron (Sichuan) Co., Ltd, China, founded in June 2004Consolidated Financial Statements57
5. Segment informationProfit or loss based on location of assetsEurope1,000 CHFSalesThird partiesIntersegment salesTotal salesOperating profit (EBIT)Financial income/(expenses), netShare of (loss)/gain in associates/joint venturesIncome before taxesTaxesIncome after taxes2005/06416,812275,930692,742207,628(134)2004/05345,997264,339610,336142,0761522005/06399,69733,321433,01824,334Americas 2) 2004/05280,82422,460303,28425,196Total assets 1)979,962731,173533,958382,111Total liabilities 1)391,045336,167331,361206,468Capital expenditure in tangible and intangible assetsDepreciation and amortization on tangible and intangible assets17,99918,82717,42119,94710,0666,5783,6684,618Third party sales based on location of customersGrowth in local currencies391,15620.4%322,920400,36034.7%284,1441)“Others” include only unallocated corporate assets and liabilities2)The segment Americas includes North and South America (previous year North America only)Prior-year figures have been adjusted accordinglyThe Group is active in one business segment; the development, manufacture, production, distribution and service of hearing systemsand related products.The primary segment information is presented according to geographical regions based on location of assets. This corresponds to theorganizational structure. Transactions between segments are generally conducted at market rates.58 Consolidated Financial Statements
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Annual Report 2005/06Annual Report
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FIVE-YEAR KEY FIGURES(Consolidated)
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CHAIRMAN’S FOREWORDIn 2005/06, th
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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 and 52: Consolidated Statement of Cash Flow
Page 53 and 54: Notes to the ConsolidatedFinancial
Page 55 and 56: equity method, the investment in an
Page 57 and 58: Short-term debtsShort-term debts co
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Page 73 and 74: GoodwillSoftwareIntangiblesrelating
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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
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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
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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
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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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