Notes to the Financial Statements

1. INTRODUCTION

The financial statements of Chocladefabriken Lindt & Sprüngli AG, with registered office in Kilchberg, were prepared in accordance with the Swiss accounting legislation of the Swiss Code of Obligations (CO).

Chocoladefabriken Lindt & Sprüngli AG is presenting consolidated financial statements according to an internationally accepted reporting standard. Therefore, theses financial statements and notes do not include additional disclosures, cash flow statement and management report, according to Art. 961d, paragraph 1 CO.

The structure of the 2014 financial statements have been adjusted in order to be comparable with the 2015 presentation.

2. ACCOUNTING POLICIES

Fixed assets

Fixed assets are valued at historical cost less impairment. The intangible assets include mainly the intelectual property rights of Russell Stover Candies, LLC, acquired in 2014.

Treasury shares

Treasury shares are recognized at acquisition cost and are presented as a deduction from shareholder's equity. Upon sale of treasury shares, the realized gain or loss is recognized through the income statement as income or expense from financial assets.

Financial liabilities

Financial liabilities are recognized at nominal value. Agio as well as disagio and also bond issue costs are booked in income statement.

Dividends and other income from subsidiaries

Dividend income resulting from financial investments is recorded upon approval of the dividend distribution.

“Other income from subsidiaries” mainly consist of license fees, which are recognized in the period they fall due.

Foreign currency translation

The foreign exchange rates are listed on page 79 of the notes to the consolidation financial statements. In deviation to the table on page 79 transactions in the income statement are booked at the respective month-end rate.

3. Liabilities arising from guarantees and pledges in favor of THIrd parties

Contingent liabilities as at December 31, 2015, amounted to CHF 271.5 million (CHF 198.9 million in 2014). This figure comprises guarantees given to counterparties providing credit lines for borrowings and hedging to subsidiaries.

The companies, Chocoladefabriken Lindt & Sprüngli AG, Chocoladefabriken Lindt & Sprüngli (Schweiz) AG, Lindt  & Sprüngli Financière AG, Lindt & Sprüngli (International) AG, and Indestro AG together form a Swiss-VAT group. According to Art. 15, paragraph 1, item c of the Swiss Value Added Tax Law and Art. 22, paragraphs 1 and 2 of the Swiss Value Added Tax Ordinance, all members participating in VAT-group taxation are jointly liable for all taxes owed by the VAT group (including interest), which arose during their period of membership.

4. Investments

The investments in subsidiaries are listed on page 77 of the notes to the consolidated financial statements.

5. Bonds

In September 2014 the Company placed bonds of CHF 1 billion in order to finance the acquisition of Russell Stover Candies, LLC. The bonds consist of the following three tranches:

  • CHF 250 million floating rate bond with a term of 3 years and a floating interest rate based on 3-month CHF LIBOR plus 0.18 % per annum. The interests are paid quarterly;
  • CHF 500 million bond with a term of 6 years and a fixed coupon of 0.5 % per annum. The interests are paid annually on October 8; and
  • CHF 250 million bond with a term of 10 years and a fixed coupon of 1.0 % per annum. The interests are paid annually on October 8.
  • CHF million Interest rate Term Notional amount
    Floating rate bond variable 2014–2017 250.0
    Straight bond 0.5% 2014–2020 500.0
    Straight bond 1.0% 2014–2024 250.0
    Total     1,000.0

6. Acquisition and sale of registered shares and participation certificates

6. Acquisition and sale of registered shares and participation certificates
    2015   2014
Inventory of treasury stock Registered shares Participation certificates Registered shares Participation certificates
Inventory as at January 1 2,558 12,730 1,853 1,682
Additions 139 750
Retirements – 90 – 68
Share buy-back program 23 11,048
Cancellation of shares – 23 – 12,730
Inventory as at December 31 2,584 2,558 12,730
Average cost of additions (in CHF) 72,316 56,034
Average sales price of retirements (in CHF) 58,171 50,538
Average cost of share buy-back program (in CHF) 50,076 4,254
Average cost of cancellation of shares (in CHF) 50,076 4,200

7. Reserves

7. Reserves
  Reserves from capital contribution Special reserves
CHF thousand Requested Approved Not approved 1) Total Total
Balance as at January 1, 2014 128,061 1,508 9,166 138,735 389,343
Reserve from retained earnings 170,000
Additions during the year 72,794 1,002 73,796 – 1,002
FTA approval March 17, 2014          
Approved reserves from capital contribution – 128,061 128,061
Treasury stock – 40,392
Share buy-back program – 48,150
Proposed dividend distribution – 126,896 – 126,896
Undistributed dividends on own registered shares and participation certificates 1,421 1,421
Options exercised from January 1 to April 30, 2014 – 869 – 869
           
Balance as at December 31, 2014 72,794 3,225 10,168 86,187 469,799
           
Reclassification reserves for own shares 105,232
Reclassification reserves for own shares (Share buy-back program) 54,615
           
Balance as at December 31, 2014 (new accounting law) 72,794 3,225 10,168 86,187 629,646
Reserve from retained earnings 120,000
Additions during the year 101,726 1,508 103,234 – 1,508
Approved reserves from capital contribution          
FTA approval March 19, 2015 – 72,794 72,794
FTA approval February 16, 2016 – 101,726 101,726
Share buy-back program – 54,615
Cancellation of shares 130
Reclassification of valuation of treasury shares – 39,670
Proposed dividend distribution – 75,308 – 75,308
Undistributed dividends on own registered shares and participation certificates 1,229 1,229
Options exercised from January 1 to April 29, 2015 – 486 – 486
           
Balance as at December 31, 2015 103,180 11,676 114,856 653,983

1) The Swiss federal tax administration (FTA) has not yet approved the capital transaction costs of TCHF 11,676 as reserves from capital contribution. This practice may be changed in the future.

8. Mandatory disclosure of interest positions pursuant to Art. 663c CO

As of December 31, 2015, Chocoladefabriken Lindt & Sprüngli AG disclosed the following shareholders known to the Company (in accordance with Art. 663c CO and the articles of association), which own voting shares of more than 4 %: “Fonds für Pensionsergänzungen of Chocoladefabriken Lindt & Sprüngli AG”, “Finanzierungsstiftung für die Vorsorgeeinrichtungen der Chocoladefabriken Lindt & Sprüngli AG”, “Lindt Cocoa Foundation” and “Lindt Chocolate Competence Foundation”. As a group they held 20.2 % of the voting rights of the Company (20.3 % in 2014).

The participation of the Board of Directors, Group Management and Extended Group Management as at December 31, 2015, according to Art. 663c CO is as follows:

    Number of registered shares (RS) Number of participation certificates (PC) Number of options
    2015 2014 2015 2014 2015 2014
E. Tanner Chairman and CEO 3,103 3,103 9,000 6,943 12,250 19,750
A. Bulgheroni Member of the Board 1,000 1,000 1,900 5,900
Dkfm E. Gürtler Member of the Board 1 50
Dr R. K. Sprüngli Member of the Board 1,092 1,092
Dr F. P. Oesch Member of the Board, deceased in 2015 13
P. Schadeberg-Herrmann Member of the Board 115 131
U. Sommer Group Management 12 12 40 140 6,150 7,450
Dr D. Weisskopf Group Management 7 7 2,400 2,400 7,475 9,650
A. Pfluger Group Management 5 5 30 30 5,100 5,188
R. Fallegger Group Management 5 5 1,154 1,969 4,088 6,035
K. Kitzmantel Extended Group Management 5 5 5 100 4,088 4,338
A. Lechner Extended Group Management 6 6 56 53 5,178 5,650
T. Linemayr Extended Group Management 4 4 77 77 4,967 5,500
Total   5,355 5,383 12,812 11,712 51,196 69,461

All other disclosures relating to the remuneration of the Board of Directos, Group Management and Extended Group Management are provided in the Compensation Report.

9. Number of Employees

Chocoladefabriken Lindt & Sprüngli AG has no employees.