Annexes to the consolidated financial statements

Accounting principles

General information

The consolidated financial statements are prepared on the basis of commercial operating values and in accordance with accounting recommendations (Swiss GAAP FER) and the Swiss Stock Corporation Act. They provide a true and fair view of the Group's net assets, financial position and results of operations. Consolidation is based on audited and unified financial statements prepared by the Group companies.

The financial statements of Jungfraubahn Holding AG and the consolidated financial statements of the Jungfraubahn Group were approved by the Board of Directors on 27 March 2017.

Deviations from continuity

In the reporting period, the adjustments to Swiss GAAP FER standards 3 and 6, which were implemented on 1 January 2016, were applied. With revenue recognition from brokerage transactions, only the value of the internally generated service is recorded as net proceeds. The previous year's figures for the income statement have been adjusted accordingly, which means that the operating income and the operating expenses of the previous year are kCHF 3,208 lower. The annual result remained unchanged.

Closing date

The uniform closing date for all companies included in the consolidation is 31 December. The associated company Skilift Bumps AG is an exception to this rule (30 June). As in previous years, Skilift Bumps AG due to the lesser importance of the company does not have to prepare interim financial statements as at 31 December.

Scope of consolidation

The consolidated financial statements include the financial statements of Jungfraubahn Holding AG and its holdings. The holdings of the Group can be seen in the Notes to the individual financial statements of Jungfraubahn Holding AG. The holdings are broken down as follows:

Group companies
Group companies are companies in which Jungfraubahn Holding AG has a direct or indirect share of more than 50 per cent.

Associated companies
Associated companies are companies in which Jungfraubahn Holding AG holds 20 to 50 per cent and has a significant influence.

Non-consolidated holdings
Non-consolidated holdings (up to 20 per cent) are reported under «financial assets».

Consolidation method

Group companies
Assets and liabilities, as well as expenses and income, are 100 per cent accounted for according to the full consolidation method. Capital consolidation is carried out according to the Anglo-Saxon method (purchase method). Goodwill paid in connection with a share acquisition is usually depreciated over 5 years, in justified cases over 20 years. A passive difference (badwill) is credited to the income statement in the financial year.

The minority interests in equity and income are shown separately on the balance sheet and the income statement. Receivables, liabilities as well as deliveries and services between group companies, including resulting profits, are eliminated.

Associated companies
These companies are included in the consolidated financial statements using the equity method less value adjustments necessary for economic reasons.

Non-consolidated holdings
The non-consolidated participations reported in the «financial investments» are valued at the acquisition cost less value adjustments necessary for economic reasons.

Valuation principles

Balance sheet items are valued according to uniform guidelines. The valuation is based on the acquisition or production costs (principle of historical costs). The most important rules for the various items are set out below:

Foreign currencies
The conversion of positions in foreign currencies is carried out according to the closing rate method. The effects from foreign currency adjustments are recorded in the period result.

Receivables
Receivables are stated at the nominal value less value adjustments necessary for economic reasons.

Inventories
In particular, articles sold in souvenir shops are included in this item. The valuation is carried out at acquisition cost or - if this is lower - at the realisable disposal value. Any discounts are recorded as a reduction in acquisition costs. Consumables and operating materials are reported as «deferred accruals» in the sense of prepaid expenses.

Tangible assets
Property, plant and equipment and spare parts are recognised at acquisition or production values and amortised using the straight-line method over the estimated period of their use (spare parts corresponding to the period of the related property, plant and equipment). Land is not amortised. The planned useful lives for:

Impairment
On each balance sheet date, an assessment is made as to whether there are any signs of impairment of the book values of the Jungfraubahn Group's assets. If there are any signs, the recoverable value of the assets is determined. An impairment loss is recognised in profit or loss.

Financial assets
Financial assets are stated at acquisition costs, less value adjustments necessary for economic reasons.

Intangible assets
Intangible assets (software, concessions and rights as well as goodwill) are recognised at cost and depreciated over the estimated or contractually determined useful lives. The planned useful lives for:

Liabilities
Liabilities are stated at their nominal value.

Provisions
Provisions are probable obligations that are based on events in the past, the amount and / or maturity of which is uncertain but can be estimated. The valuation is based on uniform business management criteria.

Sales realisation

The revenues of the Jungfraubahn Group stem mainly from the sale of travel tickets (transport income). Transport income is realised with the completion of the sales transaction in the sales system and posted in the corresponding period. Proceeds from long-term travel tickets are deferred on a monthly basis and are settled over the entire duration of the travel tickets.

Taxes

Current taxes on profits are deferred on the basis of the business results reported in the reporting year according to the principle of current-year measurement.

For deferred taxes, all differences between tax rates and group values are measured at full tax rates and reported in the balance sheet (comprehensive liability method). To calculate the deferred tax burden, the future expected tax rate is applied to each company at the time of dissolution. Deferred tax assets on tax-deductible losses carried forward are not capitalised but shown in the Notes.

Employee pension funds

All employees of the Jungfraubahn Group are insured by the legally independent personnel pension fund of Jungfrau Railways. The purpose of the fund is to insure the employees against the economic consequences of age, death and disability. All workers aged over 17 are insured.

The assets of the foundation are not included in the consolidated financial statements. In the statement of income, the contributions demarcated for the period are presented as personnel expenses. The balance sheet includes the corresponding deferred tax assets or liabilities as well as liabilities arising from contractual, regulatory or legal principles. It is assessed annually whether there is an economic benefit or an economic obligation from the organisation's perspective. The annual accounts of the pension fund, which are prepared in Switzerland in accordance with Swiss GAAP FER 26, and other calculations which represent the financial situation, the existing excess cover or shortfall under the actual circumstances, serve as a basis.

Transactions with related parties

Business relationships with related parties are settled under market conditions. This applies in particular to business transactions with BEKB | BCBE, Gebäudeversicherung Bern, Garaventa AG, Graf AG, Hoch- & Tiefbau, Holzbau, as well as with associated companies and personnel services.

Segment information

Comments

0 Scope of consolidation

In the reporting year, the newly founded companies Grindelwald Grund Infrastruktur AG, Grindelwald (80% holding), and Mürrenbahn AG, Lauterbrunnen (100% holding) were included in the scope of consolidation. They were recognised in the consolidated financial statements using the fully consolidated method.

Among liabilities to shareholders, unpaid dividends are recognised on exchange shares. Exchange shares are non-swapped shares from the mergers of the Jungfraubahn Holding AG with Wengernalpbahn AG and Jungfraubahn AG in 1994, with Sesselbahn Innerwengen-Allmend AG in 2002 as well as Bergbahnen Grindelwald-First AG in 2003.

The uncovered costs of the transport service ordered by the public authorities (Federation and Canton of Bern) on the routes Lauterbrunnen–Mürren and Lauterbrunnen–Wengen are paid by the purchaser. The corresponding compensation must be negotiated in advance.

The compensation paid to the Management booked under personnel expenses is shown in the remuneration report of Jungfraubahn Holding AG.

Management insurance is maintained for members of management and extended management. Expenses for the companies amounted to kCHF 210 in 2016 and kCHF 163 in 2015.

General expenses mainly include administrative costs, fees and duties as well as various sponsorship and cost contributions. The compensation paid to Board members as a general expense is disclosed in the remuneration report of Jungfraubahn Holding AG.

20 Financial income

Financial income for 2016 includes a badwill of kCHF 2,440, which resulted from the purchase of shares in subsidiaries. There was no badwill in 2015.

The Group's average income tax rate is based on the weighted average tax rate resulting from the profit or loss before tax as well as the tax rate of each individual company.

With the companies Firstbahn AG, Bergbahn Lauterbrunnen-Mürren AG, Grindelwald Grund Infrastruktur AG as well as Mürrenbahn AG there are tax-deductible losses carried forward totalling kCHF 4,583 (previous year kCHF 5,633). The resulting non-capitalised deferred tax claim is kCHF 1,013 (previous year kCHF 1,233).

22 Equity

Share capital

The share capital of Jungfraubahn Holding AG is fully paid up, amounting to CHF 8,752,500 at 31 December 2016 and is divided into 5,835,000 registered shares with a nominal value of CHF 1.50. Rights and restrictions related to the shares are explained in Section 6 of the Corporate Governance report.

Treasury shares

At 31 December 2016, the company held 4,704 registered treasury shares with a nominal value of CHF 1.50 each (previous year 14,737 registered treasury shares).

In the reporting year, 20,476 (previous year: 16,138) of the Company's registered treasury shares were purchased at an average price of CHF 94.89 (previous year: CHF 93.97) and 30,509 (previous year 23,271) registered treasury shares were sold at an average price of CHF 93.15 (previous year CHF 93.05).

Since 2005, the employees of the Jungfrau Railway Group as well as the administrative boards of Jungfraubahn Holding AG have been given the option of voluntarily purchasing a limited number of registered shares of Jungfraubahn Holding AG at a preferential price. In the reporting year, this price was CHF 32.00 per registered share (previous year CHF 25.00). The difference between the preferential price and the average acquisition price was recognised in the income statement under personnel expenses. In this way 20,970 registered treasury shares were sold in the reporting year (previous year 20,990).

The share ownership of the Board members and management is shown in the annexe to the financial statements of Jungfraubahn Holding AG.

Reserves

The non-distributable, statutory or legal reserves amounted to kCHF 24,392 at 31 December 2016 (previous year kCHF 24,524).

25 Events after the balance sheet date

Since the balance sheet date of 31 December 2016, no events have occurred which affect the meaningfulness of the consolidated financial statements for 2016.