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SIX-Telekurs annual report 2003 Document Transcript

  • 1. ANNUAL REPORT 2003
  • 2. TELEKURS GROUP PRODUCTS MasterCard VISA Maestro VISA Electron CASH MasterCard SecureCode Verified by VISA EFT/POS terminals POS management system Virtual terminal saferpay Issuing processing Acquiring processing SIC euroSIC multiSIC remoteGATE /swisseuroGATE LSV/DTA payGATEweb /payCOMweb payROUTE Market information Securities administration information Development & system integration Housing, hosting Application management Disaster recovery Output management Capturing (scanning) Electronic archiving PayNet BillingServices
  • 3. TABLE OF CONTENTS 5 7 8 9 11 Chairman’s management report Employee appreciation Management Bodies of Telekurs Holding Ltd. Changes Telekurs Group at a glance 13 16 21 25 28 32 Telekurs Group activity report Telekurs Multipay Ltd. Telekurs Card Solutions Ltd. Swiss Interbank Clearing Ltd. PayNet (Schweiz) AG Telekurs Financial Information Ltd. Telekurs Services Ltd. 36 39 40 41 42 43 44 54 Consolidated financial statement 2003 Telekurs Group Financial Result Five-year overview Statement of income Balance sheet Cash flow statement Shareholder’s equity Notes Report of the group auditors 56 57 58 59 60 Annual Report 2003 Telekurs Holding Ltd. Statement of income Balance sheet Notes and off-balance sheet transactions Shareholder’s equity and proposed balance sheet profit allocation Report of the statutory auditors 62 64 65 66 Group companies Telekurs Group management bodies and organizations Consolidated companies Telekurs Group addresses Publishing details
  • 4. TELEKURS ANNUAL REPORT 2003 4 5 CHAIRMAN OF THE BOARD OF DIRECTORS AND THE EXECUTIVE COMMITTEE The Chairman of the Board of Directors and the Executive Board of Telekurs Holding Ltd. (from left to right): André Bamat, Ruedi Denier, Rolf Finschi, Stephan Zimmermann (Chairman of the Board of Directors), Walter Wirz (CEO), Eugen Niesper, Felix Aeschlimann.
  • 5. CHAIRMAN’S MANAGEMENT REPORT DEAR SIR OR MADAM, All in all, the Telekurs Group can look back on a successful year with satisfactory growth. It produced an operating result of 53.4 million francs in the year 2003, before interest and taxes. While this result lies low that of the previous year, it was achieved despite declining demand in the financial information business and considerable price reductions in our interbank services. The extraordinary profit from the sale of the participation in Fininfo in France had a positive effect on the consolidated financial result. It lies significantly above that of the previous year at 67.5 million francs. Telekurs Financial has developed and successfully brought to market a new display product family with Telekurs iD. This user-friendly display product visualizes the unique linkage of master and corporate actions data for financial instruments with current prices and business news. Numerous strategic projects and measures to boost efficiency led to a further enhancement of competitive strength. The most important event in the reporting year was the acquisition of the VISA acquiring business from the UBS Card Center at the beginning of June. At the beginning of last year, the lacking dual-brand offer and the poor economic situation led to sinking transaction volumes and turnover in the MasterCard business. The acquisition of the VISA acquiring business has enabled us to meet the requirement of customers for a credit card offer from a single source. At the same time, the acquired volume of VISA transactions lead to a turnover volume in the credit card business field per year-end that far exceeded that of the previous year. Numerous customers, both within Switzerland and abroad, some of which are portrayed in this Annual Report, profit from our high-quality products and services, and appreciate Telekurs as a reliable and secure business partner. This would not be possible without the daily commitment of around two thousand Telekurs Group employees. I thank them and the members of the various Telekurs committees for their commitment as well as their personal contribution to the success of our company. A further important step was the successful merger of the 3C-Gruppe with the Card Services division of the former Payserv to form Telekurs Card Solutions. Telekurs can thus now offer complete solutions for the registration, transmission, processing and crediting of card transactions from a single source. In the reporting year, PayNet (Schweiz) successful won over numerous banks, important billers and software providers for Electronic Bill Presentment and Payment and was thus able to further expand the PayNet network. Stephan Zimmermann Chairman of the Board of Directors
  • 6. 6 7 SPOTLIGHT ON THE CUSTOMERS Spotlight on the customers Many leading companies in Switzerland and abroad are customers of the Telekurs Group. Their wishes and needs are central to our efforts to offer an array of high-quality and attractive solutions. On the photographic pages of this year’s Annual Report, we introduce some of our customers who use Telekurs Group services on a daily basis.
  • 7. EMPLOYEE APPRECIATION WILLINGNESS TO LEARN AND CHANGE The Telekurs Group has constantly grown in recent years and today has successfully compiled a product portfolio that comprehensively covers customer requirements in the areas of international financial information, the card business and in payment systems thanks to successful product developments and targeted acquisitions, among other things. The year 2003 required a great deal of willingness to learn and change from the employees of the Telekurs Group. The majority of them now work in another group company than in the previous year. Efficiency-boosting measures also led to a certain reduction of jobs. Supervisors and employees showed great flexibility and team spirit in this challenging environment. Reliability, security and professionalism distinguish our company and thus also our group’s customer relations. The employees play a key role in this regard: their constant will to implement these values directly effects our success in the market. The latest IT systems and infrastructure support them in the process. The increasing complexity of the customer solutions offered and the basic production processes place ever greater requirements upon the human factor. The value of motivated and willing employees is proven in this highly technical working environment. Your personal commitment, your know-how and your creativity are prerequisite to the development and operation of our customer-oriented and market-driven products and services. In the name of the Telekurs Holding Ltd. Executive Committee, I heartily thank all our employees for their commitment to Telekurs Group. Walter Wirz CEO Telekurs Group
  • 8. TELEKURS ANNUAL REPORT 2003 8 9 MANAGEMENT BODIES OF TELEKURS HOLDING LTD. Board of Directors Group auditors and statutory auditors Members of Senior Management Stephan Zimmermann Chairman Member of the Group Managing Board of UBS Ltd., Zurich Ernst & Young Ltd., Zurich Daniel Bulgheroni Head of Controlling Executive Committee Hans-Peter Königs Corporate Security Officer Dr Romeo Lacher Vice Chairman Member of the Executive Board of Credit Suisse, Zurich Walter Wirz CEO of the Telekurs Group Arthur Bolliger Chief Executive Officer Maerki Baumann & Co AG, Zurich Dr Pierin Vincenz Chief Executive Officer Union of Swiss Raiffeisen Banks, St. Gallen Marcel Zoller Member of the Executive Committee Cantonal Bank of Saint Gall, St. Gallen Felix Aeschlimann CEO of Telekurs Card Solutions André Bamat CEO of Swiss Interbank Clearing Ruedi Denier CEO of Telekurs Multipay Rolf Finschi CEO of Telekurs Services Eugen Niesper CEO of Telekurs Financial Ursula C. La Roche-Ender Head of Finances & Controlling Roger Niederer Head of Financial Accounting Mirko Thomas Oberholzer Legal Service Andreas Plüss Head of Legal Service, Board of Directors Secretary Richard Walder Head of Inspectorate Bernhard Wenger Head of Public Relations, Media Spokesman Status: 1 February 2004
  • 9. CHANGES Telekurs Group Boards of Directors Telekurs Group Executive Committees In the Telekurs Holding Board of Directors, Dr Romeo Lacher, Member of the Executive Board of Credit Suisse, replaces the departing Bruno B. Pfister as Vice Chairman. Telekurs Services has been managed by an executive committee since 1 March 2003. Chief Executive Officer is Rolf Finschi while Beat Christen, Rainer Deutschmann, and since 1 January 2004, Reto Camenisch, are Members of the Executive Committee. Departing the Board of Directors of Telekurs Multipay (formerly Telekurs Europay) are Germain Hennet, Dr Klaus Spremann and Stephan Weigelt. Dr Thomas Ankenbrand, Director of RBA Central Bank is a new Member of the Board. Dr Ruedi Berger, Member of the Executive Board of RBA-Holding, is a new Member of the Board of Directors of Telekurs Card Solutions. Dr Thomas Ankenbrand has departed the Board of Directors of Swiss Interbank Clearing. Christian Bieri, Member of the Executive Committee of RBA Central Bank was elected as a new member. Dr Jacques Bischoff, CEO of Telekurs Multipay, left the company on 21 July 2003. Ruedi Denier has assumed the position of Chief Executive Officer; Dôn Nguyen-Quang has assumed a position on the Executive Committee. The Telekurs Holding Executive Committee is comprised of the existing members Walter Wirz (CEO), André Bamat, Eugen Niesper as well as the new members Felix Aeschlimann, Ruedi Denier and Rolf Finschi. Appreciation The management of Telekurs Group thanks the departing board members and executive committee members for their personal dedication and commitment to the group companies and wishes them all the best and much success in the future. Felix Aeschlimann joined the Executive Committee of Telekurs Card Solutions on 1 August 2003 and assumed the position of Chief Executive Officer. Walter Wirz, who had provisionally held this position, departed the committee at that time. Dr Linus Bertsch, Ruedi Denier and Ralph Oechslin are also Members of the Executive Committee. Status: 1 February 2004
  • 10. 10 11 BUCHERER LTD., LUCERNE Adelbert Bütler, CEO. “ The absence of cashless means of payment would be inconceivable today. We receive many customers from abroad each day that pay with credit cards; this represents an important part of our turnover. Credit card payments are a nearly irreplaceable payment option for our company.”
  • 11. TELEKURS ANNUAL REPORT 2003 TELEKURS GROUP AT A GLANCE Key figures (consolidated) 2003 CHF M 2002 CHF M Change CHF M Operating income Cash flow Operating result before taxes and interest Annual profit 726.8 88.7 53.4 67.5 704.3 93.1 67.6 52.6 22.5 –4.4 –14.2 14.9 Balance sheet total as of 31 December Shareholders’ equity as of 31 December 832.2 320.3 930.7 433.6 –98.5 –113.3 Operating income (consolidated) 2003 CHF M 2002 CHF M Change CHF M Card-based payment systems Electronic payment systems Financial information services Other operating income Total 406.4 44.9 240.1 35.4 726.8 365.3 46.7 258.9 33.4 704.3 41.1 –1.8 –18.8 2.0 22.5 31. 12. 2003 31. 12. 2002 Change Telekurs Multipay Ltd. Telekurs Card Solutions Ltd.1, including subsidiaries Swiss Interbank Clearing Ltd. PayNet (Schweiz) AG Telekurs Financial Information Ltd. Foreign subsidiaries and Rolotec Ltd. Telekurs Services Ltd.2 Telekurs Holding Ltd. Total 162 454 54 20 361 425 528 48 2,052 140 508 56 20 365 398 540 48 2,075 22 –54 –2 0 –4 27 –12 0 –23 Annual average 2,070 2,081 –11 2003 CHF 1000 2002 CHF 1000 Change CHF 1000 351 43 338 45 13 –2 Number of employees (weighted) Operational details Operational income per employee Cash flow per employee 1 2 formerly 3C-Gruppe. On 01.01.03 the former Payserv Ltd. Card Services division was added to this group. formerly Payserv Ltd. 0n 01.01.03 the Card Services division was split off.
  • 12. 12 13 VICTORIA-JUNGFRAU GRAND HOTEL & SPA, INTERLAKEN Emanuel Berger, General Manager. “Over 40 % of our turnover is now generated through credit card payments, which has the following advantages for us: – rapid availability of the financial means – credit card confirmation of the room reservation – fewer losses – simply, uncomplicated handling We appreciate Telekurs Multipay Ltd. as a reliable partner. In comparison with foreign providers, we have determined that Telekurs Multipay Ltd. is entirely competitive with its conditions and services.”
  • 13. TELEKURS ANNUAL REPORT 2003 TELEKURS MULTIPAY LTD. MAESTRO TURNOVER DEVELOPMENT 1 in CHF billions 15 13.5 12 12.8 12.0 10.5 10.8 9 7.5 9.4 8.6 6 4.5 3 1.5 0 99 00 01 02 03 1 Swiss cards in Switzerland (without ATM cash withdrawals) STRONG MARKET POSITION IS STRENGTHENED Despite challenging economic conditions, Telekurs Multipay recorded significant growth in the year 2003; it was thus able to consolidate its leading market position in the Swiss acquiring business. An essential contribution to this growth resulted from the takeover of the VISA acquiring business from UBS Card Center Ltd. as well a growth of nearly 10 percent in the debit business. In May 2003, Telekurs Europay was renamed to Telekurs Multipay Ltd. in connection with the VISA license issuing, and as a consequence of the formation of a lean marketing and sales organization. Since the beginning of June 2003, in addition to MasterCard and Maestro, the company now also offers VISA and VISA Electron. Dual offer is realized With the granting of the VISA license by VISA International as well as the takeover of the UBS Card Center Ltd. VISA acquiring business, Telekurs Multipay was able to realize its long-planned dual brand strategy. With its range of acceptance contracts for both MasterCard and VISA, it meets the requirements of its customers for a dual credit card offer from a single source. Credit card turnover increased The newly acquired VISA transaction volume lead to a turnover figure in the credit card business field in the reporting year that is considerably higher than that of the previous year. The number of transactions processed by Telekurs Multipay in Switzerland thus amounted to 53.5 million, with a total volume of CHF 8.3 billion. This corresponds to an average transaction turnover of CHF 155.20. A total of CHF 6.4 billion were turned over with Swiss credit cards (VISA and MasterCard), while foreign cards (VISA and MasterCard) contributed CHF 1.9 billion to the total volume.
  • 14. TELEKURS ANNUAL REPORT 2003 14 15 TELEKURS MULTIPAY LTD. MAESTRO POINTS OF ACCEPTANCE 1 in thousands 100 90 80 80.7 70 84.5 73.9 60 50 67.5 61.6 40 30 20 10 0 99 00 01 02 03 1 in Switzerland ( without ATM ) Secure paying on the Internet CASH – a niche product Telekurs Multipay offers the approved e-commerce technologies, MasterCard SecureCode and Verified by VISA. These worldwide standardized security solutions protect the cardholder and online shop alike from misuse, by a process in which a personal password – equal to a signature – must be entered upon each transaction. Since the past year, the value card CASH has only been managed as a niche product and is no longer being supported in terms of advertising with large campaigns. The number of transactions conducted with CASH decreased in the reporting year by 5.4 percent, to 19.4 million. Taking advantage of chances and challenges Debit cards record continuous growth Growth in the debit card sector continues to develop very positively. Swiss ec/Maestro cards were used in Switzerland and abroad for a total of 145.3 million payments (+ 9.3 percent), with a total value of CHF 13.1 billion (+ 7.6 percent). 115 million of these transactions (+ 9.8 percent) were conducted in the Swiss retail market and 28.5 million (+ 6.2 percent) were conducted at automated refueling stations. The average turnover per debit card transaction in the retail market decreased to CHF 99 (– 3 percent). New brands MasterCard and Maestro In the year 2003, preparations were made for the so-called brand switch for the EUROCARD and ec brands. On 1 January 2004, the brand MasterCard/EUROCARD was shortened to MasterCard on all newly issued Swiss credit cards and the Swiss brand ec was replaced by Maestro. Since last autumn, new debit cards no longer bear the ec logo. The progressing liberalization and internationalization of the card business represent both chances and challenges alike for Telekurs Multipay. Chances are presented by the fact that customers can now be acquired internationally. However, challenges are presented by the fact that the Swiss market is being subjected to foreign competitive pressure from providers abroad. Telekurs Multipay intends to meet this competition with its dual brand offer and with the introduction of service packages that offer customized products to its customers.
  • 15. KEY FIGURES 2003 2003 2002 Change in percent 4.1 3.8 7.9 Turnover with Swiss Maestro cards (in CHF millions) Retail Switzerland ATM Switzerland 1 Turnover abroad – generated through retail – generated through ATMs 12,787 14,471 1,869 278 1,591 11,952 14,490 1,645 196 1,449 7.0 –0.1 13.6 41.8 9.8 Usage possibilities in Switzerland Maestro points of acceptance CASH points of acceptance ATM (including postal banking machines) 84,500 34,500 5,300 80,600 33,500 5,200 4.8 3.0 1.9 Telekurs Multipay Ltd. credit card business 2003 2002 Change in percent Turnover with MasterCard and VISA 2 (in CHF millions) Total volume – generated with Swiss cards – generated with foreign cards 8,354 6,441 1,913 6,779 5,504 1,275 23.2 17.0 50.0 104,400 45,100 98,900 – 5.6 – Maestro system (in M) Number of Swiss Maestro cards Points of acceptance 2 MasterCard VISA2 1 2 only withdrawals with clearing through the Telekurs Group only Telekurs Multipay Ltd. Merchants, VISA since the beginning of June 2003 Acquiring (merchant business, card acceptance at the point of sale) Acquiring includes the contractual integration of points of acceptance, such as stores, hotels, restaurants and refueling stations (referred to collectively as “merchants”). Contracts are concluded between the acquirer and the merchant, in which the merchant accepts the respective card as a means of payment, receives the turnover generated through the card credited to him and in return pays the acquirer a commission. Dual offer (offering of two credit card brands through a card issuer or acquirer) A dual brand strategy, or dual brand offer, refers to the issuing or acquiring of two credit card brands – such as VISA and MasterCard, from a single source. Dual brand issuing enables the card issuer to offer customers (cardholders) both VISA and MasterCard for cashless paying. Dual brand acquiring enables the acquirer to conclude contracts with interested companies for the acceptance of both VISA and MasterCard.
  • 16. TELEKURS ANNUAL REPORT 2003 16 17 TELEKURS CARD SOLUTIONS LTD. CASH WITHDRAWALS AT CASH DISPENSERS in millions 150 135 140 120 131 120.2 105 109.8 90 100.9 75 60 45 30 15 0 99 00 01 02 03 COMPLETE SOLUTIONS LEAD TO SUCCESS Telekurs Card Solutions recorded positive development in the year 2003. A leading provider in the field of technical processing of cashless payment transactions has come into being with the successful combination of the Card Services business unit of the former Payserv Ltd. and 3C Holding into Telekurs Card Solutions Ltd. The fusion brought with it numerous synergies as well as an improved cost basis. According to the motto “All from a single source”, Telekurs Card Solutions offers an array of solutions for card-based payment transactions and a wide range of terminal products for accepting POS payments, plus processing solutions for issuers and acquirers, as well as other comprehensive evaluation and reconciliation services for merchants. Transactions again on the increase The use of credit cards and debit cards has again increased. The number of POS payment transactions processed through Telekurs Card Solutions and withdrawals at cash dispensers increased in comparison to the previous year by 20.7 million, to 347 million transactions (+ 6.3 percent). The POS and ATM systems reached a new one-day record on 20 December 2003. Over 1.5 million transactions were processed on this day for the first time, specifically 1,004,476 POS payments and 563,494 ATM withdrawals. Moreover, the processing system was distinguished by a high level of reliability throughout the entire year. Processing system certified by VISA On 1 November 2003, Telekurs Card Solutions received certification from VISA International for the processing of VISA transactions at the point of sales (POS). The stage-by-stage transfer of VISA transactions from UBS Card Center Ltd. to the Telekurs Card Solutions system will be completed by mid-2004, at the latest.
  • 17. MAX BY VÖGELE SHOES, RAPPERSWIL Silvia Capaul, Branch Manager. “High-fashion shoes for a preferential price-performance ratio – that is what we offer our customers in the ‘Max by Vögele Shoes’ city stores. For us, part of a pleasant shopping atmosphere is also the option of paying easily, quickly and securely so that spontaneous shoe purchases are possible at any time. For this we count on the processing of credit cards and debit cards from our proven partner of many years, Telekurs Card Solutions Ltd., which frees us from all concerns in the area of payment processing. An ideal partnership which creates the optimal environment for our customers.”
  • 18. TELEKURS ANNUAL REPORT 2003 18 19 EFT/POS PAYMENTS AND CASH WITHDRAWALS AT CASH DISPENSERS (ATMS) IN SWITZERLAND Transactions, all cards in millions EFT/ POS Cash dispensers Total Number of transactions per minute through all systems 2003 Transactions 2002 Transactions Change in percent 207.5 139.6 347.1 195.5 131.0 326.5 6.1 6.6 6.3 660 621 Migrations carried out according to plan New terminal generation is proven In the Issuing Services business unit, the migration of credit card issuing processing, i.e. the relocation of the processing and the personnel resources proceeded according to plan. The Swisscard card portfolio was migrated in November 2003, resulting in a reduction of the number of employees in this business unit by over 80 positions. The migration of the Viseca card portfolio is planned for the end of August 2004. In the Terminal business unit, Telekurs Card Solutions is the first supplier of ep2-homologized terminals. The payment terminals are EMV- and offline-capable. The entire product palette will be converted to ep2, from stand-alone solutions through multi-station systems, on to modular vending machine applications. In another development, the banks approved the personalization of Maestro cards using the internationally standardized EMV chip. Since September 2003, all renewed and new Maestro cards have been equipped with this chip. Approximately half the 4.1 million Maestro cards had been converted at the end of 2003. However, the conversion will not be completed before the year 2005, due to the two- to three-year life span of cards. On 1 November 2003, the first single terminal in Switzerland, a so-called monoblock with cash register and customer terminal integrated in a single device, was launched under the name EPSYS smash compact. The ep2 standardization makes it an inexpensive terminal for the processing of debit and credit cards. Simultaneous with the launching of the EPSYS smash compact device, the financial reconciliation portal topas pms was activated.
  • 19. TRANSACTIONS AT EFT/POS TERMINALS (INCL. REFUELING) Transactions, all cards in millions 2003 2002 2001 2000 1999 Debit cards Credit cards Value cards Total 145.7 42.4 19.4 207.5 133.5 41.5 20.5 195.5 117.8 38.6 19.9 176.3 101.5 35.8 17.9 155.2 85.6 30 10.7 126.3 “saferpay” solution is in demand With the Internet payment platform saferpay, the E-Commerce business unit has a product that is very successful, particularly in Germany. The product saferpay was also able to gain increased footing within Switzerland in the reporting year. Approximately 5,000 active clients were served in the year 2003, making saferpay one of the most widely used Internet payment platforms in Europe. Competition increases The liberalization of the card business also affects payment transaction processors. The international card organizations are changing their rules to enable cross- Cross-border acquiring Acquiring business in which the acquirer and the merchant are active in various countries. EMV standard Specifications for chip cards that were jointly developed by Eurocard, MasterCard and VISA. Issuing (card issuing) Issuing refers to the issuing of cards to cardholders to facilitate the cashless purchasing of goods and services. The cardholder obligates himself to pay a card fee and also to pay for the turnover generated using the card. It is a contractual relationship between the card issuer and the cardholder. border offers, and are establishing international standards, such as EMV. This opens the Swiss market for international providers, leading to increased competition. Telekurs Card Solutions is well equipped for international competition. It is continuously expanding its range with innovative solutions. It already has high-capacity, flexible platforms for the receipt, routing and accounting of electronic payments. This meets the multifaceted functional requirements of internationally active companies seeking to handle their card-based payments through a single processor.
  • 20. 20 21 FERRIER LULLIN & CIE SA, GENEVA Rolf Leber, Head of Operations. “We have used euroSIC, the clearing and settlement system for euro, since 1999. It enables the simple and inexpensive settlement of our euro payments. The integrated back-end organization model is also a quality guarantee for us: Thanks to this automated process chain, we can execute bank transactions very efficiently and with optimal risk control. The stability of the platforms used has been constantly increased and has contributed to the greater availability of our operations team for customer support services.”
  • 21. TELEKURS ANNUAL REPORT 2003 SWISS INTERBANK CLEARING LTD. TRANSACTIONS IN SIC in millions 200 190 193 180 170 177 160 161 150 150 140 130 142 120 110 100 99 00 01 02 03 SOLID-BASED INTERBANK BUSINESS 2003 was a positive business year for Swiss Interbank Clearing. It was once again able to further extend its position as a hub for interbank payment traffic. The number of transactions made increased over the previous year by 4.6 percent. SIC, the Swiss interbank clearing system for Swiss francs, is one of the world’s leading online payment transaction systems. It facilitates optimal cash management, improved liquidity control and rapid handling of payments in the national currency for participating financial institutions. The number of payments also increased in the year 2003. SIC processed a total of approximately 193 million transactions, which amounts to an increase of 8.8 percent over the previous year. The system executed an average of 767,000 payments each day with a daily turnover of CHF 178 billion. At the end of 2003, there were 323 financial institutions connected to SIC, 93 of which are located outside Switzerland. euroSIC system transactions increased euroSIC, the clearing system for euro payments in Switzerland and across its borders, recorded an increase in the number of transactions in the reporting year. A total of over 2 million payments were processed, 788,000 of which were cross-border. Viewed over the course of the entire year, this makes a daily average of nearly 8,000 payments executed daily; the daily average reached nearly 9,700 payments in December. Among the 16 clearing systems connected to TARGET, euroSIC ranks a significant sixth in terms of the number of transactions. A total of 117 financial institutions were connected to euroSIC at the end of December. euroSIC is monitored and controlled by the SECB (Swiss Euro Clearing Bank GmbH) in Frankfurt, which, among other things, also manages swisseuroGATE, administers the participants’ settlement accounts, undertakes liquidity management and provides intraday or overnight credits (www.secb.de).
  • 22. TELEKURS ANNUAL REPORT 2003 22 23 SWISS INTERBANK CLEARING LTD. TRANSACTIONS IN EUROSIC in millions 2.0 2.0 1.8 1.6 1.6 1.4 1.2 1.0 1.1 0.8 0.8 0.6 0.4 0.5 0.2 0 99 Increasing interest in remoteGATE remoteGATE enables financial institutions to connect directly to the Swiss Interbank Clearing Ltd. RTGS system via SWIFT. The number of financial institutions that have decided to make use of this direct connection to SIC and euroSIC increased from 26 to 43 in the reporting year. DTA/LSV with new services Transactions decreased on whole in the DTA/LSV business field. They dropped by 6 percent in the DTA data carrier exchange sector, to 63 million. The decrease can be traced back to the increased substitution of DTA by electronic banking and the banks’ decision to discontinue central DTA processing in its current form at 00 01 02 03 the end of 2005. As an option, Swiss Interbank Clearing will also make the submission of DTA payments possible beyond 2005. This meets the needs mainly of those financial institutions that do not have their own e-banking interface. This new service, called payROUTE, can be used by interested banks starting mid-2004. In the LSV direct debit field, a slight increase of 2.3 percent to nearly 37 million transactions was recorded in comparison to the previous year. Further progress was made in the redesign of direct debiting in cooperation with the financial institutions. The redesign should encompass improved processes to reduce risks, the optimization of procedures and the reduction of processing costs.
  • 23. KEY FIGURES 2003 Transactions SIC Daily transaction volume euroSIC DTA LSV In mid-2003, the expensive EVA platform was replaced with payGATEweb, which has already led to considerable cost savings. The payCOMweb service was also successfully introduced to the market, offering an inexpensive submission option for DTA and LSV customers. One network for different services 2003 2002 Change in percent 192,669,000 767,000 2,024,179 63,105,516 36,952,306 177,013,000 698,000 1,609,849 67,127,256 36,129,340 8.8 9.9 25.7 –6.0 2.3 Pressing ahead with standardization In the area of standardization, IBAN and PI – the international standards for account numbering and for an international payment slip, which enables the automatic and inexpensive processing of payments (Straight Through Processing) – were updated and further disseminated. Finance IPNet, the TCP/IP network, has been in operation since the beginning of 2003. It networks financial institutions with the Telekurs Group for services such as SIC and euroSIC, as well as the submission and delivery of LSV/DTA. All financial institutions will be witched from the old TELOSnet network infrastructure to Finance IPNet by the end of September 2004, at the latest. RTGS The term Real Time Gross Settlement refers to a clearing system with irrevocable settlement of each individual payment without settlement of a counterclaim (gross system). Straight Through Processing (STP) STP refers in the realm of payment traffic to the automatic processing of payment transactions from the ordering party right through to the beneficiary. swisseuroGATE swisseuroGATE is the interface between TARGET – the network of 15 national euro clearing systems in the EU – and Switzerland. Together with the SECB Swiss Euro Clearing Bank, Swiss Interbank Clearing creates a rapid and inexpensive connection between the EU countries’ RTGS systems and euroSIC, Switzerland’s euro RTGS system. With swisseuroGATE, payments between the EU and Switzerland can be processed easily, rapidly and inexpensively. TARGET Trans-European Automated Real-time Gross settlement Express Transfer system: Interlink between the clearing systems of the EU member countries for trans-European euro payments which connects the various national clearing systems.
  • 24. 24 25 ELEKTRIZITÄTSWERKE DES KANTONS ZÜRICH (EKZ) Katharina Brunner Faraji, in charge of e-communications. “With electronic billing via PayNet, we can offer our customers an attractive and innovative service: No more paper, no bothersome filing, no typing of long columns of figures. PayNet supports us with their network just as we guarantee secure distribution of electricity in Canton Zurich with our high-capacity network.”
  • 25. TELEKURS ANNUAL REPORT 2003 PAYNET (SCHWEIZ) AG PAYNET ACCEPTANCE INCREASES For PayNet (Schweiz), the year 2003 was a year of establishment. It managed to gain a foothold in three areas vital for the dissemination of PayNet: in B2B, in B2C and among the software producers. PayNet (Schweiz) markets and operates PayNet, the Electronic Bill Presentment and Payment system (EBPP) within Switzerland. It thus enables individuals and companies to conduct paperless and VAT-compatible billing management. By mid-2004, a total of 12 banks will be connected to the PayNet network, with a total of over 1 million Internet banking customers. Sectors such as health and agrochemicals are represented in the B2B area. In addition, various software publishers have agreed to support PayNet interfaces. Introduction prepared for Internet banking customers In the B2C field, preparation was made in the reporting year for the introduction of PayNet for Internet banking customers. New contracts for participation in PayNet were signed with the Zürcher Kantonalbank, Credit Suisse and UBS Ltd., among others. Twelve banks, with over 1 million Internet banking customers, have agreed to participate in PayNet. The Zürcher Kantonalbank and the Hypothekarbank Lenzburg had already productively introduced PayNet by the end of 2003 and other banks will also do so by mid-2004. An important prerequisite for winning over B2C billers has thus been met. Major billers, such as Orange Communications Ltd., Cornèr Bank Ltd., the “Elektrizitätswerk des Kantons Zürich” and Swisscom Mobile, have been won over for PayNet. Additional large billers, such as Swisscom Fixnet and Cablecome, have also decided to connect to PayNet.
  • 26. TELEKURS ANNUAL REPORT 2003 26 27 PAYNET (SCHWEIZ) AG Exchange of experience established The biller, PayNet and the payer’s bank must work together to be able to present bills to the Internet customers electronically. Towards this end, PayNet (Schweiz) AG founded the PayNet B2C Forum in June last year in cooperation with SAP. Participating banks and interested billers regularly meet there with SAP and PayNet (Schweiz) to prepare the introduction of PayNet. Procedures and marketing measures are exchanged within this forum in addition to the sharing of experiences. Participation by important sectors chemical sector, the company Syngenta Crop Protection Ltd., a major international company, has decided to participate in PayNet. Software producers support PayNet An essential aspect for the introduction of PayNet is support by providers of ERP systems. In addition to SAP (R/3, BusinessOne), PayNet successfully gained other important software producers, such as ABACUS Research (AbaNet), Microsoft (BizTalk), Polynorm (i/2), SSA Baan, Rotron (europa3000) and C-Channel (PayMaker and BusinessMaker) and Microsoft Business Solutions. PayNet will thus also be supported by solution providers for small and mid-sized companies. In the B2B field, PayNet (Schweiz) gained a foothold in the health and agrochemical sectors. Won over in the health sector were the Basel County Hospital as well as the companies STRATEC Medical, Johnson & Johnson, Globopharm and Globomedica. In the agro- Consolidator The core of an EBPP network receipt the biller’s invoices from all connected BSP’s (Biller Service Provider), sorts them by recipient and then routes them to the corresponding CSP (Customer Service Provider) for delivery to the bill recipient. EBPP Electronic Bill Presentment and Payment is term indicating the electronic dispatch or presentation and electronic payment of bills.
  • 27. DRESDNER BANK AG, FRANKFURT Wulf Pallmer, Head of Market Information Services in the transactions and basic IT system of Dresdner Bank (Switzerland) Ltd. “International partners need global financial information. The comprehensive data spectrum of Telekurs Financial provides the consulting bank with a decisive knowledge edge.”
  • 28. TELEKURS ANNUAL REPORT 2003 28 29 TELEKURS FINANCIAL INFORMATION LTD. TELEKURS ID – NEW DISPLAY PRODUCTION GENERATION IS LAUNCHED The year 2003 was very challenging for Telekurs Financial. The declining demand for financial information and massive price pressures accordingly lead to lower turnover. Nevertheless, Telekurs Financial managed to further expand its market share despite the difficult market situation. The new display product generation, Telekurs iD, was successfully launched in the past year. With it, Telekurs Financial has made a standard platform available to its customers, one that offers both more information and expanded functionality. Telekurs iD is successively replacing the existing display products FinXS, Finbase and Finvest. The migration from FinXS and Finbase is currently proceeding apace. The rollout of a further version of Telekurs iD, intended to replace the Finvest populations, is in preparation. Valordata Feed is the first choice for STP All national and international customers were migrated from the former distribution concept Valordata System VDS to the Valordata Feed VDF in the course of the year. Its depth of data and high level of structuring highly suits the VDF for the implementation of Straight Through Processing applications in the back-office sector. Additional emphasis was placed on expanding system availability. This was achieved through an increase in the number of servers and an improvement of distribution platform capacity. Telekurs Financial will now offer daily multiple deliveries of securities data. VDF customers have the choice of receiving master data updates once or three times daily. Progress was also made on the introduction of the ISO 15022 standards, a format for the distribution of corporate actions messages. Data range expanded Telekurs Financial also continuously expanded its data range in the reporting year. The most important innovation in this regard was the introduction of Dow Jones News in Telekurs iD.
  • 29. NUMBER OF FINANCIAL INSTRUMENTS NUMBER OF PRICE TELEGRAMS in millions in billions 2.0 20 1.8 1.90 1.79 1.6 19.8 18 16 1.64 1.4 1.2 1.80 17.5 14 14.4 12 1.36 1.0 10 0.8 8 0.6 6 0.4 4 0.2 13.2 2 0 9.8 0 99 00 01 02 03 The composition of indices is displayed in detail in the index area. This also enables the simple and clear call-up of additional information about the individual indices as well as their weighted composition. Bond markets coverage was essentially increased. In addition to NASDAQ bond data, Telekurs Financial now offers bond data from Mexico, Brazil, Argentina and South Africa. In the bond area, coverage was improved with key data (such as accrued interest and duration). With fair values for rarely traded European bonds and the introduction of average earnings, Telekurs Financial supplies an expanded offer for financial specialists, including calculated values. The coverage of funds data from France, Canada and the Scandinavian countries has been considerable improved. Master data for funds was also expanded and refined. This provides customers of Telekurs Financial products with expanded information about the composition of funds. 99 00 01 02 03 New services in the regulations sector The banking center Switzerland must introduce new regulations in connection with Basel II, the money laundering law and the EU paying agent tax. Telekurs Financial supports the banks with various projects by providing third-party data that is relevant to these regulations. Expansion of international services Additional measures were taken to increase proximity to customers internationally, to ensure the quality of data delivered by Telekurs Financial and to introduce other improvements. The attractiveness of the products was also increased by additional key data calculations, including the calculation of the accumulated interest on all fixed-interest securities and generation of the CFI codes on all instruments. On 1 January 2003, a new branch office of Telekurs (U.K.) Ltd. was opened in Dublin under the name Telekurs Financial (Ireland Branch). It will help support
  • 30. TELEKURS ANNUAL REPORT 2003 30 31 KEY FIGURES 2003 Number of financial instruments (December 2003) Bonds Equities Hybrids Options/Futures Trust Units Warrants Other Total Display applications (without public Internet) Processing and customized solutions Data Sources Price sources (active) New agencies 2003 585,000 322,000 70,000 498,000 182,000 144,000 99,000 1,900,000 40,099 terminals* 846 customers** 595 15 * Telekurs’ own software ** Telekurs data in third-party software/display products the steadily growing funds business in Ireland with Telekurs services. The newly founded Telekurs (France) SAS commenced operations on 1 October 2003. The 16-head team supplies real-time information and securities data from France, Monaco and French-speaking Africa to the Telekurs Financial central database in Zurich. The French office also commenced sales activities on 1 January 2004. Worldwide partnerships In addition to founding its own company in France, the Telekurs Group sold a minority participation in Fininfo, the French financial information provider. Telekurs iD Telekurs iD stands for intelligent Display, which is the new product generation from Telekurs Financial that combines the existing display products into a uniform product. The name indicates that Telekurs iD intelligently supports the user and is also a reminder of the old Telekurs INVESTDATA system, thus covering the needs of two generations of financial market specialists in a uniform product. The partnership established two years ago with the Danish securities clearing central VP Denmark (Værdipapircentralen A/S) has been expanded. VP Denmark took over operation of the Valordata Feed VDF for the entire Northern area at the beginning of 2004. Telekurs Japan expanded its multiyear cooperation with the Nomura Research Institute (NRI). Nomura was previously a revendor for corporate actions data in the Japanese market. This partnership will now be extended to the distribution of valuation prices through T-STAR21, NRI’s leading application for investment trust funds in the back-office. European bond pricing, developed in partnership with Standard & Poor’s, has appealed to a wide customer basis, particularly in Europe. The product delivers calculated values for illiquid bonds. ISO15022/MT564 Message type 564 within the ISO 15022 standard is called “corporate action notification”. With this message type, a party (e.g. a portfolio manager) provides information about a specific action in the cash flow or corporate action field of another party (e.g. a central securities depository). At the beginning of an MT564, is a “Corporate Action Indicator” field that describes the actual event type.
  • 31. NOMURA RESEARCH INSTITUTE, TOKYO Hiromichi Minami, General Manager, Investment Information Services Business Department. “Data quality and reliable delivery are key elements for evaluation prices. We are pleased to have Telekurs data be accessible to our T-STAR customers involved in investment trust management business.”
  • 32. TELEKURS ANNUAL REPORT 2003 32 33 TELEKURS SERVICES LTD. SECURITY AND AVAILABILITY Technical innovations ensured the high quality of services provided by Telekurs Services in a reporting year dedicated to the boosting of efficiency. The Logistics business unit of the former Payserv Ltd. was formed into a company under the name Telekurs Services Ltd. on 1 January 2003. As a service provider, it operates systems and applications for the Telekurs Group that meet the highest requirements in terms of security and availability. IT Services are undergoing expansion Availability of the IT system remained constantly at the highest level in the reporting year – despite considerably increased transaction volumes, more complex requirements and enlarged technical facilities. The IT Services business unit also ensured the quality of its services through innovations in system efficiency. The Storage Area Networks technology (SAN) was enhanced through positive experiences in terms of operational efficiency and increased customer demand. In the area of the forward-looking, inexpensive open source operating system Linux, a first productive application was introduced on the new IBM mainframe generation. Moreover, the increased availability requirements of internal and external customers lead to a considerable expansion of the back-up computer center. Finally, all Telekurs Group workstations were converted to Windows XP. Emphasis in the coming year will be placed on renovation of the mainframe equipment and system standardization.
  • 33. NUMBER OF SERVER SYSTEMS MAINFRAME CAPACITY Servers in millions of instructions per second ( MIPS) 700 2,500 630 659 560 2,495 2,250 2,290 2,000 580 490 1,750 516 420 350 1,500 460 1,670 1,770 1,250 1,500 412 280 1,000 210 750 140 500 70 250 0 0 99 00 01 02 03 99 00 01 02 03 Modular offer for customers Clever system for document circulation The services offered by Telekurs Services are based on the comprehensive IT knowledge of the company’s staff and on the first-class infrastructure with one of the most modern computer centers in Switzerland. The computers are structured modularly to meet individual and evolving customer needs. In this regard, Telekurs Services shall assume operation of the bank application avaloq for Bank Linth as an Application Service Provider (ASP). The Document Services business unit has a high-capacity printing and packaging center. This modern equipment facility and the certified management system based on ISO 9001:2000 standards guarantees high-quality job execution. Individually matched mass dispatches were processed through the DATA-TO-DOCUMENT service area. Over 48 million envelopes and 130 million printed pages were processed in the form of complex invoice mailings and customer loyalty programs in the reporting year alone for large companies in the retail and telecom sector, as well as for financial institutions. Document Services was the first printing and packaging center in Switzerland to introduce an electronic dispatch control to ensure gapless and error-free processing.
  • 34. TELEKURS ANNUAL REPORT 2003 34 35 KEY FIGURES 2003 2003 Mainframe capacity in MIPS (in millions of instructions per second) Number of server systems Number of mailings (in millions) Number of printed pages (in millions) DOCUMENT-TO-DATA takes on the labor-intensive entering of data. Based on a clever system, the processing of over 4.2 million documents, such as orders, inquiries and registrations was efficiently carried out in the year 2003. Moreover, a new processing infrastructure commenced operation for the production and administration of over 1.8 million subscriptions and member cards in credit card format, including photographs. The information is archived in the form of electronic documents, sent per e-mail and presented over the Internet through the DATA-TO-DATA service. The customer can also make use of each of these services individually. The archiving platform manages over 233 million documents, such as lists and images with a total of 1.8 billion pages. Over 60,000 documents have already been supplied since September 2003 through the new Electronic Document Delivery (EDD) platform. 2002 Change in percent 2,495 659 48 130 2,290 580 49 122 9 14 –2 7 Services for the Telekurs Group The Corporate Services business unit assumes important central functions for the entire Telekurs Group with Facility Services, Human Resources Management, Procurement Services and Management Services. Office usage density was increased in the reporting year in Telekurs’ own buildings. This enables Telekurs to vacate rental properties. In the energy sector, the former monitoring and control systems of the operational-critical energy supply facilities were replaced after a 12-year pilot operation phase. Telekurs Services has also set the goal of further boosting energy efficiency by joining the “Zurich Energy Model”. The cost and billing transparency of IT services was increased within the scope of the IRRIS project.
  • 35. ORANGE COMMUNICATIONS SA, LAUSANNE Andreas S. Wetter, CEO. “The steady growth and increasing market pressure required a flexible partner with great capacities for the printing and dispatching of invoices. With Telekurs Services, we have found a provider in which the quality, reliability and transparency for the billing of end customers are just right, even for growing requirements.”
  • 36. TELEKURS ANNUAL REPORT 2003 36 37 CONSOLIDATED FINANCIAL STATEMENT 2003 TELEKURS GROUP FINANCIAL RESULT Operating income Net revenues from goods and services by business area 2003 CHF M 2002 CHF M Change CHF M Card-based Payment Systems Electronic Payment Systems Financial Information Services Other operating revenue Total 406.4 44.9 240.1 35.4 726.8 365.3 46.7 258.9 33.4 704.3 41.1 –1.8 –18.8 2.0 22.5 629.7 83.3 13.8 726.8 610.1 79.1 15.1 704.3 19.6 4.2 –1.3 22.5 Net revenues from goods and services according to geographic market Switzerland Europe excluding Switzerland Other regions Total Earnings in the reporting year were primarily influenced by the takeover of the UBS Card Center Ltd. VISA acquiring business as well by the fact that a full year of revenue generated by the former 3C-Gruppe, purchased on 1 July 2002, has been listed in the company financial statement for the first time. In the business areas Card-based Payment Systems and Electronic Payment System, price reductions, which in some cases were considerable, could be compensated by satisfactory increases in volume. In view of developments in the banking sector, the Financial Information Services business area continued to move within what remains a highly challenging market environment and was unable to maintain the earnings level of the previous year. On the group level there was an overall earnings increase of CHF 22.5 million or 3.2 %. The Card-based Payment Systems business area includes the acquiring business as well as the processing of credit card and debit card transactions. Earnings in this business area increased in the reporting year by CHF 41.1 million or 11.3 %. Transaction volume and turnover for the product MasterCard decreased in the reporting year. However, with the takeover of the VISA acquiring business, the long-planned dual-brand strategy was realized, thereby meeting customer requirements for a dual credit card offer from a single source. The newly acquired VISA transaction volume, along with an also increasing number of debit card transactions, led to considerably higher earnings, despite decreasing commission rates and lower transaction turnover. Various special projects in the processing business also contributed to the positive development of earnings. The Electronic Payment System business area includes the processing of interbank payments and DTA/LSV transactions. The slight decrease in turnover from CHF 1.8 million or 3.9 % can be traced specifically to the strongly discounted transaction prices. With the exception of data carrier exchange, the processing volume of which decreased as result of the wholly intentional substitution by electronic banking solutions, considerable volume increases were registered for all products.
  • 37. In the Financial Information Services business area, decreasing demand and massive price pressure led to a drop in turnover of CHF 18.8 million or 7.3 %. This particularly affected the display products in Switzerland. In contrast, turnover in the securities data information field increased in comparison to the previous year. The foreign subsidiaries managed to maintain the turnover levels of the previous year or even exceed them, with the exception of Japan and Germany. Other operating revenues increased by CHF 2 million or 6 %. Increased revenues were primarily generated by the archiving of customer data, the computer center and communication services, as well as application management. Turnover by geographic region continues to clearly show the Group’s strong home base in the Swiss market, which has been further strengthened by the acquisitions made. Operating expenses 2003 CHF M 2002 CHF M Change CHF M Personnel expenses Other operating expenses without depreciation and amortisation Depreciation and amortisation Total 294.5 291.5 3.0 331.2 47.7 673.4 299.2 46.0 636.7 32.0 1.7 36.7 The slight increase in personnel expenses is largely attributable to an increase in the number of employees due to the takeover of the VISA acquiring business in the course of the reporting year as well as the expenses generated by the former 3C-Gruppe, figuring for the first time in the group financial statement for the entire year. In addition, establishment of the subsidiary in the Paris advanced powerfully in the reporting year. Otherwise, considerable measures to increase efficiency were realized in the course of the year, through which personnel expenses, expressed as a percentage, were reduced from 41.4 % to 40.5 % of operating revenue. The increase in other operating expenses is solely the result of the higher interchange rates paid to the banks in the credit card business. This was caused by the business volume expansion due to the acquisition of the VISA business, as well as by the higher interchange rate in comparison to the previous year. Among the other expense items, essential cost reductions were achieved, specifically in transmissions, information procurement and the acquisition of hardware and software, in part as a result of exchange rates. Approximately 25 % in savings were achieved in advertising costs in the reporting year despite acquisitions made.
  • 38. TELEKURS ANNUAL REPORT 2003 38 39 CONSOLIDATED FINANCIAL STATEMENT 2003 TELEKURS GROUP Financial year results / Return on equity / Result per share Operating income Operating expenses Operating result before interest and taxes Financial result (net) Extraordinary items (net) Taxes Minority interests Telekurs Group result for the year Average equity capital Return on equity (average equity) Earnings per share (90,000 units) in CHF The decrease in the operating result before interest and taxes is primarily attributable to the above-mentioned developments in income and expenses. The net financial result decreased as a result of the lower amount of financial means available for investment (due to the purchase of the VISA acquiring business) 2003 CHF M 2002 CHF M Change CHF M 726.8 –673.4 53.4 2.9 24.0 –11.8 –1.0 67.5 704.3 –636.7 67.6 4.4 0.8 –19.8 –0.4 52.6 22.5 –36.7 –14.2 –1.5 23.2 8.0 –0.6 14.9 376.9 18 750 432.6 12 584 –55.7 6 166 as well as the fall in money market rates. Extraordinary income is largely the result of capital gains realized on the sale of the Fininfo stake. The increase in the return on equity was essentially caused by the recognition of goodwill from the purchase of the VISA acquiring business in equity.
  • 39. FIVE-YEAR OVERVIEW Income statement 2003 CHF M 2002 CHF M 2001 CHF M 2000 CHF M 1999 CHF M Card-based Payment Systems Electronic Payment Systems Financial Information Services Other operating income Total operating income 406.4 44.9 240.1 35.4 726.8 365.3 46.7 258.9 33.4 704.3 357.0 49.1 265.3 31.5 702.9 346.6 56.4 252.8 27.7 683.5 400.1 57.6 243.2 17.0 717.9 Personnel expenses Other operating expenses Total operating expenses 294.5 378.9 673.4 291.5 345.2 636.7 302.3 346.1 648.4 293.1 336.7 629.8 271.3 343.6 614.9 53.4 67.6 54.5 53.7 103.0 Financial result (net) Extraordinary items (net) Taxes Minority interests Result for the year 2.9 24.0 –11.8 –1.0 67.5 4.4 0.8 –19.8 –0.4 52.6 10.4 –0.9 –12.1 –0.3 51.6 4.8 146.5 –50.5 –0.2 154.3 –9.5 –23.9 –17.0 –0.1 52.5 Balance sheet on 31 December Current assets Tangible assets Financial assets Intangible assets Total assets 2003 CHF M 633.9 170.6 27.7 0.0 832.2 2002 CHF M 703.1 190.2 30.7 6.7 930.7 2001 CHF M 835.6 194.2 30.6 0.0 1,060.4 2000 CHF M 797.5 201.5 30.5 0.3 1,029.8 1999 CHF M 716.0 266.3 28.5 0.5 1,011.3 Outside capital Minority stakes Shareholders’ equity Total liabilities 507.6 4.3 320.3 832.2 492.3 4.8 433.6 930.7 628.3 0.6 431.5 1,060.4 604.3 0.1 425.4 1,029.8 723.0 0.1 288.2 1,011.3 Number of employees on 31 December 2,052 2,075 1,946 1,868 1,815 Operating result before interest and taxes
  • 40. TELEKURS ANNUAL REPORT 2003 40 41 CONSOLIDATED FINANCIAL STATEMENT 2003 TELEKURS GROUP STATEMENT OF INCOME Note Card-based Payment Systems Electronic Payment Systems Financial Information Services Other operating revenue Total operating income Commodities expenses Personnel expenses Transmission expenses Information procurement Hardware and software expenses Advertising expenses Facilities expenses Other operating expenses Depreciation and amortization Total operating expenses 3 4 Operating result before interest and taxes Financial result Result from valuation according to equity method Neutral and extraordinary income Neutral and extraordinary expenses 5 6 7 7 Annual result before taxes and minority interests Taxes Annual result before minority interests Minority interests Result for the year 8 Change in % 406,367 44,928 240,139 35,362 726,796 365,330 46,667 258,883 33,392 704,272 11 –4 –7 6 3 16,736 294,545 26,653 33,089 29,881 13,724 11,727 199,338 47,666 673,359 9,775 291,546 29,271 35,031 32,927 18,282 10,717 163,156 46,007 636,712 71 1 –9 –6 –9 –25 9 22 4 6 67,560 –21 2,544 400 33,471 –9,549 4,327 44 13,511 –12,663 80,303 2 2002 CHF 1000 53,437 1 2003 CHF 1000 72,779 –11,769 –19,802 68,534 52,977 –990 –376 67,544 52,601 10 29 28
  • 41. BALANCE SHEET Assets Note 31. 12. 2003 CHF 1000 31. 12. 2002 CHF 1000 Cash and cash equivalents Trade accounts receivable Stock and work in progress Other claims Accrued and deferred items Total current assets 9 10 11 12 219,169 142,905 6,533 252,911 12,366 633,884 333,344 173,969 4,675 179,659 11,462 703,109 Fixed assets Financial investments Participations Securities Treasury shares Intangible assets Total non-current assets 13 170,641 190,205 14 15 4,195 1,345 22,152 0 198,333 3,795 4,859 22,039 6,713 227,611 832,217 930,720 181 221,512 49,753 131,264 89,444 492,154 97 153,956 65,558 158,066 99,092 476,769 185 15,252 15,437 122 15,425 15,547 507,591 492,316 4,312 4,821 Share capital Reserves for treasury shares Share premium Retained earnings Total shareholders’ equity 45,000 22,152 15,000 238,162 320,314 45,000 22,039 15,000 351,544 433,583 Total liabilities 832,217 930,720 16 Total assets Liabilities Short-term bank debts Trade accounts payable Other short-term liabilities Accrued liabilities Short-term provisions Total short-term liabilities Long-term commitments Long-term provisions Total long-term liabilities Total liabilities Minority participations 17 18 19 19
  • 42. TELEKURS ANNUAL REPORT 2003 42 43 CONSOLIDATED FINANCIAL STATEMENT 2003 TELEKURS GROUP CASH FLOW STATEMENT Note Profit for the financial year Minority participations Depreciation and amortisation Profit from sale of tangible assets Change in long-term provisions Profit from sale of participations/financial investments Profit from valuation according to the equity method Cash flow Investments in tangible assets Disposal of tangible assets Acquisitons, net of cash and cash equivalents Sale of participations Investments in intangible assets Cash flow from investment activities 13 Redemptions of bank loans Repurchase of treasury shares Dividend payments to shareholders in Telekurs Holding Divident payments to minority shareholders Cash flow from financing activities Exchange rate differences Total inflow (+)/outflow (–) in cash and cash equivalents Position on 1 January Position on 31 December Change in cash and cash equivalents 9 9 155,127 –317 596 –174,986 17,996 –1,584 91,519 –23,230 1,627 0 29,995 –135,000 –126,608 –29,933 1,048 –16,362 10,000 –370 –35,617 –204 –62 –44,647 –250 –45,163 –1,582 –114,175 Cash flow from operations 52,601 376 46,007 1,133 1,777 –8,747 –44 93,103 84 –113 –44,646 –250 –44,925 Accounts receivable Stock and work in progress Accruals and other assets Liabilities Accrued liabilities and short-term provisions Change in non-cash net current assets 67,544 990 47,666 276 –106 –27,231 –400 88,739 58,940 7 2002 CHF 1000 –41,752 –1,858 –1,027 51,624 –36,786 –29,799 4 2003 CHF 1000 –5,116 5,623 333,344 219,169 –114,175 327,721 333,344 5,623
  • 43. SHAREHOLDER’S EQUITY Equity Position as of 1 January 2003 Dividend Result for the year Repurchase of treasury shares Recognition of goodwill Correction for minority shares Change in exchange rates Position on 31 December 2003 Share premium Earnings reserve Total equity CHF 1000 Reserve treasury shares CHF 1000 CHF 1000 CHF 1000 CHF 1000 45,000 22,039 15,000 351,544 –44,646 67,544 –113 –135,000 500 –1,667 238,162 433,583 –44,646 67,544 0 –135,000 500 –1,667 320,314 113 45,000 The share capital is comprised of 90,000 registered shares with a par value of CHF 500 each. Among these are 8,824 nominal shares (previous year 8,824 nominal shares) with a value of CHF 22.2 million (previous year CHF 22.0 million), which are held by the Group. A total of 25 shares was repurchased in the reporting year at a price of CHF 4,519.80 per share. The Telekurs Group changed its accounting method for goodwill in the reporting year. In former years, goodwill was deferred and amortized linearly over its expected useful life; in exercise of the options under Swiss GAAP ARR 9, it now is recorded directly in equity at the first consolidation. In a hypothetical deferral, goodwill to the amount of CHF 127.1 million would be recognized in the consolidated balance sheet, while equity would 22,152 15,000 increase by the same amount, thus necessarily decreasing the group result by CHF 7.9 million through the pro-rata goodwill amortization over 10 years. Since the change in the accounting method is not enacted retroactively, such a hypothetical deferral would have no impact on the previous year’s statements. In the previous year, a 25 % stake in Swiss Interbank Clearing Ltd. has been sold. According to the purchase contract, the dividend for the business year 2002 (paid in the year 2003) is to be paid entirely to Telekurs Holding Ltd. This cash flow has only partially been considered in the calculation of the minority shares as of 31 December 2002.
  • 44. TELEKURS ANNUAL REPORT 2003 44 45 CONSOLIDATED FINANCIAL STATEMENT 2003 TELEKURS GROUP NOTES Accounting principles The consolidated annual financial statement is based on the individual financial statements of the group companies as of 31 December 2003 and established according to standard principles. Telekurs Group accounting follows the Swiss GAAP ARR (Accounting and Reporting Recommendations) and accurately reflects the Group’s position regarding assets, finance and income. Consolidation principles The Telekurs Group consolidated financial statement includes the individual financial statements of all Group companies in which Telekurs Holding Ltd. directly or indirectly holds more than 50 % of the voting rights. The companies included in the scope of consolidation are listed on page 64. Assets and liabilities as well as expenses and income of the consolidated companies are recognized in full (100 %). The minority shareholders’ stake in equity and net result are recorded separately in the consolidated balance sheet as well as the statement of income. Equity is consolidated according to the purchase method. The net assets of companies acquired are revaluated at the time of purchase according to group standard guidelines and accounted with the purchase costs of the participation. The remaining difference was, until and including 2002, deferred as goodwill and amortized linearly over the useful life. Since 2003, in exercise of the options according to Swiss GAAP ARR 9, goodwill is recognized directly in equity at the first consolidation. Participations with voting rights between 20% and 49.9% are recorded according to the equity method in proportion to their shareholders’ equity on the balance sheet date and are listed under financial assets. A proportionate figure for the net result valuated according the equity method is stated in the consolidated statement of income Participations below 20 % are valued at acquisition costs minus operationally necessary value adjustments. These investments are also listed under financial assets. Company internal assets and liabilities as well as expenses and income from internal company transactions are eliminated. Interim group internal profits are not eliminated because their influence on the company’s result is insignificant. Foreign currency conversion Assets and liabilities from balance sheets established in foreign currencies are converted at the relevant yearend exchange rate. An average annual exchange rate is used to convert the income statements. Cash flows are also converted using an average annual exchange rate. The differences resulting from the application of the aforementioned exchange rates are credited or debited to retained earnings and have no impact on the income statement. The corresponding amounts are shown in the equity statement. Transactions in foreign currencies during the business year are valued at the then current rate. The resulting currency exchange rate differences are recorded in income.
  • 45. The following rates were used for conversion of the group’s various accounting currencies: Average rates 2003 CHF 1 1 1 100 100 100 euro British pound American dollar Singapore dollar Hong Kong dollar Japanese yen 2002 CHF Year-end rates 2003 CHF 2002 CHF 1.52 2.20 1.35 77.23 17.21 1.16 1.47 2.34 1.56 87.03 20.00 1.24 1.56 2.21 1.24 72.87 15.96 1.16 1.45 2.24 1.39 79.96 17.79 1.17 Accounting and valuation principles Items in the consolidated balance sheet and income statement are normally recorded at acquisition or production costs, which are based on the principle of individual valuation of assets and liabilities. Any restatements are borne by reserves or value adjustments. This has the following implications for the key balance sheet items: Cash and cash equivalents Cash and cash equivalents are cash holdings, balances in post office or bank accounts, as well as sight or time deposits with a residual term not exceeding 90 days. These are recorded at their nominal values. Accounts receivable Accounts receivable are listed at their nominal value net of operationally necessary value adjustments. Inventories Inventories are valuated at the acquisition or production costs or – should this be lower – at the realizable market value. Valuation is made according to the averaging method. Work in progress Work in progress is recognized at the lower of production cost and market value. Tangible assets Tangible assets are carried at acquisition or production costs, including expenditures that enhance their economic value and net of operationally necessary write-offs. Depreciation and amortization are effected on the basis of the following expected useful lives: Asset category Depreciation period Real estate Buildings Equipment and furnishings Other tangible assets no depreciation 5–60 years 3–30 years 5 years
  • 46. TELEKURS ANNUAL REPORT 2003 46 47 CONSOLIDATED FINANCIAL STATEMENT 2003 TELEKURS GROUP Tangible assets valued below CHF 3,000 are not carried as assets, but categorized as low-value assets and recorded in expenses. Leases Tangible assets financed through long-term leasing contracts (finance leases) are deferred and depreciated at the lower of acquisition and market or cash value of the future leasing payments. The corresponding liabilities are recorded in long or short-term liabilities. Stakes This refers to participations between 20 % and 49.4 % in other companies which are accounted for according to the equity method. Securities Securities recorded in non-current assets include shares below 20 % in other companies, which are valued at acquisition cost. Treasury shares Valuation is made at acquisition cost and net of operationally necessary value adjustments. Intangible assets This item includes goodwill purchased up to and including 2002, which was written down linearly over its useful life. Since 2003, in exercise of the options according to Swiss GAAP ARR 9, goodwill is recognized directly in equity at its first consolidation. Research and development costs, as well as software costs, are directly charged to the income statement. Deferred taxes A provision for deferred taxes is listed for differences arising from uniform valuation across the group. Country-specific tax rates are applied in these cases. Deferred taxes are not carried under assets, since their future use is as yet undetermined. Tax deferrals are made for non-refundable source taxes on anticipated dividend payments by subsidiaries in the coming year. Other deferred taxes for undistributed subsidiary profits are not taken into account. Financial results Discounts on supplier invoices are shown in the financial result. Derivative financial instruments Derivative financial instruments are exclusively used for hedging purposes. Those transactions which can clearly be allocated to the hedged underlying transaction are valued according to the same method as the latter. Transactions for which no such allocation is possible are carried at market value. Positive or negative replacement values are included in accruals and deferrals as the case may be. Explanations 1 Segment reporting The segmentation of operating income, as shown in the income statement, was adjusted to that of the management structures in the reporting year. Information from previous years has been adapted correspondingly. For the segmentation according to geographic markets we refer to the corresponding section of the financial results (see page 36).
  • 47. 2 Personnel expenses 2003 CHF 1000 2002 CHF 1000 Change CHF 1000 216,133 19,192 20,058 3,459 25,644 9,780 279 294,545 208,158 18,738 15,962 4,923 33,650 9,794 321 291,546 7,975 454 4,096 –1,464 –8,006 –14 –42 2,999 2003 CHF 1000 2002 CHF 1000 Change CHF 1000 6,016 6,152 1,276 185,894 199,338 6,628 5,876 846 149,806 163,156 –612 276 430 36,088 36,182 4 Depreciation and amortization 2003 CHF 1000 2002 CHF 1000 Change CHF 1000 Depreciation of tangible assets Depreciation of intangible assets Total 40,950 6,716 47,666 40,937 5,070 46,007 13 1,646 1,659 Salaries and wages Social insurance contributions Pension fund contributions Training Contract staff Other personnel expenses Board of Directors’ remunerations Total 3 Other operating expenses Travel and representation expenses Accounting, consultancy and auditing Capital taxes Other operating expenses Total The depreciation of intangible assets is attributable to the residual goodwill from the 3C Holding AG purchased in the previous year, which was written down entirely in the reporting year. Goodwill from the purchase of the VISA acquiring business made in business year 2003 was directly recognized in equity at first consolidation in exercise of the options according to Swiss GAAP ARR FER 9.
  • 48. TELEKURS ANNUAL REPORT 2003 48 49 CONSOLIDATED FINANCIAL STATEMENT 2003 TELEKURS GROUP 5 Financial result Financial income Financial expenses Total The considerably lower financial result is a result of both the lower amount of funds available for investment and 6 Result from equity valuation This item contains the increase of the book value resulting from the equity valuation of the participation in SECB Swiss Euro Clearing Bank GmbH (see Participations). 7 Neutral and extraordinary income and expenses Neutral/extraordinary income Profit from the sale of participations/financial investments Disposals of provisions for contingent losses Release of reserves Credits for turnover bonuses Profit from sale of fixed assets Other Total 2003 CHF 1000 2002 CHF 1000 Change CHF 1000 3,570 –1,026 2,544 6,348 –2,021 4,327 –2,778 995 –1,783 also the fall in interest rates in the reporting year. This can be primarily traced back to the increased EUR/CHF currency exchange rate in the reporting year. 2003 CHF 1000 2002 CHF 1000 Change CHF 1000 27,231 323 4,500 287 169 961 33,471 8,747 2,428 895 624 141 676 13,511 18,484 –2,105 3,605 –337 28 285 19,960 1,039 299 445 6,493 1,273 9,549 8,807 1,269 1,274 702 611 12,663 –7,768 –970 –829 5,791 662 –3,114 Neutral/extrarordinary expenses Creation of provisions for vacancy risks Fluctuation reserves purchase for former 3C employees Losses from fixed asset disposals Out-of-period expenses Other Total In the previous year, the sales profit from participations/ financial investments resulted from the sale of a 25 % share in Swiss Interbank Clearing Ltd. The stakes in Fininfo SA were sold in the reporting year. The release of provisions as well as out-of-period expenses in the reporting year primarily resulted from the new assessment of legal risks. Provisions for vacancy risks were formed for spaces no longer used by the Telekurs Group, which, however, continue to generate costs.
  • 49. 8 Taxes Current income taxes Deferred taxes Total Tax-loss carry forwards exist. The corresponding tax credits in the amount of approximately CHF 13 million 9 Cash and cash equivalents Current accounts and call money Fixed-term deposits at banks Other cash and cash equivalents Total 10 Accounts receivable from goods and services From banks Other Delcredere Total 11 Stock and work in progress Finished products Semi-finished products/accessories/replacement parts Work in progress ./. Value adjustments Total 2003 CHF 1000 2002 CHF 1000 Change CHF 1000 13,123 –1,354 11,769 20,214 –412 19,802 –7,091 –942 –8,033 (previous year approximately CHF 14 million) have not been deferred, since future use is as yet undetermined. 31. 12. 2003 CHF 1000 31. 12. 2002 CHF 1000 Change CHF 1000 32,963 185,276 930 219,169 50,180 282,596 568 333,344 –17,217 –97,320 362 –114,175 31. 12. 2003 CHF 1000 31. 12. 2002 CHF 1000 Change CHF 1000 99,072 49,404 –5,571 142,905 130,415 57,418 –13,864 173,969 –31,343 –8,014 8,293 –31,064 31. 12. 2003 CHF 1000 31. 12. 2002 CHF 1000 Change CHF 1000 845 10,553 55 –4,920 6,533 1,802 6,726 142 –3,995 4,675 –957 3,827 –87 –925 1,858
  • 50. TELEKURS ANNUAL REPORT 2003 50 51 CONSOLIDATED FINANCIAL STATEMENT 2003 TELEKURS GROUP 12 Other accounts receivable This item primarily consists of clearing claims from the card business. The necessary value adjustments of 13 Tangible assets CHF 2.5 million (previous CHF 1.8 million) have been recorded in assets. Real estate and buildings CHF 1000 Equipment and furnishings CHF 1000 Other fixed assets CHF 1000 Total fixed assets CHF 1000 Acquistion value Position as of 1 January 2003 Exchange rate differences Additions Disposals Reclassifications Position as of 31 December 2003 293,908 –322 238 –5 0 293,819 313,226 351 21,882 –31,967 –27 303,465 43,254 77 1,110 –13,210 27 31,258 650,388 106 23,230 –45,182 0 628,542 Accumulated depreciation Position as of 1 January 2003 Exchange rate differences Disposals Ordinary depreciation and amortization Reclassifications Position as of 31 December 2003 182,058 –352 –2 6,313 0 188,017 249,153 432 –30,111 29,986 –86 249,374 28,972 –33 –13,166 4,651 86 20,510 460,183 47 –43,279 40,950 0 457,901 Net book value as of 1 January 2003 111,850 64,073 14,282 190,205 Net book value as of 31 December 2003 105,802 54,091 10,748 170,641 The fire insurance value of the tangible assets is CHF 479.1 million (previous year CHF 482.6 million). A mortgage lien exists on the property at Hardturmstrasse 201, Zurich which is carried at CHF 103.9 million. 14 Participations This refers to a 25 % share in SECB Swiss Euro Clearing GmbH, Frankfurt am Main. Its book value was carried accrued as follows: Position 1 January Proportional annual profit ./. Proportional dividend Exchange rate difference Position 31 December 2003 CHF 1000 3,795 421 –345 324 4,195 2002 CHF 1000 3,751 383 –208 –131 3,795 Change CHF 1000 44 38 –137 455 400
  • 51. 15 Securities 2003 CHF 1000 2002 CHF 1000 Change CHF 1000 4,859 0 –3,514 1,345 4,859 0 0 4,859 0 0 –3,514 –3,514 Net book value as of 1 January 4,859 4,859 0 Net book value as of 31 December 1,345 4,859 –3,514 Acquisition value Position as of 1 January Additions Disposals Position as of 31 December The stakes in Fininfo SA, Paris, were sold in the reporting year. The remaining book value consists entirely 16 Intangible assets Acquisition value Position as of 1 January Change in scope of consolidation Additions Disposals Position as of 31 December Accumulated depreciation Position as of 1 January Additions Disposals Position as of 31 December Net book value as of 1 January Net book value as of 31 December In the previous year, only the purchased goodwill was included in assets and written down linearly over its useful life. In the reporting year, the newly acquired goodwill from the purchase of the VISA acquiring business was directly recognized in equity in exercise of of the shares in MasterCard International Inc., St. Louis. 2003 CHF 1000 2002 CHF 1000 Change CHF 1000 12,765 0 0 0 12,765 1,052 11,713 0 0 12,765 11,713 –11,713 0 0 0 –6,052 –6,713 0 –12,765 –995 –5,057 0 –6,052 –5,057 –1,656 0 –6,713 6,713 57 6,656 0 6,713 –6,713 the options according to Swiss GAAP ARR 9. The existing residual goodwill from the previous year’s purchase of the 3C-Gruppe recognized in the income statement was written down in its entirety.
  • 52. TELEKURS ANNUAL REPORT 2003 52 53 CONSOLIDATED FINANCIAL STATEMENT 2003 TELEKURS GROUP 17 Other short-term liabilities These are primarily clearing obligations from the card business. 19 Provisions 18 Accrued liabilities This item specifically consists of pre-invoiced services for the following years in the financial information business. 31. 12. 2003 CHF 1000 31. 12. 2002 CHF 1000 Change CHF 1000 Taxes on current result Deferred taxes Other provisions Total short-term provisions 8,058 8,174 73,212 89,444 27,346 8,927 62,819 99,092 –19,288 –753 10,393 –9,648 Provision for employee pension benefits Other provisions Total long-term provisions 452 14,800 15,252 447 14,978 15,425 5 –178 –173 104,696 114,517 –9,821 31. 12. 2003 CHF 1000 31. 12. 2002 CHF 1000 Change CHF 1000 16,330 0 2,000 18,330 25,922 742 2,000 28,664 –9,592 –742 0 –10,334 30,624 95 95 0 0 0 30,624 95 95 Total Deferred tax assets in the amount of CHF 1.5 million (previous year CHF 0.9 million) from valuation differences are recorded under accruals and deferrals. 20 Off-balance sheet business Contingent liabilities and other off-balance sheet obligations Long-term obligations – Space rentals – Cooperation agreements – Purchase obligations for group company shares Total Derivative financial instruments Currency swaps Total contract value Total positive (or negative) replacement value of which already recognized For optimization of cash management and the reduction of hedging costs, derivative products were used for the first time in the reporting year. For the net position of bank accounts, receivables and payables in foreign currencies the opposing position was represented by means of a currency swap instead of fixed deposits or fixed advances.
  • 53. 21 Transactions with affiliated companies The term “affiliated companies” refers to are those shareholders with a participation of over 20 % in the company, as well as companies in which the Telekurs Group has significant participations. The following transactions with affiliated companies are contained in the 2003 and 2002 annual financial statements. All transactions were conducted according to conditions in line with the market. 31. 12. 2003 CHF 1000 Income (service income, interest income, extraordinary income) Expenses (interchange, interest expenses) 22 Employee pension benefits Employees of the Swiss Telekurs Group companies are insured by the Telekurs Holding Ltd. employee pension fund. The Telekurs Holding Ltd. employee pension fund is a defined contribution fund in the sense of the Swiss GAAP ARR and provides benefits in the mandatory and supplement employee benefits areas. There are employer contribution reserves in the amount of CHF 35.8 million (previous year CHF 35.5 million). Employees in foreign subsidiaries are insured at least to the extent of local regulations. The employer contributions amount to CHF 20.1 million (previous year CHF 16.0 million) and correspond to the expenses recognized. Change CHF 1000 156,608 27,503 163,111 26,737 –6,503 766 2003 CHF 1000 Receivables Payables 31. 12. 2002 CHF 1000 2002 CHF 1000 114,141 20,473 124,467 21,439 –10,326 –966 23 Events after the balance sheet date No significant events occurred subsequent to the balance sheet date.
  • 54. TELEKURS ANNUAL REPORT 2003 54 55 CONSOLIDATED FINANCIAL STATEMENT 2003 TELEKURS GROUP REPORT OF THE GROUP AUDITORS To the general meeting of Telekurs Holding Ltd., Zurich As auditors of the group, we have audited the consolidated financial statements (income statement, balance sheet, statement of cash flows and notes) of Telekurs Holding Ltd. for the year ended December 31, 2003. These consolidated financial statements are the responsibility of the board of directors. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We confirm that we meet the legal requirements concerning professional qualification and independence. Our audit was conducted in accordance with auditing standards promulgated by the Swiss profession, which require that an audit be planned and performed to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. We have examined on a test basis evidence supporting the amounts and disclosures in the consolidated financial statements. We have also assessed the accounting principles used, significant estimates made and the overall consolidated financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements give a true and fair view of the financial position, the results of operations and the cash flows in accordance with Swiss GAAP ARR and comply with Swiss law. We recommend that the consolidated financial statements submitted to you be approved. Zurich, 20 February 2004 Ernst & Young Ltd. Thomas Schneider Certified Accountant (in charge of the audit) René Hunziker Certified Accountant
  • 55. LIECHTENSTEINISCHE LANDESBANK AG, VADUZ Stephan Schmidle, Head of Financial Systems. “We offer our foreign customers comprehensive financial services in the areas of asset management and investment counseling. In addition to Telekurs display products, which we use in private banking and in the back-office, we also offer the Valordata Feed (VDF), a basis for Straight Through Processing, which supports us in the automation of front- and back-office processes.”
  • 56. TELEKURS ANNUAL REPORT 2003 56 57 ANNUAL REPORT 2003 TELEKURS HOLDING LTD. STATEMENT OF INCOME 2003 CHF 1000 2002 CHF 1000 Financial income Participations income Profit from disposal of financial investments Other income Total income 2,536 35,010 26,481 15,383 79,410 6,175 81,066 0 15,180 102,421 Financial expenses Personnel expenses Other expenses Total expenses 986 7,867 11,959 20,812 4,584 7,774 17,264 29,622 Annual result before taxes 58,598 72,799 Taxes –3,299 –2,009 Annual result 55,299 70,790
  • 57. BALANCE SHEET Assets 31. 12. 2003 CHF 1000 31. 12. 2002 CHF 1000 Cash and cash equivalents* Trade accounts receivable – from third parties – from Group companies Loans to subsidiaries ./. Cumulative value adjustments towards subsidiaries Other claims upon third parties Accrued assets Total current assets 150,146 264,223 79 145,952 13,000 –13,000 424 108 296,709 264 90,073 8,000 –8,000 1,173 415 356,148 Tangible assets Participations Treasury shares Total financial assets 25 136,651 22,152 158,828 42 139,582 22,039 161,663 Total assets 455,537 517,811 276 135,593 462 5,396 141,727 570 208,434 104 5,543 214,651 2,584 2,584 2,586 2,586 144,311 217,237 45,000 45,000 Liabilities Trade accounts payable – to third parties – to Group companies Other short-term obligations to third parties Accrued liabilities and other short-term provisions Total short-term liabilities Long-term provisions Total long-term liabilities Total liabilities Share capital Legal reserves – General legal reserves – Reserves for treasury shares Free reserves Balance sheet profit – Retained earnings – Annual result Total equity capital 32,187 22,152 149,825 32,187 22,039 119,938 6,763 55,299 311,226 10,620 70,790 300,574 Total liabilities 455,537 517,811 * Cash also contains positions with shareholder banks.
  • 58. TELEKURS ANNUAL REPORT 2003 58 59 ANNUAL REPORT 2003 TELEKURS HOLDING LTD. NOTES 31. 12. 2003 CHF M 31. 12. 2002 CHF M 8,849 8,824 Fire insurance value of fixed assets 0.1 0.1 Obligations to employee benefits institutions 0.4 0.1 5.4 p.m. 9.8 p.m. Participations (The participations are listed on page 64.) Treasury shares (number) Purchase of 25 shares at CHF 4,519.80 each Contingent liabilities Total amount of sureties and guarantee obligations in favor of third parties (these are guarantees to subsidiaries) Joint liability from consolidated tax filing status OFF-BALANCE SHEET TRANSACTIONS Currency swaps Total contract value Total positive (or negative) replacement value of which already recognized in the balance sheet 31. 12. 2003 CHF 1000 31. 12. 2002 CHF 1000 Change CHF 1000 30,624 95 95 0 0 0 30,624 95 95
  • 59. SHAREHOLDER’S EQUITY Equity CHF 1000 Position as of 1 January 2003 45,000 Appropriation of profit – Dividends – Allocation to reserves Allocation to reserves for treasury shares Annual result Position as of 31 December 2003 45,000 General legal reserves CHF 1000 Reserves for treasury shares CHF 1000 CHF 1000 32,187 22,039 119,938 113 30,000 –113 22,152 149,825 32,187 The share capital consists of 90,000 registered shares with a par value of CHF 500 each. Among these, 8,849 nominal shares (previous year 8,824 nominal shares) with a value of CHF 22.2 million (previous year CHF 22 million) are held by the Group. In the reporting Free Reserves Balance Total sheet shareholder’s profit equity CHF 1000 CHF 1000 81,410 300,574 –44,647 –30,000 –44,647 0 0 55,299 311,226 55,299 62,062 period 25 shares were repurchased at the price of CHF 4,519.80 per share. The reserves for treasury shares were adjusted according to the purchase price of the shares repurchased in the year 2003, the adjustment being debited to the free reserves. PROPOSED BALANCE SHEET PROFIT ALLOCATION The Board of Directors proposes to the Annual General Meeting that the balance sheet profit be used as follows: 2003 CHF 1000 2002 CHF 1000 Profit carried forward from previous year Annual result Balance sheet profit 6,763 55,299 62,062 10,620 70,790 81,410 Dividend CHF 550 (previous year CHF 550) per nominal share of CHF 500 nominal value Free reserves Profit carried forward to following year Total 49,500 12,000 562 62,062 44,647 30,000 6,763 81,410 The difference between the proposed dividend (CHF 49,500,000) and the effective 2002 dividend payment corresponds to the dividend payment on treasury shares, which Telekurs Holding Ltd. waived.
  • 60. TELEKURS ANNUAL REPORT 2003 60 61 ANNUAL REPORT 2003 TELEKURS HOLDING LTD. REPORT OF THE STATUTORY AUDITORS To the general meeting of Telekurs Holding Ltd., Zurich As statutory auditors, we have audited the accounting records and the financial statements (income statement, balance sheet and notes) of Telekurs Holding Ltd. for the year ended December 31, 2003. These financial statements are the responsibility of the board of directors. Our responsibility is to express an opinion on these financial statements based on our audit. We confirm that we meet the legal requirements concerning professional qualification and independence. Our audit was conducted in accordance with auditing standards promulgated by the Swiss profession, which require that an audit be planned and performed to obtain reasonable assurance about whether the financial statements are free from material misstatement. We have examined on a test basis evidence supporting the amounts and disclosures in the financial statements. We have also assessed the accounting principles used, significant estimates made and the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the accounting records and financial statements and the proposed appropriation of available earnings comply with Swiss law and the company’s articles of incorporation. We recommend that the financial statements submitted to you be approved. Zurich, February 20, 2004 Ernst & Young Ltd. Thomas Schneider Certified Accountant (in charge of the audit) René Hunziker Certified Accountant
  • 61. WHITE ARENA GROUP, LAAX Adrian Wolf, Head of Finances and Controlling. “The White Arena Group offers unforgettable mountain experiences for around one million guests annually in winter and summer alike. Guests profit from a multifaceted range of services from a single source, from sporting goods rentals, to ski passes, accommodations and food, as well as après-ski. In this environment we depend on a payment process that is easy and fast. That is why we have relied for years on Telekurs Card Solutions Ltd. for credit card and debit card processing, a partnership well worth it, not only for us, but also for our guests.”
  • 62. TELEKURS ANNUAL REPORT 2003 62 63 TELEKURS GROUP MANAGEMENT BODIES AND ORGANIZATIONS Telekurs Multipay Ltd. Telekurs Card Solutions Ltd. Board of Directors Board of Directors Marcel Zoller Chairman Member of the Executive Committee Cantonal Bank of St. Gall, St. Gallen Cord-Constantin Bregulla Vice Chairman First Vice President of UBS AG, Zurich Dr Thomas Ankenbrand Director, RBA Central Bank, Bern Robert Fuchs Head of Brand Management Union of Swiss Raiffeisen Banks, St. Gallen Thomas von Burg Director of Basic Products, Credit Suisse, Zurich Walter Wirz Chief Executive Officer of Telekurs Group Telekurs Holding Ltd., Zurich Dr Pierin Vincenz Chairman Chief Executive Officer Union of Swiss Raiffeisen Banks, St. Gallen Peter Hinder Vice Chairman Head of Banking Products, UBS Ltd., Zurich Dr Ruedi Berger Member of the Executive Board of RBA-Holding, Gümligen Andreas Kälin Member of the Executive Committee Luzerner Kantonalbank, Lucerne Erich Wild Director, Credit Suisse, Zurich Walter Wirz Chief Executive Officer of Telekurs Group Telekurs Holding Ltd., Zurich Executive Committee Executive Committee Ruedi Denier Chief Executive Officer Marketing Dôn Nguyen-Quang Corporate Services Member of Senior Management Niklaus Santschi Sales Felix Aeschlimann Chief Executive Officer Dr Linus Bertsch Operations Ruedi Denier Business Development Ralph Oechslin Marketing, Sales & Business Management Members of Senior Management Heinz Burkhardt Head of Service Center, Card Services Ulrich Byland Application Development Walter Fenner Product Management Issuing Systems Maria Mathis Service Center Terminals Christian Vetsch Sales Boris Urs Zeltner Business Development Swiss Interbank Clearing Ltd. Board of Directors Dr Romeo Lacher Chairman Member of the Executive Committee, Credit Suisse, Zurich Fritz Klein Vice Chairman Member of the Executive Board of SIS SegaInterSettle AG, Zurich Jörg Auer Managing Director, UBS Ltd., Zurich Zeno Bauer Member of Senior Management of Zürcher Kantonalbank, Zurich Christian Bieri Member of the Executive Committee, RBA Central Bank, Bern Jürg Bucher Head of PostFinance, Bern Othmar Fritschi Member of Senior Management, Swiss Union of Raiffeisenbanks, St. Gallen Dr Urs P. Roth Chief Executive Officer Swiss Bankers Association, Basel Theo Schmid Member of Senior Management of Credit Suisse, Zurich Erwin Sigrist Former Director, Deputy Head of Department 3, Swiss National Bank, Zurich Walter Wirz Chief Executive Officer of Telekurs Group Ltd., Zurich
  • 63. Executive Committee André Bamat Chief Executive Officer Members of Senior Management Andreas Galle Head of Business Management Thomas Grütter Head IT Management Walter Leuenberger Finance & Controlling PayNet (Schweiz) AG Board of Directors Walter Wirz Chairman Chief Executive Officer of Telekurs Group, Telekurs Holding Ltd., Zurich André Bamat Chief Executive Officer of Swiss Interbank Clearing Ltd., Zurich Mirko Thomas Oberholzer Telekurs Group Legal Service Josef Landolt Vice Chairman Managing Director, UBS Ltd., Zurich Felice De Grandi Head of Risk Management Swiss Union of Raiffeisenbanks, St. Gallen Thomas F. Husemann Member of the Executive Board of Rothschild Bank AG, Zurich Ernst Messmer Managing Director Affentranger Associates Ltd., Geneva Philippe Sauthier General Director of Banque Cantonale Vaudoise, Lausanne Manfred Stöpper Managing Director, Credit Suisse, Zurich Walter Wirz Chief Executive Officer of Telekurs Group, Telekurs Holding Ltd., Zurich Executive Committee Eugen Niesper Chief Executive Officer Members of Senior Management Executive Committee Martin Frick Chief Executive Officer Members of Senior Management Nicolas Bloch Sales & Communications Koni Hüsser Product Management & Operations Telekurs Financial Information Ltd. Board of Directors Arthur Bolliger Chairman Chief Executive Officer of Maerki Baumann & Co AG, Zurich Fredy Capecchi Global Data Administration & Acquisition Hans-Peter Cueni Development Christian Cuennet Geneva Sales Unit Armando Foiadelli Technical Consulting Product Management Fritz Hediger Marketing & Sales Heinz Hess Server and Frontend Technology & Services Karl Landolt Data Operations Nourredine Yous General Support Data Hans-Peter Schumacher Controlling Telekurs Services Ltd. Board of Directors Walter Wirz Chairman Chief Executive Officer of Telekurs Group, Telekurs Holding Ltd., Zurich Jörg Buser General Manager, Rolotec Ltd., Biel Andreas Plüss Head of Legal Service, Telekurs Holding Ltd., Zurich Executive Committee Rolf Finschi Chief Executive Officer Head of Corporate Services Reto Camenisch Head of Business Management & Development Beat Christen Head of Document Services Rainer Deutschmann Head of IT Services Members of Senior Management Heinrich Angst Human Resources Services Martin Bänninger Facility Services Hans Bütikofer Procurement Services Peter Knüppel Chief Technology Officer Franz Röösli Management Services Peter Rufener CCC Financial Services & Services Management Status: 1 February 2004
  • 64. TELEKURS ANNUAL REPORT 2003 64 65 CONSOLIDATED COMPANIES Group companies Business field Equity capital in 1000 Percent held 1 2003 Consolidation method SWITZERLAND Telekurs Holding Ltd., Zurich Telekurs Multipay Ltd., Wallisellen 2 Telekurs Card Solutions Ltd., Urdorf 3 Epsys AG, Urdorf 4 Swiss Interbank Clearing Ltd., Zurich PayNet (Schweiz) AG, Wallisellen PayNet International AG, Wallisellen Telekurs Financial Information Ltd., Zurich Rolotec Ltd., Biel Telekurs Services Ltd., Zurich 5 Telekurs Card Services Ltd. (inoperative) Swisskey Ltd. (inoperative) O C C C E E E F F O C E CHF 45,000 CHF 6,500 CHF 100 CHF 100 CHF 1,000 CHF 1,000 CHF 4,000 CHF 5,000 CHF 200 CHF 52,500 CHF 100 CHF 100 100 % 100 % 100 % 80 % 75 % 100 % 100 % 100 % 75 % 100 % 100 % 100 % FC FC FC FC FC FC FC FC FC FC FC FC EUROPE Telekurs (Deutschland) GmbH, Frankfurt am Main Telekurs (Luxembourg) S.A., Luxembourg Telekurs (France) SAS, Paris6 Telekurs (Nederland) B.V., Amsterdam Telekurs (Italia) s.r.l., Milano Telekurs (U.K.) Ltd., London Telekurs Card Solutions GmbH, Hamburg 4 PayNet AG (Deutschland), Frankfurt am Main (in liquidation) 7 F F F F F F C E EUR EUR EUR EUR EUR GBP EUR EUR 511 31 400 250 100 500 25 500 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % FC FC FC FC FC FC FC FC AMERICA Telekurs (USA) Inc., Stamford F USD 2,045 100 % FC ASIA Telekurs (Japan) Ltd., Tokyo Telekurs (Hong Kong) Ltd., Hong Kong Telekurs (Singapore) Pte. Ltd., Singapore F F F JPY 40,000 HKD 4,000 SGD 25 100 % 100 % 100 % FC FC FC Unconsolidated holdings SECB Swiss Euro Clearing Bank GmbH, Frankfurt am Main MasterCard International Inc., St. Louis 7 E C EUR 9,200 25 % 0.27 % EQ AV Business field O = Other operating income C = Card-Based Payment Systems E = Electronic Payment Systems F = Financial Information Services Consolidations method FC = Full consolidation EQ = Equity method AV = Acquisition value 1 For all companies, the percentage of equity corresponds to the percentage of voting rights. Formerly Telekurs Europay Ltd, Wallisellen. Formerly 3C Holding AG. In the reporting year the company absorbed the participations in 3C-Systems AG, ComOp AG, Hotseven AG and Soplex AG and was renamed to Telekurs Card Solutions Ltd. The Card Services division split off from Telekurs Services AG was added as investment in kind. 4 Participation of Telekurs Card Solutions Ltd. 5 Formerly Payserv Ltd., Zurich. In the reporting year the Card Services division was split off and added to Telekurs Card Solutions Ltd. 6 Founded in 2003. 7 Participation of Telekurs Multipay Ltd. 2 3 Liquidation of Telekurs (Ceska Republika), a.s., Praha was completed in the reporting year. This company will therefore no longer be listed in the consolidated companies.
  • 65. TELEKURS GROUP ADDRESSES Telekurs Holding Ltd. Hardturmstrasse 201 P.O. Box CH-8021 Zurich Phone +41 1 279 21 11 Fax +41 1 279 21 12 Internet www.telekurs.com Telekurs Financial Information Ltd. Hardturmstrasse 201 P.O. Box CH-8021 Zurich Phone +41 1 279 51 11 Fax +41 1 279 51 12 Internet: www.telekurs-financial.com Telekurs (Italia) s.r.l. Via del Vecchio Politecnico 3 I-20121 Milano Phone +39 02 76 45 631 Fax +39 02 78 13 18 Internet www.telekurs.it CEO: Adriano Bazzi Telekurs Multipay Ltd. Hertistrasse 27 CH-8304 Wallisellen Phone +41 1 832 91 11 Fax +41 1 832 91 15 Internet www.telekurs-multipay.com Offices in Switzerland Telekurs (U.K.) Ltd. 15, Appold Street GB-London EC2A 2NE Phone +44 20 7550 5000 Fax +44 20 7550 5001 Internet www.telekurs.co.uk CEO: Beat Koch Branch office: Telekurs Financial (Ireland Branch), Dublin Geneva office: Phone +41 22 827 77 66 Fax +41 22 827 77 67 Telekurs Card Solutions Ltd. In der Luberzen 25 CH-8902 Urdorf Phone +41 848 661 111 Fax +41 848 661 112 Internet www.telekurs-card-solutions.com Branch offices: Zurich, Biel Companies reporting to Telekurs Card Solutions: Epsys AG In der Luberzen 25 CH-8902 Urdorf Phone +41 848 000 597 Fax +41 848 000 596 Internet www.epsys.ch CEO: Felix Aeschlimann Telekurs Financial Information Ltd. 48, route des Acacias P.O. Box 1529 CH-1211 Geneva 26 Phone +41 22 827 77 11 Fax +41 22 827 77 35 Telekurs Financial Information Ltd. Via Pretorio 9 CH-6900 Lugano Phone +41 91 924 71 11 Fax +41 91 924 71 12 Companies reporting to Telekurs Financial Telekurs (Deutschland) GmbH Solmsstrasse 18 D-60486 Frankfurt am Main Phone +49 69 717 00-0 Fax +49 69 717 00-103 Internet www.telekurs.de CEO: Christoph Kuzinski Branch offices: Berlin, Dusseldorf, Hamburg, Munich and Vienna Telekurs (USA) Inc. 3 River Bend Center P.O. Box 4999 USA-Stamford, CT 06907-0999 Phone +1 203 353 8100 Fax +1 203 967 2961 Internet www.tkusa.com CEO: Barry S. Raskin Telekurs (Japan) Ltd. 1-28-5, Nihonbashi Kakigaracho Chuo-ku, Tokyo 103-0014, Japan Phone +81 3 3808 2271 Fax +81 3 3808 2274 Internet www.telekurs.co.jp CEO: Alain Delfosse Telekurs Card Solutions (Deutschland) GmbH Tangstedter Landstrasse 6 D-22415 Hamburg Phone +49 40 325 181-0 Fax +49 40 325 181-29 Internet www.telekurs-card-solutions.de CEO: Ralph Oechslin Telekurs (Luxembourg) S.A. 10b, Z.A.I Bourmicht P.O. Box 2135 L-8070 Bertrange Phone +352 261 16-1 Fax +352 261 16-600 Internet www.telekurs.lu CEO: Claude Sinner Branch offices: Brussels Swiss Interbank Clearing Ltd. Hardturmstrasse 201 P.O. Box CH-8021 Zurich Phone +41 1 279 31 11 Fax +41 1 279 31 12 Internet www.sic.ch Telekurs (France) SAS 24, rue Royale F-75008 Paris Phone +33 1 55 35 11 55 Fax +33 1 55 35 11 99 Internet www.telekurs.fr CEO: Beat Koch Telekurs (Singapore) Pte. Ltd. 5 Temasek Boulevard #16-01 Suntec Tower Five Singapore 038985 Phone +65 6338 3808 Fax +65 6338 8380 Internet www.telekurs.com.sg CEO: Paul Bollhalder PayNet (Schweiz) AG Hertistrasse 27 CH-8304 Wallisellen Phone +41 1 832 95 11 Fax +41 1 832 95 25 Internet: www.paynet.ch, www.billingservices.ch Telekurs (Nederland) BV Rivierstaete-Amsteldijk 166 P.O. Box 74700 NL-1070 DJ Amsterdam Phone +31 20 3012 888 Fax +31 20 3012 800 Internet www.telekurs.nl CEO: Jan De Groot Rolotec Ltd. Gottstattstrasse 24 P.O. Box 8258 CH-2500 Biel Phone +41 32 344 86 00 Fax +41 32 344 86 86 Internet www.rolotec.ch CEO: Jörg Buser Telekurs Services Ltd. Hardturmstrasse 201 P.O. Box CH-8021 Zurich Phone +41 1 279 41 11 Fax +41 1 279 41 12 Internet www.telekurs-services.com Telekurs (Hong Kong) Ltd. 19/F One International Finance Centre 1 Harbour View Street Central, Hong Kong Phone +852 2971 0388 Fax +852 2971 0118 Internet www.telekurs.com.hk CEO: Paul Bollhalder Status: 1 February 2004
  • 66. TELEKURS ANNUAL REPORT 2003 66 67 PUBLISHING DETAILS Copyright Telekurs Holding Ltd., Zurich Concept and design Wirz Corporate AG, Zurich Editorial office Telekurs Group Public Relations, Zurich Translations Word + Image, Zufikon Photography Roberto Ceccarelli, Zurich Andreas Seibert, Tokyo Pre-press Reprotechnik Kloten AG, Kloten Printing Printlink AG, Wetzikon Paper Supersilk Snow Languages German, English, French, Italian Source for Annual Report Telekurs Holding Ltd. Public Relations Hardturmstrasse 201 CH-8021 Zurich Phone +41 1 279 22 24 Fax +41 1 279 23 36 E-Mail pr.holding@telekurs.com Internet www.telekurs.com (electronic version available)
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