With an annual profit of CHF 53.3 million, the Jungfrau Railway Group increased its earnings in 2019 by 11.5% compared to the previous year.

The Jungfrau Railway Group generated a total operating income of CHF 223.3 million, which corresponds to an increase of CHF 10.5 million. The most important source of income remains transport revenue, which amounted to CHF 161.8 million in the reporting year – 5.2% or CHF 8.0 million above the previous year’s amount. Operating expenses rose by 2.3% to CHF 120.4 million. EBITDA rose accordingly by 8.3% and, at CHF 103.0 million, exceeded the CHF 100 million mark for the first time. Depreciation and amortisation amounted to CHF 35.5 million. EBIT increased by 10.7% to CHF 67.5 million, which corresponds to an EBIT margin of 30.2%. After a positive financial result and after taxes, the annual accounts show an annual profit of CHF 53.3 million, CHF 5.5 million above the previous year. Cash flow (from operating activities) rose by 21.5% to CHF 97.1 million.

2019 was all about building the core elements of the V-Cableway project. In mid-December, important milestones were reached with the opening of the Grindelwald Terminal station of the Bernese Oberland Railway, the new Männlichen Railway and the partial opening of the terminal. All other construction sites were also busy throughout the year. The Jungfrau Railway Group’s total investment volume last year was CHF 118.6 million. Of this, CHF 83.6 million was accounted for by the V-Cableway project. In recent years, the company has invested just under CHF 250 million into the once-in-a-generation project, which includes the already completed rolling stock renewals at the Wengernalp Railway and Jungfrau Railway in addition to the core elements of the Eiger Express, Grindelwald Terminal and multi-storey car park.

In addition to the V-Cableway, a second major project was launched – the renewal programme for the Lauterbrunnen-Mürren mountain railway. Costs of a good CHF 50 million have been estimated for the complete renewal of the Mürrenbahn, largely financed by the Canton of Bern. CHF 2.7 million was invested in the reporting year. The acquisition of the former bank building on Höheweg in Interlaken and its subsequent conversion into Jungfrau Railways’ first flagship store, including facilities, cost CHF 16.1 million. The station concourse on the Jungfraujoch will be under renovation until spring 2021. CHF 5.1 million was invested in the reporting year. In addition, orders were placed for the rolling stock of the Wengen Shuttle and advance payments of CHF 4.0 million were made.

With the exception of CHF 1.3 million in interest-free infrastructure loans from the public sector for the Lauterbrunnen-Wengen and Lauterbrunnen-Mürren routes and a first instalment of CHF 7.8 million of an investment aid loan for Grindelwald Grund Infrastruktur AG to partially finance the terminal, the investments were financed entirely from cash flow.

The consolidated balance sheet as of 31 December 2019 shows equity of CHF 607.3 million. This results in a very solid equity ratio of 79.0%. The company continues to operate without interest-bearing debts and has liquid assets of CHF 57.4 million. The Jungfrau Railway Group is therefore well prepared for the intensive investment phase lasting until the completion of the V-Cableway project with the planned operative launch of the Eiger Express in December 2020.

The most important segment, Jungfraujoch – Top of Europe, achieved net sales of CHF 149.8 million. The increase of 7.6% is based on the long-standing, intensive and successful development of the Asian markets. With 1,056,000 visitors, more than a million guests travelled to Jungfraujoch – Top of Europe in the reporting year, for the fourth time following 2015, 2017 and 2018. Transport revenue increased by 1.8% to CHF 120.9 million. Encouragingly, average revenues also rose again, by 2.7% to CHF 114.50 per guest. The Top of Europe Flagship Store was opened in Interlaken on 12 October and on 1 November, operation of the Jungfraujoch and Eigergletscher restaurant businesses was assumed. Overall, the business segment posted earnings before interest, taxes, depreciation and amortisation (EBITDA) of CHF 70.5 million.

For the fourth time in a row, higher earnings were achieved in winter sports. The number of ski visits (of ski sport guests) in the entire Jungfrau Ski Region rose by 8.4% compared to the previous year to 1,069,500, exceeding the one million mark for the first time since 2013. The Group’s proportionate transport revenue increased by 5.1% to CHF 23.5 million. With net sales of CHF 30.8 million, the segment achieved an EBITDA of CHF 1.7 million.

The sharpest rise was in Experience Mountains. All participating railways – the Harder Railway, First Railway and the Lauterbrunnen-Mürren Mountain Railway – once again achieved new records in transport revenue. This resulted in an overall net increase of 21.1% to CHF 25.0 million. The independent positioning of all Experience Mountains and consistent cross-selling proved worthwhile. Overall, segment sales for the Experience Mountains rose by 18.9% to CHF 32.6 million, accompanied by a 30.3% increase in EBITDA to CHF 18.8 million.

The strategic financial targets of the Jungfrau Railway Group reflect the orientation towards long-term goals and the policy of a value-based company (value stock). The current financial targets were reviewed for the last time in 2014.

In 2019, the Jungfrau Railway Group exceeded its targets with the exception of the investment/cash flow indicator. The return on sales amounted to 23.9%, the EBIT margin reached 30.2%. With the proposed dividend of CHF 2.80 per share (previous year CHF 2.80), the payout ratio at 30.8% is slightly below the defined target range. Investments in the reporting year accounted for 122.2% of cash flow. For 2019, this resulted in a free cash flow of CHF -21.5 million. The accumulated free cash flow for the 2014–2023 target period at the end of 2019 therefore amounts to CHF 52.0 million. At the same time, the equity ratio was 79.0%.

In the course of the V-Cableway realisation, the financial targets were reviewed and aligned with the time after entering into full operation. The system of objectives should remain clear and simple.

The Jungfrau Railway Group will continue to strive for development and financing based on solid results in the future. After the investment-intensive phase with the V-Cableway project, the scope for dividend payments will be increased. Investments should continue to be financed from self-generated funds wherever possible. In the future, interest-bearing debt capital will continue to be raised only in a limited scope and only for operational investments. The Jungfrau Railway Group thus underlines its claim to be solidly financed and to be able to act independently of outside capital providers at all times.

The Board of Directors has therefore formulated the following financial targets for the years after the V-Cableway enters into operation:

The EBITDA margin target is new and replaces the EBIT margin indicator. EBITDA is a common benchmark in the mountain railway industry and indicates how much cash flow can be generated from the operating business. Instead of the equity ratio, a limit for interest-bearing debt capital is introduced. An EBITDA margin of 46.1% was achieved in 2019. As of 31 December 2019, the consolidated balance sheet does not show any interest-bearing liabilities. Due to the widely varying level of investment, the annual investment/cash flow target of <50% will be waived in future. The targeted limitation of investments is ensured by the free cash flow target and the limitation of interest-bearing debt.

Within the framework of risk management, Jungfrau Railways deals with possible events whose occurrence could mean that its strategic and thus the financial goals cannot be achieved. We assess such events in terms of their probability of occurrence and their likely impact on EBIT. Events may include commercial success, partnerships, reputation, organisation (especially personal safety, material assets, availability, integrity, confidentiality of data and the assurance of expertise), finances, governance, and compliance. Risk management identifies both opportunities and threats. Strategic risks are regularly discussed as part of the Board of Directors’ SWOT analysis. In the management report, we focus heavily on the commercial challenges (see message from the company management/opportunities and risks).

Jungfrau Railways has an internal control system (ICS) that meets legal requirements. With this instrument, we firstly check compliance with processes and the integrity of data in the particularly sensitive area of finance and secondly ensure security with regard to the accuracy and reliability of reporting.

The IT security policy of Jungfrau Railways pursues a best-practice approach. The rules are defined in the IT security policy, the IT security guidelines for employees, and the IT password guidelines or user authorisation plan. In addition, special service levels are defined for all business-relevant applications in line with the respective risks and a specialist group monitors the change process. The in-house data protection officer oversees the 60 or so data files that include sensitive personal data, advises the data controllers regarding handling of these data and reports to the Executive Board at least once a year on data protection concerns and the results and conclusions from said officer’s investigations. Jungfrau Railways is guided by the General Data Protection Regulation (GDPR) of the EU, although the Swiss law formally implementing it is not yet in force.

Risk management is embedded in the company’s general process landscape. Process organisation specifies responsibilities and ensures that the relevant measures are planned and implemented. The corresponding risk index (risk catalogue) forms the central basis for the formal risk process. The risks are assessed according to financial impact and probability of occurrence and positioned based on their importance for the company (risk profile). The risk catalogue of Jungfrau Railways provides an overview of the operational risks and is revised annually. The Board of Directors discusses and supplements the strategic risks at least once a year and in addition as required. The strategic catalogue has always included a pandemic, a risk that is currently a major concern. What this means in concrete terms is described by the company management in its current message in the management report. The external and internal audit activities are closely linked to risk management. In addition to internal audits, which are used by the Executive Board to check certain areas for risks, Jungfrau Railways is regularly externally audited by the Swiss Federal Office of Transport, Suva, and the certification body for quality management according to ISO 9001/2015.

The increasing density of regulation, which goes hand in hand with public awareness of compliance issues, has recently been explicitly included in the Board of Directors’ SWOT analysis. This results in efforts to continuously expand compliance. While the safety of our employees and our clients remains our top priority, the company is constantly faced with additional legal and regulatory requirements in a wide variety of areas. As a small listed company, it is a challenge for Jungfrau Railways to meet all the rules correctly, even to set standards in some areas, while at the same time ensuring costs do not explode and innovation is not hindered. A compliance management system was set up in 2019 with this objective in mind. In February 2020, the new Jungfrau Railways Code of Conduct was adopted by the Board of Directors. The most important innovation is the prohibition of accepting and giving gifts worth more than CHF 300. The implementation of structural measures, in particular the assignment of the Compliance Officer’s duties to an independent unit, will take place in the course of this year in view of the comprehensive reorganisation of the entire management as of 1 January 2021.

The failure of projects is a significant risk position in the catalogue of a naturally investment-driven transport company that must maintain and constantly renew cable cars and railways. The major V-Cableway project currently poses corresponding challenges for our project management. This is carried out by a board formed specifically from representatives of Jungfrau Railways and Gondelbahn Grindelwald-Männlichen AG. Every three months, this body reports to the Board of Directors of Jungfraubahn Holding AG, Berner Oberland-Bahnen AG, and Gondelbahn Grindelwald-Männlichen AG. In addition to the cost control, the schedule and the monitoring of the necessity and added value of any project adjustments, the safety, allocation of tasks, preparation of the handover and the quality and specific risks of the construction are discussed. The internal reporting is supplemented by a report from an independent expert.

Accounting principles

General information

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

The financial statements of Jungfraubahn Holding AG and the consolidated financial statements of the Jungfraubahn Group were approved by the Board of Directors on 25 March 2020.

Closing date

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

Scope of consolidation

The consolidated financial statements include the financial statements of Jungfraubahn Holding AG and its holdings. The holdings of the Group can be seen in the comment «0 Scope of consolidation» below. The holdings are broken down as follows:

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

Associated companies
Associated companies are companies in which Jungfraubahn Holding AG holds 20 to 50 per cent.

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

Consolidation method

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

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

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

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

Valuation principles

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

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

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

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

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

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

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

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

Liabilities
Liabilities are stated at their nominal value.

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

Sales realisation

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

Taxes

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

For deferred taxes, all differences between tax rates and group values are measured at full tax rates and reported in the balance sheet (comprehensive liability method). The currently applicable tax rate for each company is used for the calculation of the deferred tax burden. Deferred tax assets on tax-deductible losses carried forward are not capitalised but shown in the Notes.

Employee pension funds

The employees of the Jungfraubahn Group extept the Jungfrau Gastronomie AG and the Grindelwald Grund Infrastruktur AG are insured by the legally independent personnel pension fund of Jungfrau Railways. The employees of the Jungfrau Gastronomie AG are insured by the GastroSocial pension fund, the employees of the Grindelwald Grund Infrasturktur AG by the Nest pension fund. The purpose of all three funds is to insure the employees against the economic consequences of age, death and disability. All workers aged over 17 are insured.

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

Transactions with related parties

In the reporting year, the following material transaction was carried out with a related party: purchase of a business property in Interlaken from BEKB | BCBE as of 1 July 2019 for CHF 11.0 million.

No other significant transactions with related parties took place in the 2019 financial year. In accordance with Swiss GAAP FER 15.8, the legal entities BEKB | BCBE, Gebäudeversicherung Bern and Garaventa AG, which are shown as related parties in the Financial Report 2018, no longer fall under this definition from 1 January 2020.

Segment information

Comments

0 Scope of consolidation

There were no changes in the scope of consolidation in the reporting year.

The following companies are included in the scope of consolidation as of 31 December 2019:

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

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

Management insurance is maintained for members of management and extended management. Expenses for the companies amounted to kCHF 248 in 2019 and kCHF 239 in 2018.

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

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

With the companies Bergbahn Lauterbrunnen-Mürren AG, Grindelwald Grund Infrastruktur AG, Jungfrau Gastronomie AG as well as Jungfrau Shopping AG there are tax-deductible losses carried forward totalling kCHF 5,669 (previous year kCHF 4,492). The resulting non-capitalised deferred tax claim is kCHF 1,267 (previous year kCHF 985).

24 Equity

Share capital
The share capital of Jungfraubahn Holding AG is fully paid up, amounting to CHF 8,752,500 at 31 December 2019 and is divided into 5,835,000 registered shares with a nominal value of CHF 1.50. Rights and restrictions related to the shares are explained in Section 6 of the Corporate Governance report.

Treasury shares
At 31 December 2019, the company held 1,085 registered treasury shares with a nominal value of CHF 1.50 each (previous year 3,018 registered treasury shares). In the reporting year, 20,052 (previous year: 20,000) of the Company's registered treasury shares were purchased at an average price of CHF 131.54 (previous year: CHF 145.88) and 21,985 (previous year 20,575) registered treasury shares were sold at an average price of CHF 154.12 (previous year CHF 139.91).

Since 2005, the employees of the Jungfrau Railway Group as well as the administrative boards of Jungfraubahn Holding AG have been given the option of voluntarily purchasing a limited number of registered shares of Jungfraubahn Holding AG at a preferential price. In the reporting year, this price was CHF 45.00 per registered share (previous year CHF 43.00). The difference between the preferential price and the exchange rate, determined according to circular no. 37 of the Federal Tax Administration, was recognised in the income statement under personnel expenses. In this way 21,685 registered treasury shares were sold in the reporting year (previous year 20,294).

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

Reserves
The non-distributable, statutory or legal reserves amounted to kCHF 28,636 at 31 December 2019 (previous year kCHF 26,279).

26 Events after the balance sheet date

On 11 March 2020, the World Health Organisation (WHO) classified the global spread of the Coronavirus (COVID-19) as a pandemic. As a result, the ski area and the cogwheel railways above Grindelwald and Wengen were officially closed on 14 March 2020. They remain closed at the time of publication of this Financial Report. The Board of Directors and Executive Board of Jungfraubahn Holding AG are monitoring events and will take the necessary measures on an ongoing basis. At the time of approval of these consolidated financial statements, the financial consequences of the direct and indirect effects of this pandemic on the current financial year 2020 cannot yet be estimated. On the other hand, the significance of the 2019 consolidated financial statements will not be affected by the consequences of the coronavirus pandemic.

The object of the official annual report of Jungfraubahn Holding AG is the management report (with segment reporting) and the financial report, which contains the consolidated financial statements for 2019 and the financial statements for 2019 of the holding company. The auditor's reports are also included in this part of the annual report. The printout of the annual report in German, available at the registered offices of the company during the invitation period to the General Meeting of Jungfraubahn Holding AG, is binding and has been audited. Thus no audit reports were drawn up in English. You can download a PDF document with the same content from the online annual report Download Centre. The accompanying report and the download file also contain the 2019 remuneration report and corporate governance information.