Chart

11  Employee benefits

 

11.1  Number of employees

 

31.12.2017

31.12.2018

FTE (full-time equivalent)

 

 

Employees – year-end

 1,482

 1,662

Employees – average

 1,469

 1,562

 

11.2  Personnel expenses

Personnel expenses include the following:

 

 

Notes

2017

2018

CHF 1,000

 

 

 

Salaries and wages

 

 141,856

153,470

Social security 

 

 18,461

19,522

Post-employment benefits

 

 

 

  Defined contribution plans

 

 1,695

1,746

  Defined benefit plans

11.3

 7,644

6,607

Share-based payment 

11.4

 12,807

11,153

Other personnel expenses

 

 4,988

4,822

 

 

 

 

Total personnel expenses

 

 187,451

197,320

 

11.3  Liability for post-employment benefits: defined benefit plans (IAS 19)

 

11.3.1  Characteristics of defined benefit plans and risks associated with them

 

 

31.12.2017

31.12.2018

 

Swiss

plans

International plans

Total

Swiss

plans

International plans

Total

Number of plans

 5

 3

 8

5

3

8

 

 

 

 

 

 

 

Actives

 

 

 

 

 

 

  Number

 493

 96

 589

 552

 100

652

  Defined benefit obligation (CHF 1,000)

 119,533

 4,541

 124,074

125,261

4,393

129,654

  Weighted average duration in years

 21.0

 9.8

 20.8

20.1

10.0

 19.8

 

 

 

 

 

 

 

Retirees

 

 

 

 

 

 

  Number

 31

 –

 31

 36

 –

 36

  Defined benefit obligation (CHF 1,000)

 6,523

 –

 6,523

6,008

 –

6,008

  Weighted average duration in years

 18.4

 –

 18.4

17.8

 –

17.8

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

  Number

 524

 96

 620

588

100

688

 

Within the Group, various defined benefit plans exist, which differ in their purpose and financing according to local needs:

 

Country

Benefits

Funded/

Unfunded

Description and risks

Switzerland

(Swiss plans)

Retirement, death-in-service and disability benefits

Funded

Nature of the benefits provided

The pension plans of Tecan Group Ltd., Tecan Schweiz AG, Tecan Sales Switzerland AG and Tecan Trading AG are plans with guarantee of a minimum interest credit on the savings and fixed conversion rates at retirement. Disability and death benefits are defined as percentage of the insured salary.

 

Regulatory framework

The plan provides benefits based on the LPP/BVG law, which stipulates the minimum requirements of the mandatory employer-sponsored pension plan in Switzerland. In particular, annual salary up to CHF 84,600 (amount in 2018) must be insured and the financing is age-dependent with contribution rates in per cent of the insured salary ranging from 7% to 18%. The conversion rate to calculate the annuity based on the accrued savings capital is 6.8% at normal retirement age (65 for men and 64 for women).

 

Under LPP/BVG law, the plan must be fully funded on a static basis at all times. In case of underfunding, recovery measures must be taken, such as additional financing from the employer or from the employer and employees, or reduction of benefits or a combination 
of both.

 

Specific plan rules

The saving credits for the retirement benefits are defined in percentage of the insured ­salary. The saving credits for the part of the annual salary between CHF 24,675 and CHF 84,600 are age-dependent and range from 8% to 19%. The saving credits for the part of the annual salary above CHF 84,600 amount to 14% for the employees and to 18% or 19% ­
for the members of the management. The conversion rate for the mandatory part of the savings capital is 6.8% at normal retirement age. For the exceeding part of the savings capital, the conversion rate is defined by the board of trustees. 

 

The annual disability pension amounts to 70% of the insured salary, the annual partner’s pension to 50% of the insured salary or to 60% of the current retirement pension. In case of death before retirement an additional lump-sum of 200% of the insured salary is paid.

 

Governance of the plan

The companies are affiliated to the collective foundation Swiss Life Collective BVG Foundation. The collective foundation is a separate legal entity. The foundation is responsible for the governance of the plan; the foundation’s board of trustees is composed of an equal number of representatives from the employers and employees chosen from all affiliated companies. The foundation has set up investment guidelines, defining in particular the ­strategic allocation with ranges.

 

Additionally, there are pension committees for each affiliated company composed of an equal number of representatives from the company and the employees. The pension ­committee is responsible for the set-up of the plan benefits.

 

Risks to which the plan exposes the Group

The plan provider Swiss Life Collective BVG Foundation has reinsured the risks disability, death, longevity and the investment risk with Swiss Life Ltd. Therefore, the only risks for the Group are that the Swiss Life Collective BVG Foundation terminates the affiliation contract or increases the premiums.

 

Plan amendments, settlements or curtailments

In 2018 the board of trustees has decided to reduce the conversion rate for calculating the annuity relating to the exceeding part of the savings capital, starting from January 1, 2021. This modification is considered as a plan amendment. The resulting past service costs amounting to CHF 1.0 million were recognized immediately in profit or loss.

 

Country

Benefits

Funded/

Unfunded

Description and risks

Austria

(International plans)

Long-service leave benefits

Unfunded

Nature of the benefits provided

The severance-payments plan of Tecan Austria GmbH and Tecan Sales Austria GmbH ­guarantees a one-time lump sum payment, once the employee leaves the company. The plan was closed for new members at December 31, 2002. Plan participants are all employees
with at least 3 years of service and an entry-date before January 1, 2003. The membership to this plan is mandatory. 

 

Regulatory framework

The plan provides benefits according to Austrian law (AngG 23 and 23a) which stipulates benefits in case of retirement, death (50%), disability or termination of employment. Vesting is after 3 years of service, whereas all rights forfeit in the case of voluntary termination.

 

The level of the benefits depends on the period of service in the company and amounts to a lump-sum payment of 2 monthly salaries after 3 years of service up to 12 monthly salaries after 25 years of service. The monthly salary is defined as twelfth part of the total annual salary of the last 12 months.

 

Governance of the plan

Only the company (employer) is responsible for the governance of the plan. 

 

Risks to which the plan exposes the Group

The plan is exposed to an inflation risk as well as to the risk of salary increases. There is no longevity risk because the payments are due latest at retirement.

 

Plan amendments, settlements or curtailments

There were no plan amendments, settlements or curtailments during the financial years 2017 and 2018.

Other

(International plans)

Retirement benefits

Unfunded

There are two minor retirement benefit plans in Tecan Japan Co., Ltd. and Tecan Italia S.r.l. for only a limited number of participants.

Other

(International plans)

Retirement benefits

Funded

The Group acquired the SPEware Group in 2016. Immediately before the closing of the ­transaction, the associated retirement benefit plan was frozen and all contributions to the plan were stopped. The plan was settled in 2017.

 

11.3.2  Amounts recognized in the financial statements

The amounts recognized in the balance sheet are as follows:

 

 

31.12.2017

31.12.2018

CHF 1,000

 

 

Swiss plans

 

 

  Present value of obligations arising from retirement benefit plans (funded)

 126,056 

131,269

  Related fair value of plan assets

 (94,085) 

(101,612)

  Deficit Swiss plans

 31,971 

29,657

 

 

 

International plans

 

 

  Present value of obligations arising from long-service leave benefit plans (unfunded)

 3,409 

3,333

 

 

 

  Present value of obligations arising from retirement benefit plans (unfunded)

 1,132 

1,101

  Deficit International plans

 4,541 

4,434

 

 

 

Total liability for post-employment benefits

 36,512 

34,091

The components of defined benefit cost are as follows:

 

 

2017

2018

 

Swiss

plans

International plans

Total

Swiss

plans

International plans

Total

CHF 1,000

 

 

 

 

 

 

Current service cost

 7,350 

294

 7,644 

7,271

 291 

7,562

Past service cost (plan amendment)

 –

(955)

(955)

 

 

 

 

 

 

 

Defined benefit cost included in operating profit

 7,350 

 294 

 7,644 

6,316

 291 

6,607

 

 

 

 

 

 

 

Net interest cost on liability for post-employment benefits

 153 

 64 

 217 

198

 60 

258

 

 

 

 

 

 

 

Defined benefit cost included in finance cost

 153 

 64 

 217 

198

 60 

 258 

Total defined benefit cost included in profit or loss

 7,503 

 358 

 7,861 

6,514

351

6,865

 

 

 

 

 

 

 

Actuarial (gains)/losses on obligations

 

 

 

 

 

 

  Changes in demographic assumptions

 (994) 

 (3) 

 (997) 

(65)

(65)

  Changes in financial assumptions

 –

 28 

 28 

(5,395)

201

(5,194)

  Experience adjustments

 5,191 

 (458) 

 4,733 

2,066

(254)

1,812

Return on plan assets (excluding interest income)

 137 

– 

 137 

70

– 

70

 

 

 

 

 

 

 

Remeasurement loss/(gain), included in other comprehensive income

 4,334 

 (433) 

 3,901 

(3,259)

(118)

(3,377)

 

 

 

 

 

 

 

Translation differences, included in other comprehensive income

 –

 331 

 331 

 –

(127)

(127)

 

 

 

 

 

 

 

Total defined benefit cost recognized

 11,837 

 256 

 12,093 

3,255

106

3,361

The Group expects to contribute CHF 5.8 million to its defined benefit plans in 2019.

 

Changes in the present value of the defined benefit obligation are as follows:

 

 

2017

2018

 

Swiss

plans

International plans

Total

Swiss

plans

International plans

Total

CHF 1,000

 

 

 

 

 

 

Balance at January 1

 112,608

 7,054

 119,662

126,056

4,541

130,597

Acquisition through business combination

 40

 40

Current service cost

 7,350

 294

 7,644

7,271

 291

7,562

Past service cost

(955)

(955)

Employee contributions

 3,595

 –

 3,595

3,733

 –

3,733

Insurance premiums

 (1,804)

 –

 (1,804)

(1,598)

 –

(1,598)

Benefits paid

 (7,202)

 (239)

 (7,441)

(788)

(214)

(1,002)

Settlement payments from plan assets

 –

 (2,482)

 (2,482)

 –

Interest expense

 788

 64

 852

879

 60

939

Actuarial losses/(gains)

 4,198

 (434)

 3,764

(3,329)

(117)

(3,446)

Gross presentation disability benefits

 6,523

 –

 6,523

 –

Translation differences

 –

 244

 244

 –

(127)

(127)

 

 

 

 

 

 

 

Balance at December 31

 126,056

 4,541

 130,597

131,269

4,434

135,703

 

Changes in the fair value of plan assets are as follows:

 

 

2017

2018

 

Swiss

plans

International plans

Total

Swiss

plans

International plans

Total

CHF 1,000

 

 

 

 

 

 

Balance at January 1

 86,947

 2,569

 89,516

94,085

94,085

Acquisition through business combination

 –

 –

 –

 –

 –

 –

Employer contributions

 5,528

 –

 5,528

5,569

 –

5,569

Employee contributions

 3,595

 –

 3,595

3,733

 –

3,733

Insurance premiums

 (1,804)

 –

 (1,804)

(1,598)

 –

(1,598)

Benefits paid

 (7,202)

 –

 (7,202)

(788)

 –

(788)

Settlement payments from plan assets

 –

 (2,482)

 (2,482)

Interest income

 635

 –

 635

680

 –

680

Return on plan assets (excluding interest income)

 (137)

 –

 (137)

(69)

 –

(69)

Gross presentation disability benefits

 6,523

 –

 6,523

 –

Translation differences

 –

 (87)

 (87)

 –

 

 

 

 

 

 

 

Balance at December 31

 94,085

 94,085

101,612

101,612

 

The investment risk for the Swiss plans is reinsured. Therefore the plan assets represent a receivable from the life insurance company. 

 

11.3.3  Actuarial assumptions and sensitivity analysis

Principal actuarial assumptions at the balance sheet date (expressed as weighted averages):

 

 

31.12.2017

31.12.2018

 

Swiss plans

International plans

Swiss plans

International plans

Discount rates

0.70%

1.39%

1.00%

1.17%

Rate of future salary increases

1.75%

2.51%

1.75%

2.80%

Rate of future pension increases

0.00%

0.00%

0.00%

0.00%

Rates for the projection of savings capital1

1.00%

0.00%

1.00%

n/a

Mortality tables2

BVG2015GT

various

BVG2015GT

various

  1. Swiss plans: the rate is only applied to the mandatory partModel 'Continuous Mortality Investigation (CMI)' 

 

Sensitivities of significant actuarial assumptions

The discount rate, the rate of future salary increase and the life expectancy were identified as significant actuarial assumptions. The following impacts on the defined benefit obligation are to be expected:

 

 

 

31.12.2017

31.12.2018

 

Change in actuarial assumptions

Swiss

plans

International plans

Total

Swiss

plans

International plans

Total

CHF 1,000

 

 

 

 

 

 

 

Discount rates

- 25 basis points

 5,359 

 107 

 5,466 

5,474

72

5,546

 

+ 25 basis points

 (4,900) 

 (110) 

 (5,010) 

(4,532)

(144)

(4,676)

Rate of future salary increases

- 25 basis points

 (821) 

 (106) 

 (927) 

(857)

(136)

(993)

 

+ 25 basis points

 826 

 99 

 925 

864

65

929

Life expectancy

- 1 year

 (1,788) 

 (21) 

 (1,809) 

(1,890)

(50)

(1,940)

 

+ 1 year

 1,820 

 10 

 1,830 

1,920

(24)

1,896

(positive = increase in obligation/negative = decrease in obligation)

 

The sensitivity analysis is based on realistically possible changes at the end of the reporting period. Each change in significant assumption was analyzed separately as part of the test. Interdependencies were not taken into account.

 

11.4  Employee participation plans – share-based payment (IFRS 2)

 

11.4.1  Employee share option plans

The terms and conditions of the outstanding grants are as follows:

 

Plan

Plan terms

 

31.12.2017

31.12.2018

 

Grant date

Expiry date

Number granted

Exercise price

 

Remaining 
contractual life (years)

Number outstanding

Remaining 
contractual life (years)

Number outstanding

Plan 2012

02.11.2011

02.11.2018

 59,998 

57.2

 

0.8

 3,691 

Plan 2013

02.11.2012

02.11.2019

 40,953 

69.6

 

1.8

 5,320 

 0.8 

3,201

Plan 2014

02.11.2013

02.11.2020

 35,112 

95.0

 

2.8

 7,492 

 1.8 

3,976

Plan 2015

02.11.2014

02.11.2021

 34,260 

100.4

 

3.8

 15,563 

2.8

7,585

Plan 2016

02.11.2015

02.11.2022

 23,569 

135.0

 

4.8

 17,831 

3.8

10,865

Plan 2017

02.11.2016

02.11.2023

 23,907 

162.8

 

5.8

 23,016 

4.8

18,756

Plan 2018

02.11.2017

02.11.2024

 22,071 

212.1

 

6.8

 22,071 

5.8

21,736

Plan 2019

02.11.2018

02.11.2025

23,921

228.7

 

6.8

23,921

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

4.9

 94,984 

 

90,040

 

 

 

 

 

 

 

 

 

 

Thereof exercisable at December 31

 

 

 

 

 

47,783

 

40,818

 

All plans are granted to members of the management level 3 and 4 and have a contractual life of 7 years. The vesting conditions are ­ one/two/three years of service for 33%/33%/34% of options. One option grants the right to purchase one Tecan share with settlement by physical delivery (equity-settled). All outstanding options are fully covered by the conditional share capital. 

 

The number and weighted average exercise price of the share options are as follows:

 

 

2017

2018

 

Weighted average exercise price (CHF)

Number

Weighted average exercise price (CHF)

Number

Balance at January 1

112.83

 113,893 

144.14

94,984

Granted

212.10

 22,071 

228.70

23,921

Exercised

92.99

 (39,053) 

108.01

(24,487)

Forfeited 

125.63

 (1,342) 

148.52

(2,610)

Expired

69.18

 (585) 

93.91

(1,768)

 

 

 

 

 

Balance at December 31

144.14

 94,984 

177.29

90,040

 

The weighted average share price at the date of exercise was CHF 181.19 in 2017 and CHF 222.08 in 2018.

 

The expenses, recognized in profit or loss, are calculated as follows:

 

The fair value of services received in return for the share options granted is measured by reference to the share options vested multiplied by their fair value at grant date (measurement date). The estimate of the fair value is based on a trinomial model. Changes in the fair value of the option after the grant date do not change the fair value of the services received.

 

Fair value of share options and key assumptions (not yet vested share option plans):

 

Grant

Share price

Exercise price

Expected

volatility1

Option life

Expected

dividends

Risk-free

interest rate

Fair value

Plan 2016

CHF 135.00

CHF 135.00

26.41 %

7.0 years

2.10 %

(0.20 %)

CHF 29.24

Plan 2017

CHF 162.80

CHF 162.80

29.42%

7.0 years

1.75%

(0.31%)

CHF 40.47

Plan 2018

CHF 212.10

CHF 212.10

22.73%

7.0 years

1.30%

(0.01%)

CHF 42.37

Plan 2019

CHF 228.70

CHF 228.70

20.89%

7.0 years

1.38%

0.21%

CHF 42.59

  1. Historic volatility with an underlying period that depends on the option life
Data source: Bloomberg

 

11.4.2  Employee share plans

 

11.4.2.1  Performance share matching plans (PSMP)

The terms and conditions of the outstanding grants are as follows, whereby all shares are delivered physically and free of charge:

 

Plan

Employees entitled/grant date

Number of shares granted

Fair value at grant

Vesting period

Vesting conditions

Performance share matching plan (PSMP) 2016

Initial grant

Extended Management Board

on March 10, 2016

20,981 shares

CHF 146.95

Immediate vesting1

None

Other management

on May 23, 2016

2,335 shares

CHF 142.25

 

 

Matching shares

Extended Management Board

on March 10, 2016

52,453 shares

(maximum of potential

shares granted)

CHF 143.45

January 1, 2016 to

December 31, 2018

Three years of service and ­performance target

Other management

on May 23, 2016

5,838 shares

(maximum of potential

shares granted)

CHF 138.75

 

 

Performance share matching plan (PSMP) 2017

Initial grant

Extended Management Board

on March 9, 2017

17,859 shares

CHF 164.25

Immediate vesting1

None

Additional grant CEO 
on April 11, 2017

7,000 shares

CHF 156.55

 

 

Other management 
on May 2, 2017

2,214 shares

CHF 169.55

 

 

Matching shares

Extended Management Board

on March 9, 2017

44,648 shares

(maximum of potential shares granted)

CHF 160.75 

January 1, 2017 to December 31, 2019

Three years of service and ­performance target

Additional grant CEO 
on April 11, 2017

3,000 shares

(maximum of potential shares granted)2

CHF 153.05

 

 

Other management 
on May 2, 2017

5,536 shares 
(maximum of potential shares granted)

CHF 166.05

 

 

Performance share matching plan (PSMP) 2018

Initial grant

Extended Management Board

on March 7, 2018

15,137 shares

CHF 191.30

Immediate vesting1

None

Other management 
on May 2, 2018

1,639 shares

CHF 218.20

Matching shares

Extended Management Board

on March 7, 2018

37,843 shares

(maximum of potential

shares granted)

CHF 187.30

January 1, 2018 to

December 31, 2020

Three years 
of service and

performance target

Other management 
on May 2, 2018

4,098 shares

(maximum of potential

shares granted)

CHF 214.20

  1. Vested shares are blocked until the end of the performance period.
  2. Matching share factor capped at 0.43 instead of 2.5

 

Number of shares outstanding at December 31:

 

2017

2018

Employee shares

 

 

Balance at January 1

 223,879 

211,671

Granted

 79,161 

59,813

Deblocked and available to the participants

 (82,858) 

(79,378)

Forfeited 

 (8,511) 

(1,411)

 

 

 

Balance at December 31

 211,671 

190,695

 

 

 

Thereof vested, but blocked until the end of the performance period

 48,034 

43,662

The expenses, recognized in profit or loss, are calculated as follows:

 

The fair value of services received in return for the shares granted is measured by reference to the shares vested multiplied by their fair value at grant date (measurement date). The fair value at grant represents the market value of one Tecan share adjusted for expected dividend payments during the vesting period. Changes in the fair value of the shares after the grant date do not change the fair value of the services received.

 

The number of matching shares is determined based on the following formula: number of shares from initial grant multiplied by the matching share factor. The matching share factor is dependent on the achievement of specific economic profit targets. In any case, the matching share factor will not be lower than 0.0 and not higher than 2.5. 

 

Number of matching shares expected to vest at December 31, 2018:

 

Plan

 

 

Total base

shares1

Matching share

factor applied

Matching shares

expected to vest2

PSMP 2016 

 

 

20,950

2.50

52,375

PSMP 2017

 

 

19,886

2.40

47,726

PSMP 2017/CEO

 

 

7,000

0.43

3,000

PSMP 2018

 

 

16,776

1.90

31,874

  1. Only shares that qualify for matching shares
  2. Not adjusted for expected fluctuation

 

11.4.2.2 Other share plans

The terms and conditions of the outstanding grants are as follows, whereby all shares are delivered physically and free of charge:

 

Plan

Employees entitled/grant date

Number of shares granted

Fair value at grant

Vesting period

Vesting conditions

Share plan 2018 – Board of Directors (BoD)

Annual grant

Board of Directors

on April 11, 2018

1,619 shares

CHF 208.60

Graded vesting 
from May 1, 2018 to April 30, 2019

One year of service

 

11.4.3  Total expenses recognized

 

 

2017

2018

CHF 1,000

 

 

Expenses arising from equity-settled share option plans

 805

 852

Expenses arising from performance share matching plans

 11,679

9,966

Expenses arising from other share plans

 323

335

 

 

 

Total expenses recognized

 12,807

11,153