26 Fair value measurement and disclosures
26.1 Fair value hierarchy
To increase consistency and comparability in fair value measurements and related disclosures, IFRS 13 established a fair value hierarchy that categorizes into three levels the inputs to valuation techniques used to measure their value.
Level 1 inputs: Quoted prices (unadjusted) in active markets for identical assets and liabilities that the Group can access at the measurement date.
Level 2 inputs: Inputs other than quoted prices included within level 1 that are observable for the asset or indirectly.
Level 3 inputs: Unobservable inputs for the asset or liability.
There have been no transfers between the levels in 2017 and 2018.
26.2 Assets and liabilities measured at fair value on a recurring basis after initial recognition
The following table shows the valuation techniques used in the determination of fair values for assets and liabilities measured at fair value on a recurring basis after initial recognition:
Position | Net carrying amount in balance sheet measured at fair value (CHF 1,000) | Level | Data source | Model | Change in fair value recognized in position | |
| 31.12.2017 | 31.12.2018 |
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Currency forwards | (109) | (3,351) | Level 2 | Bloomberg | (forward rate – [spot rate +/- forward points]) * amount in foreign currency | Financial result |
Currency options | – | 112 | Level 2 | Bloomberg | Black-Scholes model | Financial result |
Unquoted equity investment | – | 4,000 | Level 3 | n/a | Discounted cash flow method | Other comprehensive income (FVOCI) |
Contingent consideration | (11,639) | (4,916) | Level 3 | n/a | Discounted cash flow method See note 3.2 | Other operating result |
Unquoted equity investment – level 3 inputs: The Group acquired an unquoted equity instrument for CHF 4.0 million in the first half of 2018. The shares have a preferred status in the case of a potential liquidation. Therefore, a decrease in the forecasted cash flows of 10% would not adversely impact the fair value of the investment. Total changes in the fair value recognized during the period in other comprehensive income amount to CHF 0.0 million. No dividend was paid in 2018.
Contingent considerations – level 3 inputs: Beside of the WACCs that were used for discounting the expected payments, the underlying business plans are the most significant unobservable inputs.
26.3 Assets and liabilities measured at fair value on a non-recurring basis after initial recognition (IFRS 5)
Position | Net carrying amount in balance sheet measured according to IFRS 5 (CHF 1,000) | Fair value less costs to sell | Level | Data source | Model | Impairment recognized in position | ||
| 31.12.2017 | 31.12.2018 | 31.12.2017 | 31.12.2018 |
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Land and | 3'650 | n/a | 3'650 | n/a | Level 3 | n/a | Net rental method See note 3.3 | Other operating result |
Land and buildings Hombrechtikon – level 3 inputs: Beside of the discount rate, the expected future rental income is the most significant unobservable input. It is based on the highest and best use of the property that differs from the current use due to its change in purpose.
26.4 Fair value disclosures for financial instruments measured at amortized cost
The carrying amount of financial instruments measured at amortized costs (see note 25.2) is a reasonable approximation of their fair value due to their short-term nature. Bank loans are the only exception due to their long-term nature. Their fair values are disclosed in the following table.
Position | Net carrying amount in balance sheet measured | Fair value disclosure | Level | Data source | Model | ||
| 31.12.2017 | 31.12.2018 | 31.12.2017 | 31.12.2018 |
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Bank loans | (1'229) | (1,182) | (1,235) | (1,182) | Level 2 | Bloomberg | The fair value is estimated by discounting the future contractual cash flow s at the current market interest rate that is available to the Group for similar financial instruments. |
26.5 Fair value disclosures for investment property
Position | Net carrying amount in balance sheet measured | Fair value disclosure | Level | Data source | Model | ||
| 31.12.2017 | 31.12.2018 | 31.12.2017 | 31.12.2018 |
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Land and buildings in Hombrechtik on (investment property) | n/a | 3,650 | n/a | 3,650 | Level 3 | n/a | Net rental method See note 3.3 |
Land and buildings Hombrechtikon – level 3 inputs: Beside of the discount rate, the expected future rental income is the most significant unobservable input. It is based on the highest and best use of the property that differs from the current use due to its change in purpose.
The valuation was not prepared by an independent valuer.
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