10 Financial instruments and fair value disclosures
Cash and cash equivalents as per cash flow statement comprise cash and cash equivalents as per balance sheet and bank overdrafts (December 31, 2017: CHF 0.0 million; June 30, 2018: CHF 0.0 million) that are included in the position ‘Current financial liabilities’.
10.1 Classes of financial instruments
| Carrying amount | Fair value | ||||||||
CHF 1,000 | Cash | Current derivatives | Trade | Non- | Total | Current | Trade | Non- | Total |
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Financial instruments measured at a fair value through P&L (FVTPL) |
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Currency forwards | - | 1,017 | - | 157 | 1,174 | (949) | - | (334) | (1,283) |
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Contingent considerations | - | - | - | - | - | (4,872) | - | (6,767) | (11,639) |
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Financial instruments measured at amortized costs1 |
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Cash and cash equivalents | 309,412 | - | - | - | 309,412 | - | - | - | - |
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Receivables | - | - | 112,382 | - | 112,382 | - | - | - | - |
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Rent and other deposits | - | - | 433 | 674 | 1,107 | - | - | - | - |
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Current bank liabilities | - | - | - | - | - | (4,329) | - | - | (4,329) |
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Bank loans | - | - | - | - | - | - | - | (1,229) | (1,229) | (1,235) |
Payables and accrued expenses | - | - | - | - | - | - | (58,904) | - | (58,904) |
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Total financial instruments | 309,412 | 1,017 | 112,815 | 831 | 424,075 | (10,150) | (58,904) | (8,330) | (77,384) |
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Reconciling items2 | - | - | 10,364 | - | 10,364 | - | (16,597) | - | (16,597) |
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Balance at December 31, 2017 | 309,412 | 1,017 | 123,179 | 831 | 434,439 | (10,150) | (75,501) | (8,330) | (93,981) |
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- The carrying amount of financial instruments measured at amortized costs 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.
- Receivables/payables arising from VAT/other non-income taxes and social security
| Carrying amount | Fair value | ||||||||
CHF 1,000 | Cash | Current | Trade | Non- | Total | Current | Trade | Non- | Total |
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Financial instruments measured at fair value |
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Currency forwards and options | – | 1,242 | – | 134 | 1,376 | (2,836) | – | (1,380) | (4,216) |
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Contingent considerations | – | – | – | – | – | (7,030) | – | – | (7,030) |
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Financial instruments |
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Unquoted equity investment | – | – | – | 4,000 | 4,000 | – | – | – | – |
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Financial instruments measured at amortized costs1 |
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Cash and cash equivalents | 301,064 | – | – | – | 301,064 | – | – | – | – |
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Receivables | – | – | 98,005 | – | 98,005 | – | – | – | – |
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Rent and other deposits | – | – | 412 | 667 | 1,079 | – | – | – | – |
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Current bank liabilities | – | – | – | – | – | (1,932) | – | – | (1,932) |
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Bank loans | – | – | – | – | – | – | – | (1,215) | (1,215) | (1,207) |
Payables and accrued expenses | – | – | – | – | – | – | (49,583) | – | (49,583) |
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Total financial instruments | 301,064 | 1,242 | 98,417 | 4,801 | 405,524 | (11,798) | (49,583) | (2,595) | (63,976) |
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Reconciling items2 | – | – | 12,261 | – | 12,261 | – | (15,988) | – | (15,988) |
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Balance at June 30, 2018 | 301,064 | 1,242 | 110,678 | 4,801 | 417,785 | (11,798) | (65,571) | (2,595) | (79,964) |
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- The carrying amount of financial instruments measured at amortized costs 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.
- Receivables/payables arising fromVAT/othernon-income taxes and social security
10.2 Fair value hierarchy (level) and valuation techniques used
Position | Level | Data source | Model |
Currency forwards | Level 2 | Bloomberg | (Forward rate – [spot rate +/– forward points]) * amount in foreign currency |
Currency options | Level 2 | Bloomberg | Black-Scholes model |
Bank loans | Level 2 | Bloomberg | The fair value is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments. |
Unquoted equity investment | Level 3 | n/a | Discounted cash flow model (see note 10.3) |
Contingent considerations | Level 3 | n/a | Discounted cash flow model (see note 10.4) |
There have been no transfers between the levels in 2017 and 2018.
10.3 Unquoted equity investment (level 3)
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 fair value recognized during the period in other comprehensive income amount to CHF 0.0 million.
10.4 Contingent considerations (level 3)
| 2017 | 2018 |
CHF 1,000 |
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Balance at January 1 | 9,273 | 11,639 |
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Cash flows |
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Settlement | – | (4,836) |
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Non-cash changes |
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Acquisition through business combination | 1,743 | – |
Change in fair value recognized in 'other operating expenses' | 360 | 210 |
Translation differences | (515) | 17 |
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Balance at June 30 | 10,861 | 7,030 |
Beside of the WACCs that were used for discounting the expected payments, the underlying business plans are the most significant unobservable inputs. A decrease in the forecasted net sales of 10% would result in a fair value of the contingent considerations of CHF 3.3 million considering the sales-defined milestones.
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