2 BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES
2.1 Basis of preparation
These unaudited financial statements are the interim condensed consolidated financial statements of Tecan Group Ltd. and its subsidiaries (together referred to as the ‘Group’) for the six-month period ending June 30, 2021. The financial statements are prepared in accordance with International Accounting Standard (IAS) 34 ‘Interim Financial Reporting’ and should be read in conjunction with the consolidated financial statements 2020 as they provide an update of previously reported information. The interim condensed consolidated financial statements were authorized for issue on August 12, 2021.
The preparation of these interim condensed consolidated financial statements requires management to make assumptions and estimates that affect the reported amounts of revenues, expenses, assets, liabilities and disclosure of contingent liabilities at the date of these interim condensed consolidated financial statements. If in the future such assumptions and estimates deviate from the actual circumstances, the original assumptions and estimates will be modified as appropriate in the period in which the circumstances change.
The Group operates in industries where significant seasonal or cyclical variations in total sales are not experienced during the financial year.
Income tax expense is recognized based on the best estimate of the weighted average annual income tax rate expected for the full financial year.
2.2 COVID-19 PANDEMIC
In October 2020 the U.S. Department of Defense and the U.S. Department of Health and Human Services awarded a government grant of USD 32.9 million (CHF 30.4 million) to support the build-up of U.S. pipette tip manufacturing for COVID-19 testing. Disposable pipette tips are key components for molecular tests for SARS-CoV-2 and other assays performed on fully automated, high throughput systems. The funding enables the Group to launch new production capacity in the U.S. and to increase the domestic supply for critical medical resources.
Due to a build up of safety stock as well as the slowing COVID related demand for consumables, provisions for supplier obligations (onerous contracts) in the amount of CHF 5.2 million had to be recognized in the first half of 2021.
Overall, the Group continues to benefit from a positive COVID-19 tailwind, driven by the high order backlog at year-end 2020 and new order entry in the first half of 2021. Furthermore, the non-COVID business has started to recover and normalize again.
2.3 INTRODUCTION OF NEW AND REVISED/AMENDED STANDARDS AND INTERPRETATIONS
The accounting policies used in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the consolidated financial statements 2020, except for the adoption of the following new or revised/amended standards and interpretations, effective as from January 1, 2021:
Interest Rate Benchmark Reform – Phase 2 – Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16
IFRS 16 ‘Leases’ amended – Covid-19 Related Rent Concessions beyond June 30, 2021
- IAS = International Accounting Standards, IFRS = International Financial Reporting Standards, IFRIC = Interpretations as by the IFRS Interpretations Committee (formerly International Financial Reporting Interpretations Committee)
The adoption of the amended standards did not result in substantial changes to the Group’s accounting policies.