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, 2022. 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 2021 as they provide an update of previously reported information. The interim condensed consolidated financial statements were authorized for issue on August 11, 2022.
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 PURCHASE PRICE ALLOCATION PARAMIT GROUP AS AT AUGUST 2ND, 2021
The accounting for the acquisition is final. No measurement adjustments were recognized in the first half of 2022.
2.3 COVID-19 PANDEMIC – LOCKDOWN SHANGHAI / GLOBAL SUPPLY CHAINS / WAR IN UKRAINE
COVID-19 pandemic - Although Tecan does not offer COVID- specific products, sales in 2020 and 2021 benefited significantly from instruments and consumables mainly used for PCR-based COVID-19 testing. However, by the second half of 2021, no significant contributions from COVID-related instruments were recorded. As expected, sales of consumables remained at a significantly lower level in the first half of 2022.
Lockdown Shanghai - Despite the delay of certain equipment installations, the COVID lockdown in Shanghai did not have a material impact on the sales performance in the first half of 2022 nor did it cause disruptions in the Group’s ability to deliver products.
Global supply chains - Global supply chains face significant challenges in logistics and the timely availability of certain materials and parts, especially with regards to the supply chain for electronic components. Through various mitigation actions, Tecan was able to avoid any major disruption in its ability to produce and deliver products to customers. As one of these measures, Tecan has encouraged its suppliers on various tiers of the supply chains to increase their inventories of critical components and raw materials and has also increased its own inventory levels. Tecan also closely monitors the developments in global logistics to ensure sufficient transport capacity. In some cases and for certain product types, longer production and logistics times have extended usual delivery times, which could affect shipping and local installation dates.
War in Ukraine - In 2021, the revenues generated through distributors in Russia and Ukraine were only around 1%-2% of total sales. Tecan does also not expect any disruptions affecting the availability of its products, sub-assemblies or spare parts as a result of the conflict or the sanctions as the Group does not have direct material suppliers from Ukraine, Russia or Belarus.
2.4 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 2021, except for the adoption of the following new or revised/amended standards and interpretations, effective as from January 1, 2022:
IAS 16 ‘Property, Plant and Equipment’ amended – Proceeds before Intended Use
IAS 37 ‘Provisions, Contingent Liabilities and Contingent Assets’ amended – Onerous Contracts (Cost of Fulfilling a Contract)
IFRS 3 ‘Business Combinations’ amended – Reference to the
Annual Improvements to IFRS Standards 2018 - 2020
- 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.