9 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, 2016: CHF 0.0 million; June 30, 2017: CHF 2.2 million) that are included in the position ‘Current financial liabilities’.
9.1 Classes of Financial instruments
| Carrying amount | Fair value | ||||||||
CHF 1,000 | Cash and cash equiva- lents | Current derivatives | Trade and other receiva- bles | Non- current financial assets | Total | Current financial liabilities | Trade and other payables/ accrued expenses
| Non- current financial liabilities | Total |
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Financial instruments measured at fair value |
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Currency forwards | – | 3,038 | – | 36 | 3,074 | (5,721) | – | (1,101) | (6,822) |
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Contingent consideration | – | – | – | – | – | – | – | (9,273) | (9,273) |
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Financial instruments measured at amortized costs1 |
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Cash and cash equivalents | 246,744 | – | – | – | 246,744 | – | – | – | – |
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Receivables | – | – | 95'763 | – | 95,763 | – | – | – | – |
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Rent and other deposits | – | – | 341 | 656 | 997 | – | – | – | – |
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Current bank liabilities | – | – | – | – | – | (1,103) | – | – | (1,103) |
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Bank loans | – | – | – | – | – | (956) | – | (704) | (1,660) | (1,644) |
Payables and accrued expenses | – | – | – | – | – | – | (50,329) | – | (50,329) |
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Total financial instruments | 246,744 | 3,038 | 96,104 | 692 | 346,578 | (7,780) | (50,329) | (11,078) | (69,187) |
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Reconciling items2 | – | – | 10,725 | – | 10,725 | – | (14,177) | – | (14,177) |
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Balance at December 31, 2016 | 246,744 | 3'038 | 106,829 | 692 | 357,303 | (7,780) | (64,506) | (11,078) | (83,364) |
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1 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.
2 Receivables/payables arising from POC, VAT/other non-income taxes and social security
| Carrying amount | Fair value | ||||||||
CHF 1,000 | Cash and cash equiva- lents | Current derivatives | Trade and other receiva- bles | Non- current financial assets | Total | Current
liabilities | Trade and other payables/ accrued expenses
| Non- current financial liabilities | Total |
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Financial instruments measured at fair value |
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Currency forwards | – | 1,068 | – | 802 | 1,870 | (1,075) | – | – | (1,075) |
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Contingent consideration | – | – | – | – | – | (4,694) | – | (6,167) | (10,861) |
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Financial instruments measured at amortized costs1 |
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Cash and cash equivalents | 250,082 | – | – | – | 250,082 | – | – | – | – |
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Receivables | – | – | 91,156 | – | 91,156 | – | – | – | – |
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Rent and other deposits | – | – | 475 | 641 | 1,116 | – | – | – | – |
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Current bank liabilities | – | – | – | – | – | (5,414) | – | – | (5,414) |
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Bank loans | – | – | – | – | – | – | – | (719) | (719) | (704) |
Payables and accrued expenses | – | – | – | – | – | – | (46,640) | – | (46,640) |
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Total financial instruments | 250,082 | 1,068 | 91,631 | 1,443 | 344,224 | (11,183) | (46,640) | (6,886) | (64,709) |
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Reconciling items2 | – | – | 14,314 | – | 14,314 | – | (16,033) | – | (16,033) |
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Balance at June 30, 2017 | 250,082 | 1,068 | 105,945 | 1,443 | 358,538 | (11,183) | (62,673) | (6,886) | (80,742) |
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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-termnature.
- Receivables/payables arising from POC, VAT/other non-income taxes and social security
9.2 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 |
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. |
Contingent consideration | Level 3 | n/a | Discounted cash flow model (see note 3.1 and 9.3) |
There have been no transfers between the levels in 2016 and 2017.
9.3 Contingent consideration (level 3)
CHF 1,000 | 2016
| 2017
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Balance at January 1 | – | 9,273 |
Acquisition through business combination | – | 1,743 |
Change in fair value recognized in other operating expenses | – | 360 |
Translation differences | – | (515) |
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Balance at June 30 | – | 10,861 |
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 less than a million considering the sales-defined milestones.
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