Integrated
Annual Report 2016

Notes to the Consolidated Financial Statements

1. Basic information and principles of the report

2. Changes in Group structure

3. Summary of significant accounting policies

4. Risk assessment and management

5. Management of capital

6. Trade accounts receivable

7. Other current assets and current financial assets

8. Inventories

9. Property, plant and equipment

10. Other non-current assets and non-current financial assets

11. Goodwill and intangible assets

12. Short-term debt

13. Other current liabilities and provisions

14. Long-term debt

15. Financial instruments

Derivative financial instruments

Where required, the Group hedges foreign currency exchange rate and interest rate risks using derivative financial instruments according to the treasury policy. This policy and the corresponding accounting policies for the Group’s derivative financial instruments are disclosed in Notes 3 and 4. As of December 31, 2016 and 2015, the following derivative financial instruments were outstanding.

a) Cross Currency Interest Rate Hedges

The following instrument was used to hedge foreign exchange rate risks arising from the intercompany financing of subsidiaries:

2015 Maturity Strike price Contract amount buy Contract amount sell Fair value 31.12. Interest rate % Interest rate % Calculation method
      MCHF MUSD MCHF CHF USD  
CHF buy/USD sell 18.12.2016 1.03345 12.4 -12.0 0.4 0.00 2.22 DCF1
1 Discounted Cash Flow

The cross currency interest rate swap (CHF buy/USD sell) for MUSD 12.0 was not designated as a cashflow hedge according to IAS 39.86 et seq. The change in fair value of the instrument is recognised directly in the financial result, net. This instrument was terminated in 2016 as per maturity date.

b) Forward foreign exchange contracts and foreign exchange options

  Contract values Fair value
31.12.
  Calculation method
2016 MCZK MEUR MGBP MPLN MDKK MCHF    
Foreign exchange contracts -5.0 -55.0 -1.0 0.0 0.0 0.2   Mark-to-Market
                 
         
2015 MCZK MEUR MGBP MPLN MDKK MCHF    
Foreign exchange contracts -5.0 -10.0 0.0 -2.0 0.0 0.1   Mark-to-Market

The change in fair value of the instruments is booked in financial result, net.

Measurement of financial instruments by categories according to IAS 39

Based on the relevant balance sheet item of financial instruments, the following table shows an allocation of the balance sheet items to the classification by categories according to IAS 39. In addition, a fair value measurement hierarchy was introduced for assets and liabilities that are measured at fair value. Level 1 contains all financial instruments with quoted prices in active markets. Level 2 contains all financial instruments with inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. Level 3 contains all financial instruments with inputs for determining the assets and liabilities that are not based on observable market data.

  Carrying amount as of 31.12.2016 Loans and receivables Financial assets at fair value Fair value measurement hierarchy
  MCHF MCHF MCHF  
Financial assets        
Cash and cash equivalents 509.7 509.7 0.0  
Trade accounts receivable 174.4 174.4 0.0  
Other current assets 110.7 110.7 0.0  
Other non-current assets 5.4 5.2 0.2 Level 2
Derivative financial instruments 0.3 0.0 0.3 Level 2
Total 800.5 800.0 0.5  

  Carrying amount as of 31.12.2016 Financial liabilities at amortised cost Financial liabilities at fair value Fair value measurement hierarchy
  MCHF MCHF MCHF  
Financial liabilities        
Short-term debt 4.2 4.2 0.0  
Trade accounts payable 112.3 112.3 0.0  
Bonds 829.5 829.5 0.0  
Syndicated bank loan 128.4 128.4 0.0  
Other financial liabilities 8.8 8.8 0.0  
Derivative financial instruments 0.1 0.0 0.1 Level 2
Total 1,083.3 1,083.2 0.1  

  Carrying amount as of 31.12.2015 Loans and receivables Financial assets at fair value Fair value measurement hierarchy
  MCHF MCHF MCHF  
Financial assets        
Cash and cash equivalents 459.6 459.6 0.0  
Trade accounts receivable 130.6 130.6 0.0  
Other current assets 90.2 90.2 0.0  
Other non-current assets 5.2 5.0 0.2 Level 2
Derivative financial instruments 0.5 0.0 0.5 Level 2
Total 686.1 685.4 0.7  

  Carrying amount as of 31.12.2015 Financial liabilities at amortised cost Financial liabilities at fair value Fair value measurement hierarchy
  MCHF MCHF MCHF  
Financial liabilities        
Short-term debt 3.7 3.7 0.0  
Trade accounts payable 105.5 105.5 0.0  
Bonds 831.4 831.4 0.0  
Syndicated bank loan 295.7 295.7 0.0  
Other financial liabilities 8.4 8.4 0.0  
Derivative financial instruments 0.0 0.0 0.0  
Total 1,244.7 1,244.7 0.0  

Fair value measurement hierarchy:

Level 1: quoted prices in active markets for identical assets
Level 2: observable prices, either directly or indirectly
Level 3: input factors that are not based on observable market data

Maturity analysis of financial instruments

The following table shows the carrying amount of all contractually defined future (not discounted) interest and amortisation payments of derivative and non-derivative financial instruments as of the balance sheet date:

  Carrying amount  Maturity
  31.12.2016 2017 2018 2019 2020 2021 and later
  MCHF MCHF MCHF MCHF MCHF MCHF
Short-term debt 4.2  4.4 0.0 0.0 0.0 0.0
Trade accounts payable 112.3  112.3 0.0 0.0 0.0 0.0
Bonds 829.5  4.2 4.2 154.2 4.1 691.8
Syndicated bank loan 128.4  1.0 129.8 0.0 0.0 0.0
Other financial liabilities 8.8  0.5 2.7 2.3 2.1 3.1
Total non-derivative financial liabilities 1,083.2  122.4 136.7 156.5 6.2 694.9
              
Derivative financial assets, net -0.2  60.5 0.0 0.0 0.0 0.0
Total derivative financial instruments -0.2  60.5 0.0 0.0 0.0 0.0
              
Total 1,083.0  182.9 136.7 156.5 6.2 694.9

  Carrying amount  Maturity
  31.12.2015  2016 2017 2018 2019 2020 and later
  MCHF MCHF MCHF MCHF MCHF MCHF
Short-term debt 3.7  3.9 0.0 0.0 0.0 0.0
Trade accounts payable 105.5  105.5 0.0 0.0 0.0 0.0
Bonds 831.4  4.2 4.2 4.2 154.2 700.2
Syndicated bank loan 295.7  2.2 2.2 297.8 0.0 0.0
Other financial liabilities 8.4  0.5 2.7 2.1 1.7 3.1
Total non-derivative financial liabilities 1,244.7  116.3 9.1 304.1 155.9 703.3
              
Derivative financial assets -0.5  23.9 0.0 0.0 0.0 0.0
Total derivative financial instruments -0.5  23.9 0.0 0.0 0.0 0.0
              
Total 1,244.2  140.2 9.1 304.1 155.9 703.3

Additional information to the cashflow statement

The following table shows the reconciliation of the items for which cashflows were or in future will be generated and that are reported as net cash from financing activities in the consolidated statements of cashflows:

2016 Non­cash movements 2015
Total Cashflows Changes in scope of consolidation Translation differences Others Total
  MCHF MCHF MCHF MCHF MCHF MCHF
Long-term debt 966.7 -172.5 0.0 -3.8 7.5 1,135.5
Short-term debt 4.2 -0.3 0.0 0.0 0.8 3.7
Interest liabilities 3.5 -6.2 0.0 0.0 4.6 5.1
Total 974.4 -179.0 0.0 -3.8 12.9 1,144.3

16. Retirement benefit plans

17. Participation plans

18. Deferred tax assets and liabilities

19. Other non-current liabilities and provisions

20. Contingencies

21. Capital stock and treasury shares

22. Earnings per share

23. Other operating expenses, net

24. Financial result, net

25. Income tax expenses

26. Operating Leasing

27. Research and development cost

28. Cashflow figures

29. Segment reporting

30. Related party transactions

31. Foreign exchange rates

32. Subsequent events

33. Group companies as of December 31, 2016