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 |