The following table provides the category in which financial assets and financial liabilities are classified in accordance with IAS 39 – Financial Instruments: Recognition and Measurement.
(in thousands of euros) IAS 39 Category 31/12/2013 31/12/2012 01/01/2012 Other non-current financial assets
Non-current receivables Loans and receivables 180 163 59
Trade and other receivables Loans and receivables 5,287 6,650 7,087
Other financial assets Loans and receivables 0 0 203
Cash and cash equivalents Loans and receivables 2,440 4,822 5,559
Total financial assets 7,907 11,635 12,908
Non-current financial liabilities
Finance lease liabilities At amortised cost 100 60 105
Government Loans At amortised cost 3,774 3,305 2,985
Loans from related parties At amortised cost 1,178 750 0
Other non-current liabilities Put on non-controlling interests
At fair value through
profit or loss 1,450 1,811 1,750
Current financial liabilities
Finance lease liabilities At amortised cost 229 37 27
Government loans At amortised cost 208 155 125
Loans from related parties At amortised cost 72 0 0
Trade and other payables
Trade payables At amortised cost 1,136 844 517
Total financial liabilities 8,147 6,963 5,509
The carrying amounts of financial assets recognised in the consolidated financial statements approximate their fair values. The same situation is applicable for financial liabilities, except as detailed in the following tables.
31/12/2013
(in thousands of euros) Carrying amount Fair value Fair value level Non-current financial liabilities
Finance lease liabilities 100 100 Level 2
Government loans 3,774 3,655 Level 2
Loans from related parties 1,178 1,159 Level 2
Other non-current liabilities
Put on non-controlling interests 1,450 1,450 Level 3
Current financial liabilities
Finance lease liabilities 229 229 Level 2
Government loans 208 208 Level 2
(in thousands of euros) Carrying amount Fair value Fair value level Non-current financial liabilities
Finance lease liabilities 60 60 Level 2
Government loans 3,305 3,397 Level 2
Loans from related parties 750 755 Level 2
Other non-current liabilities
Put on non-controlling interests 1,811 1,811 Level 3
Current financial liabilities
31/12/2012
(in thousands of euros) Carrying amount Fair value Fair value level
Finance lease liabilities 37 37 Level 2
Government loans 155 155 Level 2
Total 6,118 6,216
(in thousands of euros)
01/01/2012
Carrying amount Fair value Fair value level Non-current financial liabilities
Finance lease liabilities 105 105 Level 2
Government loans 2,985 2,812 Level 2
Loans from related parties 0 0 Level 2
Other non-current liabilities
Put on non-controlling interests 1,750 1,750 Level 3
Current financial liabilities
Finance lease liabilities 27 27 Level 2
Government loans 125 125 Level 2
Total 4,992 4,819
The fair values of the financial assets and financial liabilities included in the level 2 and level 3 categories above have been determined in accordance with generally accepted pricing models based on a discounted cash flow analysis, with the most significant input being the discount rate that reflects the credit risk of counterparties.
The only financial liability subsequently measured at fair value on Level 3 fair value measurement is the put option granted by the Group to non-controlling interests in SCTS, which has been fully consolidated. These commitments to purchase equity instruments have been recognized under other non-current liabilities and concern 50.1% of SCTS (2012: 56.48%).
The following table includes a reconciliation of the level 3 fair value measurements:
in thousands of euros 31/12/2013 31/12/2012
Opening balance 1,811 1,750
Total gains or losses in profit or loss 14 61
Decrease of capital (375) 0
Closing balance 1,450 1,811
The put option has been measured using a discounted cash flow analysis based on significant unobservable inputs, such as expected rate of return (6.5%) and discount rate (3.5%). See also section 3 of these consolidated financial statements on significant judgements.
If the above unobservable input linked to the expected rate of return was 10% higher/lower while all the other variables were held constant, the carrying amount of the put option would increase/decrease by € 47,000 (2012:
increase/decrease by € 58,000; 2011: increase/decrease by € 56,000).
6.2. Capital risk
The Company manages its capital to ensure that it will be able to continue as a going concern. The capital structure of the Company consists of financial debt, cash and cash equivalents and short-term investments and equity attributed to the holders of equity instruments of the Company, such as capital, reserves and retained earnings as mentioned in the consolidated statement of changes in equity. The Company makes the necessary adjustments in the light of changes in the economic circumstances, risks associated to the different assets and the projected cash needs of the current and projected activities. The current cash situation and the anticipated cash generation and cash burn are the most important parameters in assessing the capital structure. The Company objective is to maintain the capital structure at a level to be able to finance its activities for at least twelve months. Cash income from existing and new non-dilutive funding sources (subsidies, grants and government loans) and cash income from possible future partnerships are taken into account and, if needed and possible, the Company can issue new shares or enter into financing agreements.
6.3. Credit risk
The Company believes that its credit risk, relating to receivables, is limited because currently almost all of its receivables are with public institutions.
Cash and cash equivalent and short-term deposits are invested with highly reputable banks and financial institutions.
The maximum credit risk, to which the Group is theoretically exposed as at the balance sheet date, is the carrying amount of the financial assets.
At the end of the reporting period no financial assets were past due, consequently no financial assets were subject to impairment.
6.4. Liquidity risk
The Group manages liquidity risk by maintaining adequate reserves and borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.
The Group’s main sources of cash inflows are currently obtained through capital increases, subsidies and government loans.
The following table details the Group’s remaining contractual maturity of its non-derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. The tables include both interest and principal cash flows. The contractual maturity is based on the earliest date on which the Group may be required to pay.
All liabilities mentioned in the tables above are secured liabilities.
There are no covenants applicable to financial liabilities.
6.5. Interest rate risk
The Company has limited interest rate risk. The company has next to forgivable loans (non-interest bearing on a cash basis) a number of medium term loans provided by regional investments bodies at fixed market interest rates.
SCTS has concluded on 15 July 2014 long term loans with two commercial banks with an interest rate linked to the Euribor 3M and short term loans to pre-finance subsidies to be received in respect of the building under construction (until the management of the subsidies) at similar short term rates. For the long-term loan the Company is permanently monitoring the short-term interest rates versus options to swap these rates versus a long term interest rate (IRS) in function of the remaining term of the loan.
6.6. Foreign exchange risk
The company is currently not exposed to any significant foreign currency risk. However should the company enter into long term collaboration agreements with third parties for which revenues would be expressed in a foreign currency which should compensate for expenses to be done by the Company, the Company might in such case consider to enter into a hedging arrangement to cover such currency exposure.
7. Other disclosures