Principal actuarial assumptions as of the balance sheet date (expressed as weighted averages):
Consolidated 2012 Consolidated 2011
Discount rate at December 31 3.93 % 4.33 %
Future salary increases 4.34 % 3.75 %
Price inflation 3.50 % 3.50 %
Return on plan assets 4.16 % 4.00 %
The Group has used the yield on long-term government bonds as the discount rate and nominal salary inflation in Thailand and Germany for determining the current fair value of employee benefits. If salary inflation were to increase, the Group’s unrecognized actuarial gain would increase with the risk that the severance payments would be greater.
ImPlEmENTaTION Of Ias 19 (REvIsEd 2011)
Revisions to IAS 19 will result in an increase of the defined benefit obligation by EUR 0.7 million on January 2013, due to the removal of the method of deferral of the recognition of actuarial gain and losses. This amount will be booked directly in equity under the line ‘other comprehensive income’ within ‘reserves’. There will be no significant impact resulting from the requirement to restate the prior year and the application of the new requirements for calculation of net interest. Generally, the changes will result in increased volatility of the defined benefit liability and other comprehensive income in the future.
144 Notes to the CoNsolidated FiNaNCial statemeNts
24. OThER NON-CURRENT lIabIlITIEs
In thousands of EUR Consolidated 2012 Consolidated 2011
Interest rate hedging derivatives 943 –
Deferred / contingent purchase consideration 420 6,156
Other non-current liabilities 40 159
Total other non-current liabilities 1,403 6,315
An amount of EUR 5.7 million of the deferred purchase considerations is due in 2013 and was reclassified into current liabilities explain- ing the decrease in 2012 compared to prior year.
25. TRadE aNd NON-TRadE PayablEs
In thousands of EUR Consolidated 2012 Consolidated 2011
Trade payables 28,063 17,207
Total trade payables 28,063 17,207
Non-trade payables 2,884 2,843
Total non-trade payables 2,884 2,843
Total trade and non-trade payables 30,947 20,050
26. PROvIsIONs
In thousands of EUR warranties Restructuring Other Total
Balance at January 1, 2012 99 – 5,223 5,322
Acquired through business combination – – – –
Provisions made during the period 77 133 – 210
Provisions used during the period (99) (105) (3,088) (3,292) Provisions reversed during the period – – (621) (621)
Currency effects – – – –
balance at december 31, 2012 77 28 1,514 1,619
Other provisions include a remaining provision for flood-related obligations especially likely payments for consigned goods which were destroyed during the flooding of the production premises in Ayutthaya, Thailand.
27. OThER CURRENT lIabIlITIEs
In thousands of EUR Consolidated 2012 Consolidated 2011
Accrued expenses 11,755 8,957
Prepayments from customers 580 1,042
FX-hedging contracts 28 79
Interest rate hedging derivatives – 173
Deferred purchase consideration 5,674 6,000
Contingent purchase liability 7,268 4,591
Other financial liabilities 968 –
Other current non-financial liabilities 3,096 3,525
Total other current liabilities 29,369 24,367
The increase in accrued expenses is mainly due to the acquisitions in 2012.
The item FX-hedging contract comprises a EUR/USD forward instrument. The fair value changes of FX-hedging contracts are booked through profit and loss (financial income / expenses: change in fair value).
The deferred purchase consideration of EUR 6.0 million recognized in December 2011 related to the KSW acquisition and was paid over the course of 2012. The amount shown in 2012 (EUR 5.7 million) relates also to KSW (shown under ‘non-current liabilities’ in 2011) and is due at the end of 2013. The contingent purchase liability of EUR 7.3 million represents the short term liability of the contingent purchase considerations for Neology, Controles and for Dalton. The contingent considerations accrued represent their current fair values, which do not differ significantly from their fair value as of the acquisition date. Calculations are based on contractually agreed thresholds of the acquiree’s EBITDA. The final payments are subject to the result of the ongoing negotiations.
28. dEfERREd INCOmE fROm GOvERNmENT GRaNTs
Deferred investment grants resulted from the regional economic structure improvement program in eastern Germany. The amounts concerned originate from grants from 2002 and are amortized over the useful life of the related assets.
146 Notes to the CoNsolidated FiNaNCial statemeNts
29. fINaNCIal INsTRUmENTs
The Group has an exposure to the following financial risks: liquidity, credit, and market risk. This note presents information about the exposure to each of the above mentioned risks and the Group’s management of capital and it summarizes SMARTRAC’s policies and processes that are in place for measuring managing risks, including those related to capital management.
SMARTRAC’s Group Treasury Department is responsible for the management of financial risks.
In July 2009, a Group Treasury Guideline was implemented in order to ensure the identification, measurement, and management of fi- nancial risks. In addition, a Group Risk Management Committee was implemented to analyze the risk profile of SMARTRAC and to review and develop risk management strategies. Members of the Group Risk Management Committee are the CEO, Group CFO and head of Corporate Finance and Controlling of SMARTRAC TEChNOLOGy Group. Following the change in the management structure with the establishment of the Co-Chairmen, the Risk Management Committee is composed of the Co-Chairmen and the head of Corporate Finance and Controlling. The Risk Management Committee meets on a regular basis.
The general financial risk management objective of SMARTRAC is risk avoidance. If feasible and necessary, financial risks are managed by using plain- vanilla derivatives. hedging without an underlying transaction is not allowed. Speculation in the field of treasury is strictly forbidden. The number of employees who are authorized to trade derivatives in the Group is kept to a minimum. Only employees with certain professional backgrounds are permitted to engage in such trading activities.