Notes to the condensed consolidated semi-annual financial statements
1 Basis of preparation
The unaudited condensed consolidated semi-annual financial statements have been prepared in accordance with IAS 34 “Interim Financial Reporting”. They are based on the financial statements of the individual Group companies drawn up according to uniform accounting policies as of June 30, 2018. The condensed consolidated semi-annual financial statements are not subject to the same requirements as the consolidated annual financial statements. It is recommended to read the condensed consolidated semi-annual financial statements in conjunction with the consolidated financial statements as of December 31, 2017. The condensed consolidated semi-annual financial statements are published exclusively in English. The financial information disclosed in this report may not add up precisely to the disclosed totals due to rounding. Ratios and variances are calculated using the exact underlying amount and not the disclosed rounded amount. Autoneum’s business activities are not subject to pronounced seasonal fluctuations. The condensed consolidated semi-annual financial statements 2018 were authorized for issue by the Board of Directors on July 25, 2018.
2 Changes in accounting policies
Except as described below, the accounting policies applied in these condensed consolidated semi-annual financial statements are the same as those applied in the consolidated financial statements as of December 31, 2017.
The Group has initially adopted IFRS 9 “Financial Instruments” effective as of January 1, 2018. IFRS 9 includes revised guidance on the classification and measurement of financial assets and financial liabilities, including a new expected credit loss model for calculating impairment as well as general hedge accounting requirements. Autoneum is mainly impacted in the area of valuation of trade receivables and contract assets, which is now assessed based on the customer’s credit rating as well as the maturity of the financial asset. In the course of the adoption of IFRS 9 as of January 1, 2018, trade receivables decreased by CHF 0.8 million, financial assets decreased by CHF 0.5 million, other assets decreased by CHF 0.2 million, deferred income tax assets increased by CHF 0.4 million, and the cumulative impact of CHF 1.2 million is recognized in retained earnings. In the course of the adoption of IFRS 9, Autoneum elected to classify its equity investments in Nihon Tokushu Toryo Co. Ltd., Tokyo, Japan into the category “at fair value through other comprehensive income” (FVOCI). Under this new category, the cumulative change in fair value is reclassified from the fair value reserve to retained earnings on disposal of the investment, and is not recycled to profit or loss. The prior-year’s financial information has not been restated, as the impairment need on assets could not be assessed without the use of hindsight.
The Group has initially adopted IFRS 15 “Revenue from Contracts with Customers” effective as of January 1, 2018. IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognized based on a five-step approach. Under IFRS 15, an entity recognizes revenue when control of the promised goods and services is transferred to the customer at an amount that reflects the consideration to which the entity expects to be entitled. It replaces existing revenue recognition guidance, including IAS 18, IAS 11 and IFRIC 13. Autoneum implemented the new standard as of January 1, 2018 using the full retrospective method. The resultant impact of the conversion is recognized in retained earnings as of January 1, 2017 and the prior-year’s financial information has been restated accordingly.
IFRS 15 requires that pre-production costs be capitalized as “costs to fulfill a contract”. Instead of an immediate recognition in the income statement, the costs are capitalized and recognized delayed over the period when revenue is recognized. The capitalized pre-production costs amount to CHF 86.6 million and are included in other assets (non-current) as of December 31, 2017. The Group capitalized pre-production costs of CHF 11.1 million and recognized pre-production costs from prior periods of CHF 9.2 million in the first half of 2017. Both transactions are recorded in the consolidated income statement in the line item “Material expenses”.
The implementation of IFRS 15 led to changes in the timing of recognition of costs and revenue for certain projects in which Autoneum sells the serial-production tool to the OEM. According to IFRS 15, both costs and revenue are recognized when Autoneum fulfills the respective performance obligation, which is at a clearly defined point in time. According to the accounting principles applied previously, costs and revenue were in some cases recognized over the serial production period. As a consequence, the line items “Other assets” (non-current and current) decreased by CHF 17.1 million as of December 31, 2017, which is mainly the result of deferred expenses that were reported as a part of other assets and are recognized as material expenses in the year 2017 or earlier, applying the new standard. Inventories decreased by CHF 6.9 million as of December 31, 2017, and the related costs are recognized in the year 2017 or earlier. Other liabilities (non-current and current) decreased by CHF 25.9 million as of December 31, 2017, which is mainly the result of deferred revenue that is recognized as revenue in the year 2017 or earlier, applying the new standard.
The adoption of IFRS 15 resulted in an increase in total equity of CHF 71.1 million as of December 31, 2017, which is net of deferred income taxes. The impact on the consolidated income statement and on the consolidated statement of comprehensive income is immaterial in relation to the Group’s results, as the effect of the change in the accounting for the pre-production costs is partly offset by the effect of the change in the timing of recognition of costs and revenue. The impact of the adoption of IFRS 15 to the first half-year 2018 is not materially different from the first half-year 2017.
A number of other new and revised standards and interpretations are effective as of January 1, 2018 but do not have a material effect on the Group’s consolidated financial statements.
The tables below show the restatement of the prior-year’s financial information due to the retrospective implementation of IFRS 15.
3 Change in scope of consolidation and significant transactions
On March 23, 2018 Autoneum acquired a 25% interest in ATN Auto Acoustics Inc., Kamioguchi, Japan, for a consideration of CHF 0.2 million from Toyota Boshoko Corporation, Kariya, Japan.
4 Segment information
Segment information is based on Autoneum Group’s internal organization and management structure as well as on the internal financial reporting to the Group Executive Board and the Board of Directors. Chief operating decision maker is the CEO.
Autoneum is the globally leading automobile supplier in acoustic and thermal management for vehicles. Autoneum develops and produces multifunctional and lightweight components and systems for noise and heat protection and thereby enhances vehicle comfort.
The reporting is based on the following four reportable segments (Business Groups/BG): BG Europe, BG North America, BG Asia and BG SAMEA (South America, Middle East and Africa). “Corporate and elimination” include Autoneum Holding Ltd and the corporate center with its respective legal entities, an operation that produces parts for Autoneum’s manufacturing lines, investments in associated companies and inter-segment eliminations. Transactions between the Business Groups are made on the same basis as with independent third parties.
- 1 Full-time equivalents including temporary employees (excluding apprentices).
- 1 Restated, refer to note 2.
- 2 Full-time equivalents including temporary employees (excluding apprentices).
5 Financial instruments
Neither significant changes in the fair value hierarchy nor in the fair value measurement assumptions of financial instruments occurred in the period under review. The Group did neither issue, repurchase nor repay Autoneum Bonds in the reporting period.
6 Exchange rates for currency translation
7 Events after balance sheet date
There were no events between June 30, 2018 and July 25, 2018 which would necessitate adjustments to the book value of the Group’s assets or liabilities, or which require additional disclosure in the condensed consolidated semi-annual financial statements.