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value of the employee services received in exchange
for the grant of the options is recognized, as stated by
IFRS 2, as an expense and a corresponding amount is
booked as a long-term liability. The total amount to be
expensed over the vesting period is determined by reference
to the fair value of the options granted. The corresponding
social security contribution is recognized
as an expense as the related options are exercised.
At each reporting date, the fair value of the liability is
remeasured and any change in fair value is recognized
in the income statement of the period. The total net
cost recognized in respect of the transaction will be
the amount paid to settle the liabilities.
T Revenue recognition
Revenue comprises the sale of licenses and is recognized
when the Group assigns the rights of ownership
to the customer, and collectability of the related
receivables is reasonably assured.
Receipts of upfront payments and other similar nonrefundable
payments relating to the sale or licensing
of products or technology are initially reported as
deferred income and recognized as income on a straightline
basis over the estimated period of the collaboration
required to finalize the development period.
The incremental costs directly attributable to entering
into the collaboration agreements are recognized as
deferred cost and amortized over the relevant period
of collaboration.
3 Financial risk management
A Financial risk factors
The Group’s activities expose it to a variety of financial
risks: market risk, credit risk and liquidity risk. The
Group’s overall risk management programme focuses
on the unpredictability of financial markets and
seeks to minimize potential adverse effects on the
Group’s financial performance. Risk management,
such as identification, evaluation and management of
financial risks, is carried out by the Group’s finance
department under the policies approved by the Board
of Directors. The Board of Directors has provided written
principles for overall risk management, as well as
written policies covering specific area such as investing
excess liquidity. There is no use of valuation techniques
for financial assets or liabilities.
Market risk
Market risk is the risk that the fair value of future cash
flows of a financial instrument will fluctuate because of
changes in market prices. Market prices comprise four
types of risk: interest rate risk, currency risk, commodity
price risk and other price risk, such as equity price risk.
Financial instruments affected by market risk include
loans and borrowings, deposits, available-for-sale
investments and derivative financial instruments.
Newron Group is mainly exposed to currency risk
whereas it is not exposed to commodity price risk, other
price risk and interest rate risk fluctuations since the
Group’s borrowing is essentially a loan received from
the government at subsidized interest rates.
The reimbursements received in relation to the licensing
and collaboration agreement with Merck Serono
are booked as a decrease of the related costs incurred.
U Grants
Grants relating to income are recognized in the income
statement over the period necessary to match them
with the costs they are intended to compensate. Grants
are recognized at their fair value where there is a reasonable
assurance that the grant will be received and
the Group will comply with all attached conditions.
The Group operates internationally and is exposed to
currency risk arising from various exposures, primarily
with respect to the Swiss francs, UK pounds and
US dollars. Foreign exchange risk arises from future
purchase and service transactions, recognized assets
and liabilities and net investments in foreign operations.
To manage foreign exchange risk, the Group
maintains foreign currency cash balances to cover
anticipated future requirements.
Notes to the Consolidated Financial Statements – Newron Annual Report 2011 51