Siegfried Annual Report 2009

Financial instruments, such as interest rate swaps, are used
by the Group to hedge in part the risks from interest rate
movements, by exchanging fixed and floating rate risks
(see Note 11).
Market value risk Changes in the market value of financial
assets and derivative financial instruments can affect the
financial position and net profit of the Group. Non-current
financial investments, such as investments in subsidiaries,
are held primarily for strategic reasons. Risks of loss in value
are minimized by thorough analysis before purchase and
by continuously monitoring the performance and risks of
the investments. The financial assets consist essentially of
the shares in Arena Pharmaceuticals Inc., San Diego, USA
(see Note 6). They are listed on NASDAQ and are therefore
subject to general market movements and company specific
risks (in particular realization of the “Lead compound
Lorcaserin”).
Liquidity risk Group companies need to have sufficient
access to cash to meet their obligations. The corporate
finance department manages the raising of current and noncurrent
debt. Cash flow forecasting is performed in the
operating entities of the Group and aggregated and monitored
by group finance. The management of excess liquidity
is also centralized.
At the reporting date the available liquidity was as follows:
2009 2008
Liquidity reserves and credit limits
Cash 8 083 14 937
Credit limit under the syndicated loan 120 000 200 000
./. Credit line drawn –71 210 –86 127
Total liquidity reserves and
unused credit line 56 873 128 810
With the 2006 prolonged syndicated loan adapted in spring
2009, which is due for repayment in 2012, the funds for
normal operating activities should be available in adequate
amount. In the event of a major acquisition or of extraordinary
investments in property, plant and equipment, additional
financing would be considered. The following table contains
an overview of the maturities of the financial liabilities.
The interest bearing financial liabilities and information
regarding covenants are explained in more detail in Note 14.
In 1000 CHF 2009
Between Between Between Between
Less than 1 and 3 3 and 12 1 and 2 2 and 5 Over
1 month months months years years 5 years Total
Interest bearing financial liabilities 218 436 1 960 2 614 71 646 – 76 874
Other non-current liabilities – – – 2 157 1 679 1 933 5 769
Trade payables 19 679 2 323 1 579 – – – 23 581
Other current liabilities 1 023 4 908 20 011 – – – 25 942
Derivative financial instruments – 589 1 766 2 118 1 410 – 5 883
In 1000 CHF 2008
Between Between Between Between
Less than 1 and 3 3 and 12 1 and 2 2 and 5 Over
1 month months months years years 5 years Total
Interest bearing financial liabilities – – 1 889 1 889 88 332 – 92 110
Other non-current liabilities – – 11 – – 3 113 3 124
Trade payables 19 338 1 341 978 – – – 21 657
Other current liabilities 1 818 3 190 26 716 – – – 31 724
Derivative financial instruments – – 1 163 1 163 1 837 – 4 163
Forward contracts – inflow – 1 170 3 529 – – – 4 699
Forward contracts – outflow – 1 056 3 168 – – – 4 224
Credit risk/Counter-party risk Credit risk arises from the
possibility that the counter-party to a transaction may be
unable or unwilling to meet their obligations, causing a
financial loss to Siegfried. Trade receivables are subject to
active risk management focusing on the monitoring and
controlling of risks.
The Siegfried Group’s business model contains mainly project
transactions. As partner in the development and production
of medicaments Siegfried collaborates intensively with
individual customers for a specific period. As a result concentrations
of risks may be built up at a specific date. At
31.12.2009 receivables from one large customer amounted
82 Financial Statements Siegfried Group