Circular No. 2 - International Financial Reporting Standards
(CIR2)

International Financial Reporting Standards (IFRS) (Circular No. 2, CIR2)

Status on 27 September 2013 Basis Arts. 49 to 51 LR and Directive Financial Reporting (DFR)

This Circular describes in detail the obligations of issuers who have chosen to apply IFRS as 1 their accounting standard. It makes reference to IFRS that, in a number of instances, have resulted in findings from SIX Exchange Regulation. The Circular on IFRS is revised and amended annually. The objective of SIX Exchange Regulation is not to formulate and publish interpretations of 2 specific accounting standards. Interpretations of IFRS are prepared exclusively by the IFRS Interpretations Committee. SIX Exchange Regulation only monitors listed companies' compliance with these standards. The following references to IFRS (the "blue" 2013 edition) which are provided in red italic 3 script have been updated and relate to findings identified by SIX Exchange Regulation with regard to the annual and semi-annual financial statements for 2012.

1. Materiality In connection with financial reporting, materiality means that the 4 information is of importance to the investor in assessing the net assets, financial position and results of operations of the entity. In this regard, qualitative as well as quantitative aspects must be taken into account. Moreover, materiality must be determined with regard to specifically required information and as well as its overall effect. Generally, the disclosure of irrelevant information is a violation of the principle of materiality equivalent to the omission or misrepresentation of important details.

2 Relevance Disclosures are deemed to be relevant if they convey actual in- 5

formation to users of financial statements. The explanations that must be given in the annual financial statements must be scrutinised at every balance sheet date to ensure that they remain current, and they must refer to the specific circumstances affecting the entity in question. Excessive descriptions of circumstances of lesser importance, as well as generic disclosures that have no material substance ("boilerplate"), impair the validity of a set of financial statements and are to be avoided.

SIX Exchange Regulation 09/13 1

Understandability Explanations must be provided in such a way that they are com- 6 prehensible for a reasonably informed investor. Disclosures must therefore be made in a way that is clear and easy to understand. Spreading information on the same matter across several notes is detrimental to comprehensibility and should be avoided. Furthermore, assigning the majority of a position to the category "other" for groupings does not fulfil to the requirements of IFRS.
Presentation of According to IAS 1p18, the application of inappropriate account- 7 financial statements ing policies may not be rectified by describing the accounting (IAS 1) policies, by disclosure in the notes or by additional explanations (e.g. in footnotes). IAS 1p25 states that uncertainties with regard to the entity's abil- 8 ity to continue as a going concern must be disclosed in the annual financial statements. Such uncertainties might, for example, include doubts about financing, a dramatic drop in demand, price erosion, or a pending authorisation decision. IAS 1p32 requires, as a principle, that assets and liabilities as well 9 as income and expenses may not be offset against each other. To that effect, down payments on inventories are not to be offset against inventories, for instance, but must be recognised as a liability. The statement of comprehensive income contains the items listed 10 in IAS 1p82, and begins with "Revenue" as defined in IAS 18p10. According to IAS 1p85, additional line items and sub-totals have to be inserted only if they are regarded as relevant to an understanding of the entity's financial position, for example because of industry practice. Income and expense items may only be described as extraordinary or one-off in those cases where this description appropriately reflects the long term reality of the situation. This will not normally be the case particularly with impairments, restructuring and legal cases. According to IAS 1p99, an entity must disclose expenses recog- 11 nised in its statement of comprehensive income either by their nature ("nature of expense" method) or by their function within the entity ("function of expense" method). The standard does not allow an approach which combines the two methods. Consequently, the nature of expense method must be applied in cases in which a significant portion of expenses cannot – or not reliably – be allocated to the functional areas of the entity (IAS 1p103). The accounting policies disclosed in the notes must be of benefit 12 to the investor in understanding the financial statements

2 SIX Exchange Regulation 09/13

(IAS 1p119). This requirement is deemed fulfilled, if among others the accounting policies are described in sufficient detail, grouped according to subject and updated regularly. Statements on methods which were not even used (e.g. hedge accounting) do not fulfil this requirement, neither does merely reproducing the relevant general provisions of IFRS. Detailed descriptions of accounting policies are, however, required for critical areas, for which IFRS does not have any specific requirements or options. The disclosures required by IAS 1p122 on critical management 13 judgements in applying the entity's accounting policies constitute an important element of the financial statements, and must be compiled with the corresponding degree of care. It is therefore recommended that this information be disclosed prominently at the beginning of the notes, along with the assumptions concerning estimation uncertainty that are required under IAS 1p125. IAS 1p134 states that an entity must disclose information that 14 enables investors to evaluate the entity's objectives, methods and processes for managing capital. Should an entity be subject to externally imposed minimum capital requirements, for example as a result of financial covenants, the nature of these requirements and whether or not the entity has been able to fulfil them must be disclosed. If such externally-imposed minimum capital requirements have not been fulfilled, IAS 1p135(e) requires additional disclosure of the consequences.

Inventories According to IAS 2p9, inventories must be measured at the lower 15 (IAS 2) of cost and net realisable value. In doing so, the assumptions made for the determination of the net realisable value must be based on the most reliable indications available at the time of valuation (IAS 2p30). Furthermore, it must be ensured that these assumptions (e.g. forecast sales proceeds) are also consistently applied in other calculations (e.g. impairment test).
Statement of cash Only cash and cash equivalents are permissible for inclusion in 16 flows total cash in the cash flow statement. Financial instruments that (IAS 7) are subject to fluctuations in value do not qualify as cash equivalents (IAS 7p7). To report money market funds as cash equivalents, the financial instruments included in the fund must meet the corresponding criteria (look-through principle). The individual components also have to be disclosed to enable an assessment of the actual composition of cash and cash equivalents

SIX Exchange Regulation 09/13 3

According to IAS 7p10, the statement of cash flows must present 17 cash flows from operating activities, as well as from investing and financing activities. Cash flows from investing and financing activities are, according to IAS 7p21, generally to be presented gross, in other words broken down as receipts and payments. In addition, these cash flows must also include the activities from discontinued operations as outlined in IFRS 5p33(c). However, the equally prominent display of additional "normalised" cash flows or subtotals (e.g. free cash flow) is not permitted. Pursuant to IAS 7p28, unrealised gains and losses on the fund 18 arising from changes in exchange rates are not regarded as cash flows, but are reported as a reconciling item from the balance at the beginning of the period, plus the net cash flows for that period, to the balance at the end of the period. This reconciliation may not include any differences or unrelated elements for which no further evidence can be supplied. Investing and financing activities that do not lead to a change in 19 cash and cash equivalents are not included in the cash flow statement. Such non-cash transactions are, for example, the first-time recognition of a financing lease, the conversion of debt into equity (debt-equity swap) or the transfer of mortgage loans in connection with a sale of real estate. Additionally pursuant to IAS 7p43, non-cash transactions must be explained in the notes to the financial statements.

7. Accounting policies, An entity may only change an accounting policy if the change 20 changes in accounting results in the financial statements providing more relevant inforestimates and errors mation (IAS 8p14). (IAS 8) When an entity has not applied a new standard that has been 21 issued but is not yet effective, the entity must disclose this information in accordance with IAS 8p30. The anticipated impact on future financial statements is usually known or may reasonably be estimated. The anticipated impact must be explained in a meaningful way. Moreover, negative confirmations that no impact is expected also provide the investor with relevant information. Errors in recognition, measurement, presentation or disclosure 22 from previous periods are to be treated in accordance with IAS 8p42 in the form of a retrospective correction (restatement). It must be clear and unambiguous that this restatement has been made to correct an error. Under no circumstances may errors in financial reporting be presented as changes in estimates (IAS 8p32) or accounting policies (IAS 8p14). Settlements with or

4 SIX Exchange Regulation 09/13

sanctions imposed by SIX Exchange Regulation in connection with breaches of financial reporting rules also require that errors in financial statements be disclosed and corrected.

8. Income taxes Recognising the effects of loss carryforwards as a deferred tax 23 (IAS 12) asset is not a matter of choice (IAS 12p34). Here, the period underlying the assessment of future earnings set-offs must be based on objective criteria (e.g. statutory expiry dates). Furthermore, the assumptions that are applied must be consistent with the parameters used for other calculations (e.g. impairment tests). The decision not to recognise deferred taxes in connection with 24 shares in subsidiaries, branches and associated companies is not a general clause, but pursuant to IAS 12p39 only permissible if the group can control the timing of the reversal of the temporary differences and such differences will not be reversed in the foreseeable future. The fact that these deferred taxes were not recognised must be disclosed in connection with the corresponding temporary differences (IAS 12p81(f)). IAS 12p81(c) requires that a tax reconciliation be made between 25 the applicable nominal tax rate (nominal tax expense) and the effective tax rate (effective tax expense) The items shown in the reconciliation must be comprehensible and the selected designations self-explanatory. If the applicable tax rate has changed from the previous accounting period, then such fact must also be separately disclosed in the notes, together with an explanation of the reasons (IAS 12p81(d)). If the applicable tax rate represents a weighted average of tax rates in different jurisdictions, then both the effect of changes to tax rates and the impact of changes to the structural composition of results in the different jurisdictions must be explained to permit a better assessment of the future average tax burden. Pursuant to IAS 12p81(e), if the deferred tax asset has not been 26 capitalised, the amounts and date of expiry of loss carryforwards must be disclosed. Here, SIX Exchange Regulation recommends staggering such disclosures in a meaningful way based on expiry dates, as well as the disclosure of tax rates. In this context, it is relevant to the investor whether the loss carryforward was incurred at a subsidiary with a high tax rate or instead at a holding company that is subject to a lower tax rate.

9 Revenue When services are rendered where the associated risks and re- 27

(IAS 18) wards remain with another entity, IAS 18p8 permits only the commission earned on those services to be recognised as reve-

SIX Exchange Regulation 09/13 5

nue. Furthermore, discounts and rebates must be set off directly against revenue (IAS 18p10). Shares in the earnings of an associated company may not be reported as revenue (IAS 18p1). IAS 18p35(b) requires the presentation or disclosure of the 28 amounts of each revenue category that is significant to the entity, such as revenue from trading in goods, from the sale of products manufactured by the entity itself, or from the rendering of services. The specific accounting policies applied to the recognition of revenue must be explained properly and in sufficient detail for each category in the notes.

10. Employee benefits The requirements in IAS 19p46 regarding "insured benefits" are 29 (IAS 19) to be observed in respect of congruent, reinsured post-employment benefit plans. The recognition and disclosure of such "insured benefits" in the financial statements, in other words the extent to which they are to be treated as defined contribution or defined benefit plans under IAS 19, depends on whether the company retains a legal or constructive obligation to pay benefits out of the plan (e.g. in the case of possibilities for termination on the part of the insurer). To quantify any such obligation, an actuarial assessment must be made and the relevant conclusions must be documented appropriately.

11 Related party The disclosure of compensation for key management personnel 30

disclosures (board of directors and management) is to be made in adherence (IAS 24) to the five categories required under IAS 24p17. For example, post-employment benefit costs, severance packages and sharebased payments recognised for key management personnel during the accounting period must each be disclosed separately. The composition of key management personnel must be consistent across all components of the annual report. Explanations concerning related parties are among the most im- 31 portant qualitative information disclosed in the notes. These disclosures must be made in such a way that users of financial statements understand the potential effect of these relationships on the financial statements (IAS 24p18). In this context, relationships with related parties may be described as based on standard market terms ("at arm's length") only if such terms can be substantiated (IAS 24p23).

6 SIX Exchange Regulation 09/13

Financial Pursuant to IAS 32p28, the contractual terms of the financial in- 32 instruments: strument must be evaluated to determine whether it contains presentation both a debt and an equity component. Generally, an equity com- (IAS 32) ponent can only be recognised if there is no contractual obligation to deliver cash or other financial assets. It is appropriate to classify embedded derivatives as equity only if a "fixed-for-fixed" requirement exists, i.e. where the only provision for fulfilling the obligation is a fixed amount of cash for a fixed number of the entity's own equity instruments. In the case of such hybrid financial instruments, care must be taken to analyse the contractual provisions in detail and to evaluate the elements identified in this analysis in terms of their classification. Pursuant to IAS 32p37, the transaction costs directly allocable to 33 a capital increase are to be recognised directly in equity with no impact on the income statement. At the time of an initial public offering (IPO), existing shares are often listed alongside newly issued shares. In such instances, the transaction costs are to be allocated plausibly in accordance with IAS 32p38. Generally, the percentage allocation reflects the ratio of newly issued and existing shares. That portion of the transaction costs attributable to the listing of existing shares must be recognised in the income statement.
Earnings per share If negative earnings per share (loss) are reported, any anti-dilutive 34 (IAS 33) effect may not be taken into account (IAS 33p41). Thus generally speaking, in the event of a loss, fully diluted earnings per share are equal to basic earnings per share. Only those options that could potentially lead to a dilution, or are 35 "in the money", are included in the calculation of diluted earnings per share (IAS 33p46 f.). Other forms of earnings per share (e.g. EBIT per share) may be 36 disclosed only in the notes, and not underneath the statement of comprehensive income (IAS 33p73). The method described in IAS 33 must be applied when calculating the number of shares outstanding (the denominator). If the numerator is not given on a separate line in the statement of comprehensive income, it must be derived accordingly in the notes.
Interim financial Pursuant to IAS 34p15, the purpose of interim financial reports 37 reporting is to update the information published in the most recent annual (IAS 34) financial statements. Care must therefore be taken in the abridged presentation to ensure that the statements include a sufficiently detailed explanation of significant changes (e.g. restruc-

SIX Exchange Regulation 09/13 7

turing, impairments, business combinations). In addition to this general requirement, IAS 34p16A(i) prescribes that the detailed disclosure obligations under IFRS 3 must be fulfilled in the case of business combinations. It is therefore recommended that the notes be structured accordingly. IAS 34p28 requires that the same accounting policies be used in 38 the interim financial statements as were applied in the annual financial statements. With regard to fair values, this means that adjustments must also be made in the interim financial statements if there are changes to the underlying assumptions or estimates.

15. Impairment of Under IAS 36p33(a), when measuring value in use an entity must 39 assets base its cash flow projections on reasonable and supportable as- (IAS 36) sumptions that represent management's best estimate of the economic conditions. In doing so, neither future expansion investments nor the resulting sales increases may be taken into account (IAS 36p44(b)). The same applies to cost reductions from restructuring measures, to which a company is not yet committed Management must continuously improve the accuracy of cash 40 flow projections on the basis of the knowledge gained from incorrect forecasts made in the past (IAS 36p34). This is particularly relevant, if the market value has been significantly below the carrying value for a prolonged period of time. If the cash flow forecasts are frequently missed, it must be reassessed over what period a reliable forecast is possible and the projection period reduced accordingly (IAS 36p35). If, as per IAS 36p84, a part of goodwill acquired in a business 41 combination during the reporting period has not been allocated to a cash-generating unit ("CGU") at the balance sheet date, the unallocated amount must be disclosed together with an explanatory justification in accordance with IAS 36p133. If a reallocation of goodwill becomes necessary as a result of a reorganisation, this may constitute an indication of an impairment for those CGUs that the goodwill amount was assigned to previously. Accordingly, an impairment test must be carried out for such CGUs before a reorganisation. The basis of valuation, in particular, must be given for impairment 42 tests relating to goodwill and intangible assets with indefinite useful lives (IAS 36p134(c)). Furthermore, the key assumptions and methods that have been used to determine the reported values must also be described (IAS 36p134(d/e)(i)). These key as-

8 SIX Exchange Regulation 09/13

sumptions and methods must be disclosed individually for each CGU, not as an average figure for all CGUs. If the forecast values differ from past developments or external 43 expectations (e.g. from analysts), the reasons must be properly disclosed (IAS 36p134(d/e)(ii)). Where the DCF method is applied, the period of projection, the assumed growth rate beyond the projection period and the discount rate must also be presented. In addition, the events and circumstances that led to impairments must be described in the notes (IAS 36p130(a)). In the case of a sensitivity analyse (IAS 36p134(f)), the amount by 44 which the recoverable amount exceeds its carrying amount, the value assigned to the key assumptions used as a basis for the impairment test, and the extent to which a change in the key assumption would lead to the recoverable value being just equal to the carrying amount, must be disclosed. In the case of an impairment recognised in the previous period, it is assumed that a change in a key assumption at a later date might lead to a further impairment, and thus a sensitivity analysis must be disclosed.

Provisions and Pursuant to IAS 37p26, circumstances in which an obligation ex- 45 contingent liabilities ists, but for which the corresponding provision cannot be esti- (IAS 37) mated reliably, must be limited to extremely rare cases. It would thus be barely plausible to apply this exception rule to a specific circumstance over several periods or as a general clause for an entire category of provisions. IAS 37p85 requires that a meaningful description of the nature 46 of the obligations, the expected timing of cash outflows as well as any related uncertainties must be provided in the notes for each group of provisions. The conclusion of a legal dispute described in previous years is considered to be relevant information and must be disclosed. Care must also be taken to distinguish clearly between the disclosures for the provisions and those for contingent liabilities. In the event of legal disputes, IAS 37p92 stipulates that the re- 47 quired information may be omitted only in very rare cases. At a minimum the nature of the legal dispute must be indicated, as well as a justification for the non-disclosure.
Intangible assets If the criteria of IAS 38p57 are fulfilled, then development costs 48 (IAS 38) must be capitalised. To ensure the comparability of companies in the same industry, it is of great relevance to the investor that the corresponding accounting policies are described in sufficient de-

SIX Exchange Regulation 09/13 9

tail. Furthermore, the total amount of research and development costs recognised as an expense during the reporting period must be disclosed in the notes as per IAS 38p126. If an intangible asset is assessed as having an indefinite useful life 49 (e.g. established brands associated with a business combination), the material factors justifying that assessment must, in accordance with IAS 38p122(a), be comprehensibly described in the notes.

18. Financial If an entity holds options in connection with a convertible bond 50 instruments: (e.g. for the early repayment of the bond), it must be established recognition and whether these options meet the criteria for a separate measuremeasurement ment and recognition (IAS 39p11). The option terms which are (IAS 39) relevant to this assessment must be disclosed (IFRS 7p21). If there is no active market for the financial instruments con- 51 cerned, then the entity must determine their fair value by using a valuation technique that makes maximum use of market inputs. According to IFRS 13p61 (formerly IAS 39p48A), the method used must be one that other market participants would also use to value the financial instruments in question. A valuation method, according to which appreciations or depreciations are made exclusively in fixed amounts or percentages, does not fulfil the principles of IFRS. Prices provided by traders, brokers or other services are only con- 52 sidered to be fair values of level 1, if they are based on current and regularly occurring market transactions among independent third parties (IFRS 13p78; formerly: IAS 39AG71). In the case of equity instruments which are available for sale, an 53 impairment must be reported if there is a significant or sustained decline in fair value below cost (IAS 39p61). Whether or not the aforementioned decline corresponds to the relevant overall market for the instruments in question has no bearing on the impairment. Furthermore, the required impairment must be calculated in the functional currency of the company and not in the currency in which the equity instrument is issued (IAS 36p54). Pursuant to IFRS 13p22 (formerly IAS 39AG82(b)), estimates of 54 the fair values of financial instruments must also consider the counterparty default risk. Counterparty default risk must be assessed and appropriately documented, for both the initial and subsequent valuations.

10 SIX Exchange Regulation 09/13

Investment property Land held for a currently undetermined future use must be trea- 55 (IAS 40) ted in accordance with IAS 40p8(b) as investment property. If an entity has not determined whether it will use the land as owneroccupied property or for short-term sale in the ordinary course of business, then the land must be treated under IAS 40p5 as "held for capital appreciation".
First-time adoption The first-time adopter of IFRS must show by means of reconcili- 56 of IFRS ations and supplemental explanations how the transition to IFRS (IFRS 1) from the previously applied accounting principles has affected its net assets, financial position and results of operations, as well as its cash flows. The reconciliations stipulated under IFRS 1p24(a) and (b) must be sufficiently detailed so that the investor can easily comprehend the adjustments that have been made to the balance sheet, statement of comprehensive income and cash flow statement. Lump-sum reconciliations that incorporate a wide variety of adjustments do not fulfil this requirement. In this connection, the example shown in IG63 of IFRS 1 is recommended as a guideline.
Share-based An entity must disclose information that enables the investor to 57 payment understand the nature and extent of share-based payment agree- (IFRS 2) ments that existed during the period. Pursuant to IFRS 2p44 f., the individual plans must be described, including the key contractual terms and conditions for each plan. For share-based payment arrangements, the number of shares 58 and their fair values must be presented, among other information, as required by IFRS 2p47. In addition to other information that must be disclosed in the context of the valuation of stock options, the option pricing model and the parameters used for the valuation – specifically the weighted average share price, exercise price, expected volatility, maturity of the option, expected dividend, risk-free rate – as well as the assumptions regarding the effects of an earlier than expected exercise of the options must be disclosed. Furthermore, the notes must describe the effects of share-based payments on the entity's profit or loss for the period and on its balance sheet (IFRS 2p50).
Business The question as to the precise date as of which an acquired busi- 59 combinations ness is to be included in the consolidated group is determined (IFRS 3) independently of the precise date on which the contract or merger was formally concluded. The date of the effective or actual change of control (acquisition date) must be used for the purpose

SIX Exchange Regulation 09/13 11

of initial consolidation (IFRS 3p8 f.). In determining when the effective change of control occurred, the principle of "substance over form" must be applied. To ensure that the information required under IFRS is available, interim financial statements for the acquired entity must generally be prepared as at the date of the effective change of control. If the allocation of the purchase price for the acquired assets, 60 liabilities and contingent liabilities was determined provisionally under IFRS 3p45, and those values might change within 12 months subsequent to the acquisition, that fact must be disclosed and explained in accordance with IFRS 3B67(a). If no disclosure is made, investors can expect that the allocated values have been established definitively and that no further adjustment will be made under IFRS 3. If subsequent adjustments are found to be necessary yet the entity has disclosed the allocated values as being definitive, those changes must be treated either as a change of estimate or correction of an error as per IAS 8, depending on the particular facts and circumstances. To enable investors to assess the business combinations, partic- 61 ularly the date of acquisition, the purchase price together with a description of the individual price components, and the profit or loss contribution of the acquired entity must be disclosed separately (IFRS 3p59 and 3B64 ff.). Furthermore, pro forma information on the revenues and profit or loss of each acquired entity is to be disclosed for the reporting period as though the entity had been acquired at the beginning of that period (IFRS 3B64(q)).

23. Insurance contracts IFRS 4 does not provide specific measurement requirements for 62 (IFRS 4) insurance contracts, but allows using existing accounting policies for insurance contracts (IFRS 4p25). The corresponding accounting policies must therefore be explained in detail in the notes, or express reference must be made to other standard setters, which develop their standards on a similar conceptual basis (e.g. US GAAP). IFRS 4p39(c)(iii) requires the disclosure of a comparison of the 63 actual losses with previous estimates. This information is generally disclosed in the form of a so-called loss triangle. The claims development can be influenced by acquisitions or divestments of subsidiaries or portfolios. It is therefore advisable to separately disclose the effect from acquisitions and divestments.

12 SIX Exchange Regulation 09/13

24. Non-current assets Under IFRS 5p6, non-current assets are to be classified as held for 64 held for sale and sale, if their carrying amount will be recovered principally through discontinued operations a sale transaction rather than through continuing use. A dilution (IFRS 5) of a financial interest triggered by a capital increase by a third party or by a partial sale of an investment is only considered to be a sale transaction if control is thereby lost. Furthermore, the sale must be considered as "highly probable", and generally take place within 12 months (IFRS 5p8). The period required to complete the sale may be extended only if the reasons for the extension are beyond the entity's control. Impairment indicators must be evaluated in particular where the sale is delayed. Results and cash flows from a disposal group may be presented 65 as discontinued operations only if the disposal group to be abandoned meets the criteria of IFRS 5p32 at that time. Pursuant to IFRS 5p35(a), purchase price adjustments in subsequent periods (e.g. from the change to earn-out values) are part of the result from discontinued operations. Changes in the use of assets which result, for example, from a change in business activities or from restructuring, do not normally fulfil the criteria for abandonment under IFRS 5p13.

25 Financial Financial instruments are to be analysed with regard to their 66

instruments: disclosures characteristics and subsequently allocated in a comprehensible (IFRS 7) way to relevant classes (IFRS 7p6). Financial instruments that do not fall within the scope of IFRS 7 are to be excluded from disclosure in accordance with IFRS 7 (e.g. investments in associates or benefits and obligations relating to employee benefits). It is recommended that the disclosures required by IFRS 7 be made in tabular form. It must be possible to reconcile this table to the line items in the balance sheet. In accordance with IFRS 7p25, an entity must disclose fair values 67 in comparison with amortised costs for each category of financial instrument, and must also allocate the fair values to one of the three levels in the fair value hierarchy (IFRS 13p93(b); formerly: IFRS 7p27A). If a valuation model has been used, the relevant underlying assumptions, e.g. the discount rates applied, growth rates for the extrapolation of cash flow projections, or volatility in the case of option pricing models, must be disclosed. The disclosures regarding the valuation hierarchy must be disclosed for all financial instruments, regardless of whether the company itself bears the risks from the variability of changes in fair value or assigns them to a third party.

SIX Exchange Regulation 09/13 13

IFRS 7p40 requires sensitivity analyses of market risks (currency, 68 interest rate and other price risks) that show how profit or loss and equity might change as the result of changes in the relevant risk variables. In this context, the applied methods and assumptions are to be chosen and disclosed in a manner that enables the investor to arrive at a realistic assessment of the related risks. Presentation based on best-case or worst-case scenarios does not fulfil this requirement.

26 Operating IFRS 8p22 requires the disclosure of whether or not operating 69

segments segments have been aggregated for the purposes of reporting. It (IFRS 8) should be noted that IFRS 8p12 permits the aggregated presentation of operating segments if they display similar economic characteristics and are comparable in the following respects: products and services, production processes, customers, distribution methods or methods of service provision, and regulatory environment. However, if the margins of two operating segments differ widely, they cannot generally be said to display similar economic characteristics, and must therefore be presented separately. Pursuant to IFRS 8p28, there must be a reconciliation of segment 70 profit and loss with the profit and loss of the entity as a whole. Material reconciliation items such as write-downs on intangible assets or financial items must be presented separately. Furthermore, reconciling items must be presented separately in accordance with IFRS 8p16, and may not be combined with the disclosures for a given reportable segment.

Circular No. 2 - International Financial Reporting Standards(CIR2)