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Financial Report Notes to the consolidated financial statements

Notes to the consolidated financial statements

1. The Company and its principal activity

1. The Company and its principal activity 

BB Biotech AG (the Company) is listed on the SIX Swiss Exchange as well as in the «Prime Standard Segment» of the German Exchange and has its registered office in Schaffhausen/Switzerland, Schwertstrasse 6. Its principal activity is to invest in companies active in the biotechnology industry for the purpose of capital appreciation. The investments are held through its wholly owned subsidiaries.

Company

Capital in CHF 1 000

Capital and voting interest in %

Biotech Focus N.V., Curaçao

11

100

Biotech Growth N.V., Curaçao

11

100

Biotech Invest N.V., Curaçao

11

100

Biotech Target N.V., Curaçao

11

100

2. Accounting policies

2. Accounting policies

General

The consolidated financial statements of the Company and its subsidiary companies (the Group) have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the IASB, as well as the provisions of the rules of the SIX Swiss Exchange for Investment Companies for the period January 1, 2023, until December 31, 2023. The consolidation is prepared from the financial statements of the Group companies using uniform accounting principles. With the exception of financial assets and liabilities (incl. derivative instruments), which are held at fair value through profit or loss, the financial statements are prepared under the historical cost convention. This requires management to make assumptions and estimates that have an impact on the balance sheet values and items of the income statement in the current financial year. In certain circumstances, the actual values may differ from these estimates.

The following amended standards, valid since January 1, 2023, have been applied in these consolidated financial statements.

  • IAS 1 (amended, effective January 1, 2023) – Disclosure of Accounting Policies
  • IAS 8 (amended, effective January 1, 2023) – Definition of Accounting Estimates
  • IAS 12 (amended, effective January 1, 2023) – Deferred Tax related to Assets and Liabilities arising from a Single Transaction

The Group assessed the impact of the above-mentioned amended standards. Based on the analysis, the Group concluded that these amended standards have no material impact on the Group’s accounting policies and overall results and financial position.

The following amended standards were approved, but will only be applicable for the Group prospectively and were not early adopted in these annual consolidated financial statements.

  • IFRS 16 (amended, effective January 1, 2024) – Lease Liability in a Sale and Leaseback
  • IFRS 7/IAS 7 (amended, effective January 1, 2024) – Disclosures Supplier Finance Arrangements
  • IAS 1 (amended, effective January 1, 2024) – Classification of Liabilities as Current or Non-current
  • IAS 1 (amended, effective January 1, 2024) – Non-current Liabilities with Covenants
  • IAS 21 (amended, effective January 1, 2025) – Lack of Exchangeability

The Group assessed the potential impact of the above-mentioned amended standards. Based on the analysis, the Group concludes that these amended standards have no material impact on the Group’s accounting policies and overall results and financial position.

Basis of consolidation

The consolidated financial statements include the Company and the subsidiary companies which are controlled by it. An investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Subsidiaries are fully consolidated from the date on which control is transferred to the Company and are deconsolidated from the date that control ceases. The consolidation is performed using the acquisition method. All intercompany transactions and balances with companies included in the consolidation are eliminated. All Group companies have a December 31 year-end.

Foreign currency translation

Based on the economic environment (primary listing, investors, costs and performance measurement) in which the Company and its subsidiaries operate, the consolidated financial statements of the Group are presented in Swiss francs, which is the Company’s and its subsidiaries functional currency. Transactions in foreign currencies are converted at exchange rates as at transaction dates. Assets and liabilities in foreign currencies at year-end are translated at rates of exchange prevailing as at the balance sheet date. Exchange differences are reflected in the statement of income. Translation differences on marketable securities held at fair value through profit or loss are reported as part of the gains/(losses) from securities.

The following exchange rates have been used for the preparation of these consolidated financial statements:

Currency

31.12.2023

31.12.2022

USD

0.84140

0.92450

ANG

0.47270

0.51938

EUR

0.92887

0.98956

GBP

1.07160

1.11870

Financial assets

The Group classifies its financial assets in the following categories:

  • Financial assets at amortized cost
  • Financial assets at fair value through profit or loss

Financial assets at amortized cost

Financial assets at amortized cost are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are generally financial assets held as part of a business model to collect contractual cash flows that are solely payments of interest and principal on the principal outstanding. They are included in current assets, except when they have maturities of greater than twelve months after the balance sheet date. Otherwise they are classified as non-current assets.

Cash and cash equivalents

Cash and cash equivalents comprise current accounts and call money at banks which have a maturity of three months or less.

Receivables from brokers

Receivables from brokers result from security transactions and do not bear any interest.

These amounts are recognized initially at fair value and subsequently measured at amortized cost. At each reporting date, the Group shall measure the loss allowance on amounts due from broker at an amount equal to the Lifetime Expected Credit Loss («ECL») if the credit risk has increased significantly since initial recognition. If, at the reporting date, the credit risk has not increased significantly since initial recognition, the Group shall measure the loss allowance at an amount equal to 12-month ECLs. A significant increase in credit risk is defined as any contractual payment which is more than 30 days past due. Any contractual payment which is more than 90 days past due is considered credit impaired. For receivables from brokers which settle within 10 business days the ECL estimate is nil.

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss comprise marketable and non-marketable securities which are classified as current assets.

Initially, securities and derivatives are measured at fair value and are subsequently remeasured at market values based on stock exchange prices or generally accepted valuation models that are based on market conditions existing at each balance sheet date, such as Black- Scholes, earnings multiple and discounted cash flow model. Purchases and sales of securities are accounted for at trade date. Realized gains and losses on security trading are recognized in the statement of comprehensive income as gains/losses from securities at the day of the transaction. Changes in fair value of securities are also recognized as gains/losses from securities in the statement of comprehensive income in the same period in which they arise. Securities are derecognized when the rights to receive cash flows from securities have expired or where the Group has transferred substantially all risks and rewards of ownership.

Transaction costs are costs to acquire financial assets at fair value through profit or loss. They include transfer taxes and duties as well as fees and commissions paid to agents, advisers, brokers and dealers. Transaction costs, when incurred, are immediately recognized as an expense.

Financial liabilities

Financial liabilities are generally classified and subsequently measured at amortized cost using the effective interest method, except for financial liabilities held for trading and derivatives.

Payables to brokers

Payables to brokers result from security transactions and do not bear any interest.

Short-term borrowings from banks

Short-term borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the income statement over the period of the borrowings using the effective interest method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least twelve months after the balance sheet date.

Income taxes

Current income taxes are calculated on the basis of the applicable tax laws in individual countries and recognized as an expense in the period in which the related profits are made.

Assets or liabilities related to current income taxes are reported in the balance sheet in the items «Current tax assets» or «Current tax liabilities». Tax effects arising from temporary differences between the carrying amounts of assets and liabilities in the Group’s balance sheet and their corresponding tax values are recognized, respectively, as «Deferred tax assets» and «Deferred tax liabilities». Deferred tax assets arising from temporary differences and from loss carry-forwards eligible for offset are capitalized if it is likely that sufficient taxable profits will be available against which those temporary differences or loss carry-forwards can be offset. Deferred tax assets and deferred tax liabilities are calculated at the tax rates expected to apply in the period in which the tax assets will be realized, or the tax liabilities settled.

Earnings per share

Basic earnings per share are calculated by dividing the net profit/loss attributable to shareholders by the weighted average number of registered shares in issue during the year, less treasury shares. For the diluted earnings per share, the weighted average number of registered shares in issue and the net profit is adjusted to assume conversion of all dilution potential registered shares.

Treasury shares

The company can buy and sell treasury shares in accordance with the Company’s article of association, Swiss company law and in compliance with the listing rules of SIX Swiss Exchange.

Treasury shares are recorded as a deduction from the shareholders’ equity at the amount of considerations paid («Total cost»). All gains and losses arising from trading in treasury shares are directly credited/debited to retained earnings. The FIFO (first in/first out) method is used for derecognition. The purchase price is booked gross with transaction costs. Treasury shares may be acquired and held by the Company or by other members of the consolidated Group.

Net asset value per share

The net asset value per share is calculated by dividing the shareholders’ equity by the number of shares outstanding less treasury shares held at year end.

Dividend income

Dividends on securities are recognized in the income statement when the Group’s right to receive payment is established.

Leasing contracts

The Group has two rental contracts for office space in Schaffhausen and Curacao. Due to the immateriality of a right-of-use-asset and a lease liability, no disclosure according to IFRS 16 are made within these consolidated financial statements.

Pension liability

BB Biotech AG maintains for its employees a defined benefit plan. There is no pension plan for employees of Group companies. Due to the immateriality of any potential pension liability or potential pension asset, no disclosures according to IAS 19 are made within these consolidated financial statements.

Segment reporting

IFRS 8 requires entities to define operating segments and segment performance in the financial statements based on information used by the chief operating decision-maker. The investment manager is considered to be the chief operating decision-maker. An operating segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other operating segments. The sole operating segment of the Group is investing in companies active in the biotechnology industry. The investment manager works as a team for the entire portfolio, asset allocation is based on a single, integrated investment strategy and the Group’s performance is evaluated on an overall basis. Thus the results published in this report correspond to the sole operating segment of investing in companies active in the biotechnology industry.

Related party

Related parties are individuals and companies where the individual or company has the ability, directly or indirectly, to control the other party or to exercise significant influence over the other party in making financial and operating decisions.

Commitments, contingencies and other off-balance sheet transactions

The operations of the Group are affected by legislative, fiscal and regulatory developments for which provisions are made where a legal or constructive obligation has been incurred which will probably lead to an outflow of resources that can be reasonably estimated.

Critical accounting estimates and judgments

The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. The Group makes estimates and assumptions that are mainly based on market conditions to value these financial instruments. Since these financial instruments are not traded in an active market, inherent difficulties exist to value these financial instruments. These difficulties cannot be eliminated. The difference between the proceeds from sale of these financial instruments and the carrying amount may be material. Note 4 discloses further details on fair values of financial instruments not traded in active markets.

The Company has assessed whether it is appropriate under IFRS 10 to consolidate the Subsidiaries. IFRS 10 states that an investor controls the investee if, and only if, the investor has all of the following:

  • Power over the investee;
  • Exposure, or rights, to variable returns from its involvement with the investee; and
  • The ability to use its power over the investee to affect the amount of the investor’s returns

The Company owns 100% of the capital and voting interest in all four subsidiaries as disclosed in note 1. Therefore the Company has power over the organization and directs the investment activities and dividend policy of its subsidiaries. The scope of the investment management and administration agreement with the investment manager also includes all subsidiaries.

Further, IFRS 10 requires that a subsidiary that provides services related to the parent’s investment activities should not be consolidated if the subsidiary itself is an investment entity. The Company also made an assessment as to whether the Company’s Subsidiaries meet the definition of an investment entity. IFRS 10 provides that an investment entity should have the following typical characteristics:

  • It has more than one investment;
  • It has more than one investor;
  • It has investors that are not related parties of the entity; and
  • It has ownership interests in the form of equity or similar interests.

An investment entity is still required to consolidate its subsidiaries if the subsidiary provides services that relate to the investment entity’s investment activities.

The Company concluded that the Subsidiaries do not qualify as investment entities, but are effectively operating subsidiaries as they act as an extension of the Company. They provide requisite investment-related services to the Company and incur costs in doing so, thus the Company consolidates its subsidiaries. Fair value accounting would not have a material impact on the net income and equity of the Group.

3. Financial risk management

3. Financial risk management

Within the framework of the law, articles of incorporation and regulations, the investment manager carries out currency and security forward transactions, buys, sells and makes use of options as well as fulfills all necessary obligations that result from these businesses.

Credit risk

The Group is exposed to credit risk, which is the risk that a counterparty will be unable to pay amount in full when due. The Group measures credit risk and expected credit losses using probability of default, exposure at default and loss given default. The Group considers both historical analysis and forward looking information in determining any expected credit loss.

The Group manages and controls its credit risk by maintaining business relations only with counterparties with an acceptable credit rating. All transactions in securities are settled/paid for upon delivery using approved brokers. The risk of default is considered minimal, as delivery of securities sold is only made once the broker has received payment. Payment is made on a purchase once the securities have been received by the broker. The trade will fail if either party fails to meet its obligation. The Group’s credit positions, if any, are monitored on a daily basis by the investment manager and are reviewed on a regular basis by the Board of Directors.

As at December 31, 2023 and 2022, the ECL-impairment model did not have a material impact as (i) the majority of the financial assets are measured at fair value through profit or loss and the impairment requirements do not apply to such instruments; and (ii) the financial assets at amortized cost are short-term (no longer than 10 days). As a result, no loss allowance has been recognized.

Market risks

Risk associated with changing market prices

Due to its business activity and the resulting high portion of securities in relation to total assets, the Group is exposed to market price risk arising from uncertainties and fluctuations on the financial and foreign exchange markets.

The Group participates occassionaly, but to a substantial extent, in the capital of its investments. In the case of sales of large parts of these investments, it may be able to influence the market price. The Group’s securities positions are monitored on a daily basis by the investment manager and are reviewed on a regular basis by the Board of Directors.

The Group’s business is to invest in biotechnology companies with the purpose of capital appreciation. Consequently, it is exposed to market risks of this industry. The individual securities are disclosed in note 4 and the valuation is made at fair value. Consequently, any price changes are reflected accordingly by the changes in fair value in the context of the subsequent valuation.

The annual volatility of registered shares BB Biotech AG (reference volatility for the marketable securities) for 2023 is 23.08% (2022: 32.64%). At December 31, 2023, had the value of listed securities increased or decreased by 23.08% (2022: 32.64%) with all other variables held constant, the increase or decrease respectively in net income/loss as well as shareholders’ equity would amount to CHF 604.7 mn (2022: CHF 990.7 mn).

At December 31, 2023 the Company holds one investment in unlisted shares (2022: one).

Interest risk

Interest rates on liquid funds are based on market rates. The funds are due on demand.

Short-term borrowings from banks are on current and short-term loan accounts with interest, based at market rates. Due to the high level of own funds, the effect of interest payable on the statement of income is insignificant. The majority of the Group’s securities are non-interest bearing; as a result, the Group is not subject to significant amounts of risk due to fluctuations in the prevailing levels of market interest rates.

The Group’s interest sensitivity is monitored on a daily basis by the investment manager and reviewed on a regular basis by the Board of Directors.

Currency risk

The Group hold assets denominated in currencies other than the Swiss franc, the functional currency. They are therefore exposed to currency risk, as the value of the securities denominated in other currencies will fluctuate due to changes in exchange rates. Depending on the market situation the Group could use foreign currency options and/or forward contracts to reduce the currency risk.

The following table summarizes the Group’s exposure to currency risks:

2023

Net exposure 31.12. (in CHF 1 000)

Annual volatility (in %)

Potential impact (in CHF 1 000) 1)

USD

2 631 178

7.89

207 600

ANG

122

7.89

10

2022

USD

3 051 509

9.37

285 804

ANG

12

9.37

1

1Potential impact on total comprehensive income as well as shareholders' equity with all other variables held constant

The Group’s currency position is monitored on a daily basis by the investment manager and is reviewed on a regular basis by the Board of Directors.

Liquidity risk

The Group invests the majority of its assets in investments that are traded in an active market and can be readily disposed of. The Group’s treasury shares, with the exception of shares purchased under a share buy-back program, are considered readily realizable as they are listed on two stock exchanges. The Group can invest a minor part of its portfolio in securities, which are not traded on a stock exchange and may be illiquid. As a result, the Group may not be able to liquidate its investments in these instruments on short notice. In addition, the Group has access to a credit line (notes 5 and 13).

The tables below analyze the Group’s financial liabilities into relevant maturity groupings based on the period between the balance sheet date and the contractual maturity date (in CHF 1 000):

At December 31, 2023

Less than 1 month

1–3 months

More than 3 months / no stated maturity

Short-term borrowings from banks

304 900

Payables to brokers

5 436

Other short-term liabilities

2 800

691

Total liabilities

313 136

691

At December 31, 2022

Short-term borrowings from banks

363 000

Other short-term liabilities

3 439

704

Total liabilities

366 439

704

The Group’s liquidity position is monitored on a daily basis by the investment manager and is reviewed on a regular basis by the Board of Directors.

Diversification

The investment portfolio usually consists of 20 to 35 investments. This includes five to eight large core investments, defined as positions > 5%. These investments together will account for up to two-thirds of the portfolio. Companies without a stock market listing shall not exceed 10% of the portfolio.

As at December 31, 2023, the Group held six core investments, representing 55% of the Company's securities (2022: eight core investments, 66%). The portfolio is – in line with the strategy – concentrated on a limited number of investments. Risk diversification is therefore limited.

4. Financial assets

4. Financial assets

Fair values

The following table presents the Group’s assets that are measured at fair value through profit and loss at December 31 (in CHF 1 000):

2023

Level 1

Level 2

Level 3

Total

Assets

Securities

- Shares

2 619 989

14 725

2 634 714

- Derivative instruments

Total assets

2 619 989

14 725

2 634 714

2022

Assets

Securities

- Shares

3 035 170

16 179

3 051 349

- Derivative instruments

Total assets

3 035 170

16 179

3 051 349

The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The quoted market price used for financial assets held by the Group is the closing price. These instruments are included in level 1.

The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximize the use of observable market data where it is available. The options are valued on the basis of the Black-Scholes model which is based on market conditions existing at each balance sheet date. These instruments are included in level 2.

If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. The valuation of level 3 instruments is quarterly reviewed. As soon as new or adjusted parameters are available the valuation model (e.g. earnings multiple model) of unlisted shares is adjusted accordingly. As of December 31, 2023, the Company holds one level 3 instrument (December 31, 2022: one).

The table below summarizes the transactions in level 3 instruments (in CHF 1 000):

2023

2022

Opening balance

16 179

2 222

Purchases

16 875

Sales

(5 071)

Realized gains/(losses) included in gains/losses from securities

2 849

Unrealized gains/(losses) included in gains/losses from securities

(1 454)

(697)

Closing balance

14 725

16 179

Gains/(losses) on level 3 instruments included in gains/losses from securities

(1 454)

2 152

There were no transfers between level 1, 2 and 3 during the reporting period. No sensitivity analysis has been disclosed due to the immaterial amount of level 3 instruments.

The level 3 instrument as at December 31, 2021, (Valuation: TCHF 2 222) was allocated as part of a corporate action in 2019 and sold at a value of TCHF 5 071 in March 2022.

The fair value of the level 3 instrument at initial recognition represents the transaction price (purchase of Series B-1 Preferred Stock of Rivus Pharmaceuticals in August 2022 for TCHF 16 875), which was paid in a financing round together with other investors. For the valuation as at December 31, 2023, it is deemed to be appropriate to use the transaction price in USD, as it is a reasonable approximation of fair value at the valuation date given the fact that no events occurred which significantly impact the fair value.

In August 2022, 8 733 538 Radius Health – Contingent Value Rights were allocated from a corporate action. The valuation as of December 31, 2023, is CHF 0 (December 31, 2022: CHF 0).

For assets and liabilities carried at amortized cost, their carrying values are a reasonable approximation of fair value.

Securities

The changes in value of securities by investment category are as follows (in CHF 1 000):

Listed shares

Unlisted shares

Derivative instruments

Total

Opening balance as at 01.01.2022 at fair values

3 638 890

2 222

3 641 112

Purchases

183 812

16 875

200 687

Sales

(471 115)

(5 071)

(476 186)

Gains/(losses) from securities

(316 417)

(697)

2 849

(314 265)

Realized gains

47 563

2 849

50 412

Realized losses

(79 326)

(79 326)

Unrealized gains

437 200

437 200

Unrealized losses

(721 854)

(697)

(722 551)

Closing balance as at 31.12.2022 at fair values

3 035 170

16 179

3 051 349

Opening balance as at 01.01.2023 at fair values

3 035 170

16 179

3 051 349

Purchases

201 147

201 147

Sales

(451 169)

(451 169)

Gains/(losses) from securities

(165 158)

(1 454)

(166 613)

Realized gains

28 749

28 749

Realized losses

(46 543)

(46 543)

Unrealized gains

276 764

276 764

Unrealized losses

(424 128)

(1 454)

(425 582)

Closing balance as at 31.12.2023 at fair values

2 619 989

14 725

2 634 714

Securities comprise the following:

Company

Number 31.12.2022

Change

Number 31.12.2023

Market price in original currency 31.12.2023

Valuation CHF mn 31.12.2023

Valuation CHF mn 31.12.2022

Ionis Pharmaceuticals

9 635 000

(1 045 000)

8 590 000

USD

50.59

365.6

336.4

Neurocrine Biosciences

2 730 000

(320 000)

2 410 000

USD

131.76

267.2

301.5

Argenx SE

892 503

(67 503)

825 000

USD

380.43

264.1

312.6

Vertex Pharmaceuticals

930 523

(290 523)

640 000

USD

406.89

219.1

248.4

Intra-Cellular Therapies

3 291 479

(251 479)

3 040 000

USD

71.62

183.2

161.0

Moderna

1 501 951

389 124

1 891 075

USD

99.45

158.2

249.4

Alnylam Pharmaceuticals

890 000

(30 300)

859 700

USD

191.41

138.5

195.5

Revolution Medicines

4 777 562

269 138

5 046 700

USD

28.68

121.8

105.2

Incyte

2 891 077

(741 077)

2 150 000

USD

62.79

113.6

214.7

Arvinas

2 136 412

358 119

2 494 531

USD

41.16

86.4

67.6

Celldex Therapeutics

1 800 000

616 296

2 416 296

USD

39.66

80.6

74.2

Macrogenics

8 929 963

1 000 000

9 929 963

USD

9.62

80.4

55.4

Agios Pharmaceuticals

4 030 792

(30 792)

4 000 000

USD

22.27

75.0

104.6

Sage Therapeutics

2 950 278

554 722

3 505 000

USD

21.67

63.9

104.0

Immunocore

965 654

965 654

USD

68.32

55.5

Relay Therapeutics

4 120 720

1 804 280

5 925 000

USD

11.01

54.9

56.9

Crispr Therapeutics

888 605

(8 605)

880 000

USD

62.60

46.4

33.4

Essa Pharma

7 879 583

7 879 583

USD

6.60

43.8

18.4

Exelixis

2 654 500

(654 500)

2 000 000

USD

23.99

40.4

39.4

Biohaven

1 075 000

1 075 000

USD

42.80

38.7

Scholar Rock Holding

2 132 725

2 132 725

USD

18.80

33.7

17.8

Black Diamond Therapeutics

5 377 839

3 140 000

8 517 839

USD

2.81

20.1

8.9

Wave Life Sciences

4 494 458

4 494 458

USD

5.05

19.1

29.1

Beam Therapeutics

693 121

693 121

USD

27.22

15.9

25.1

Fate Therapeutics

4 839 779

4 839 779

USD

3.74

15.2

45.1

Esperion Therapeutics

4 194 064

4 194 064

USD

2.99

10.6

24.2

Generation Bio Co.

3 608 280

3 608 280

USD

1.65

5.0

13.1

Molecular Templates 1)

11 192 003

283 686

1 029 820

USD

3.73

3.2

3.4

Myovant Sciences

5 872 639

(5 872 639)

USD

n.a.

146.4

Mersana Therapeutics

4 066 200

(4 066 200)

USD

n.a.

22.0

Kezar Life Sciences

3 000 000

(3 000 000)

USD

n.a.

19.5

Homology Medicines

1 622 522

(1 622 522)

USD

n.a.

1.9

Listed shares

2 620.0

3 035.2

Rivus Pharmaceuticals

USD

14.7

16.2

Unlisted shares

14.7

16.2

Total shares

2 634.7

3 051.3

Radius Health – Contingent Value Right

8 733 538

8 733 538

USD

0.00

Total derivative instruments

Total securities

2 634.7

3 051.3

1Share split 1:15 as at August 14, 2023

Securities are deposited with Bank Julius Baer & Co. Ltd., Zurich.

5. Short-term borrowings from banks

5. Short-term borrowings from banks

At December 31, 2023, a CHF 304.9 mn short-term loan is outstanding, with interest payable at 2.10% p.a. (2022: CHF 363 mn at 1.36% p.a.).

6. Other short-term liabilities

6. Other short-term liabilities

Other short-term liabilities comprise the following:

in CHF 1 000

31.12.2023

31.12.2022

Payables to investment manager

2 074

2 978

Other liabilities

1 417

1 165

Total liabilities to third parties

3 491

4 143

7. Shareholders’ equity

7. Shareholders’ equity

The share capital of the Company consists of 55.4 mn fully paid registered shares (2022: 55.4 mn registered shares) with a par value of CHF 0.20 each (2022: CHF 0.20). CHF 2.2 mn of the retained earnings (2022: CHF 2.2 mn) are undistributable.

in CHF 1 000

Share capital

Treasury shares

Retained earnings

Total

Balances at January 1, 2022

11 080

(9 205)

3 281 618

3 283 493

Dividend

(212 242)

(212 242)

Trade with treasury shares

(27 303)

(27 303)

Total comprehensive income for the period

(357 812)

(357 812)

Balances at December 31, 2022

11 080

(36 508)

2 711 563

2 686 135

Balances at January 1, 2023

11 080

(36 508)

2 711 563

2 686 135

Dividend

(156 311)

(156 311)

Total comprehensive income for the period

(206 607)

(206 607)

Balances at December 31, 2023

11 080

(36 508)

2 348 645

2 323 217

Dividend per share 2023: CHF 2.85 (2022: CHF 3.85).

At December 31, 2023 and 2022, the Company has neither authorized nor conditional capital.

Treasury shares

The Company can buy and sell treasury shares in accordance with the Company’s articles of association and Swiss company law and in compliance with the listing rules of the SIX Swiss Exchange. During the period from January 1, 2023, to December 31, 2023, the Company has not bought or sold any treasury shares (01.01.–31.12.2022: Purchase of 446 574 treasury shares to the amount of TCHF 27 303; no sales). As at December 31, 2023, the Company holds 554 000 treasury shares (December 31, 2022: 554 000 shares). The treasury shares as at December 31, 2023, were treated as a deduction from the consolidated shareholders’ equity using cost values of TCHF 36 508 (December 31, 2022: TCHF 36 508).

Share buy-back 2nd line (bought for cancellation)

In April 2019, the Board of Directors approved the repurchase of a maximum of 5 540 000 own registered shares with a nominal value of CHF 0.20 each. Until the end of the program, at April 11, 2022, no shares had been repurchased under this share buy-back program.

In April 2022, the Board of Directors has approved the repurchase of a maximum of 5 540 000 own registered shares with a nominal value of CHF 0.20 each. The share buy-back program will run from April 13, 2022 until April 11, 2025 at the latest. Until December 31, 2023, no shares had been repurchased under this share buy-back program. The repurchase will take place via second trading line for the purpose of a subsequent capital reduction.

8. Administrative expenses

8. Administrative expenses

Administrative expenses comprise the following:

in CHF 1 000

2023

2022

Investment manager

– Management fees

27 682

36 497

Personnel

– Board of Directors remuneration

1 680

1 550

– Wages and salaries

600

578

– Social insurance contributions and duties

120

122

30 083

38 747

The remuneration model of BB Biotech AG is determined by the Board of Directors. 

Since 2014, the remuneration paid to the investment manager is based upon a 1.1% p.a. all-in fee on the average market capitalization without any additional fixed or performance-based elements of compensation, which is paid on a monthly basis. The compensation of the Board of Directors consists since 2014 of a fixed compensation.

9. Other expenses

9. Other expenses

Other expenses comprise the following:

in CHF 1 000

2023

2022

Bank charges

446

516

Marketing and financial reporting

1 567

1 171

Legal and consulting expenses

380

288

Transaction costs

948

985

Other expenses

1 219

1 314

4 560

4 274

10. Income taxes

10. Income taxes

in CHF 1 000

2023

2022

Operating income before tax

(206 528)

(357 751)

Expected tax rate (Direct federal, cantonal and communal tax)

14.2%

14.2%

Expected income tax

(29 286)

(50 729)

Difference between effective local tax rates and the expected Swiss tax rate

(29 365)

(50 790)

Total income tax

79

61

In the current year, the average effective income tax rate on a consolidated basis was less than 1% (2022: <1%). This low rate is mainly attributable to the fact that a large proportion of operating income was generated by companies located in Curaçao. As at December 31, 2023, there is no nettable loss carry forward (2022: none). 

11. Earnings per share

11. Earnings per share

2023

2022

Total comprehensive profit/(loss) for the period (in CHF 1 000)

(206 607)

(357 812)

Weighted average number of shares in issue

54 846 000

55 011 338

Earnings per share in CHF

(3.77)

(6.50)

Income used to determine diluted earnings per share (in CHF 1 000)

(206 607)

(357 812)

Weighted average number of shares in issue following the dilution

54 846 000

55 011 338

Diluted earnings per share in CHF

(3.77)

(6.50)

12. Segment reporting

12. Segment reporting

The sole operating segment of the Group reflects the internal management structure and is evaluated on an overall basis. Revenue is derived by investing in a portfolio of companies active in the biotechnology industry for the purpose of capital appreciation. The following results correspond to the sole operating segment of investing in companies active in the biotechnology industry.

The geographical analysis of the profit/(loss) before tax is as follows – all income from financial assets are attributed to a country based on the domiciliation of the issuer of the instrument:

Profit/(loss) before tax in CHF 1 000

2023

2022

Canada

25 400

(57 337)

Great Britain

16 181

62 370

Switzerland

8 389

(32 542)

British Virgin Islands

1 559

Singapore

(9 989)

15 976

Netherlands

(21 842)

23 715

Curaçao

(35 008)

(39 717)

USA

(191 218)

(330 216)

(206 528)

(357 751)

13. Assets pledged

13. Assets pledged

At December 31, 2023, the securities in the amount of CHF 2 634.7 mn (2022: CHF 3 051.3 mn) are a collateral for a credit line of CHF 700 mn (2022: CHF 700 mn). At December 31, 2023, a CHF 304.9 mn short-term loan is outstanding (2022: CHF 363 mn). 

14. Commitments, contingencies and other off-balance sheet transactions

14. Commitments, contingencies and other off-balance sheet transactions

The Group had no commitments or other off-balance sheet transactions open at December 31, 2023 (2022: none).

The operations of the Group are affected by legislative, fiscal and regulatory developments for which provisions are made where deemed necessary. The Board of Directors concludes that as at December 31, 2023, no proceedings existed which could have any material effect on the financial position of the Group (2022: none).

15. Financial instruments by category

15. Financial instruments by category

Financial assets and liabilities are allocated to categories as follows (in CHF 1 000):

At December 31, 2023

Financial assets at amortized cost

Financial assets at fair value through profit or loss

Total

Assets as per balance sheet

Cash and cash equivalents

501

501

Receivables from brokers

1 829

1 829

Securities

2 634 714

2 634 714

2 330

2 634 714

2 637 044

Financial liabilities at amortized cost

Financial liabilities at fair value through profit or loss

Total

Liabilities as per balance sheet

Short-term borrowings from banks

304 900

304 900

Payables to brokers

5 436

5 436

Other short-term liabilities

3 491

3 491

308 391

5 436

313 827

At December 31, 2022

Financial assets at amortized cost

Financial assets at fair value through profit or loss

Total

Assets as per balance sheet

Cash and cash equivalents

1 948

1 948

Securities

3 051 349

3 051 349

1 948

3 051 349

3 053 297

Financial liabilities at amortized cost

Financial liabilities at fair value through profit or loss

Total

Liabilities as per balance sheet

Short-term borrowings from banks

363 000

363 000

Other short-term liabilities

4 143

4 143

367 143

367 143

Profit and loss from financial assets and liabilities are allocated to categories as follows (in CHF 1 000):

2023

Financial assets at amortized cost

Financial instruments at fair value through profit or loss

Financial liabilities at amortized cost

Total

Profit and loss from financial instruments

Interest income

35

35

Losses from securities

(166 613)

(166 613)

Foreign exchange gains

490

490

Finance expenses

(5 802)

(5 802)

2022

Profit and loss from financial instruments

Interest income

4

4

Losses from securities

(314 265)

(314 265)

Foreign exchange gains

1 253

1 253

Finance expenses

(1 726)

(1 726)

16. Transactions with the investment manager and related party transactions

16. Transactions with the investment manager and related party transactions

The investment management and administration of the Company has been delegated to Bellevue Asset Management AG. Based on the 1.1% p.a. all-in fee model, no additional costs incurred at Bellevue Asset Management AG were charged to the BB Biotech Group (2022: none). The amounts outstanding at the balance sheet date are disclosed in note 6, «Other short-term liabilities». 

17. Significant shareholders

17. Significant shareholders

The Board of Directors is not aware of any major shareholder with a holding exceeding 3% of all votes as at December 31, 2023 and 2022. 

18. Subsequent events

18. Subsequent events

There have been no events subsequent to December 31, 2023, which would affect the 2023 consolidated financial statements. 

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