Financial assets include loans to joint ventures and a number of small-scale participations in companies, mostly in Germany and in Switzerland, engaged in activities closely related to the ones of Clariant.

In 2019, Clariant acquired a 10% stake in Plant Advanced Technologies SA, which develops plant-based active ingredients for cosmetics. The purchase price amounted to CHF 2 million.

In 2019 loans extended amounted to CHF 9 million (2018: CHF 13 million). Participations amounted to CHF 209 in 2019 (CHF 198 million in 2018).

In 2019, loans to associates in the amount of CHF 4 million (2018: CHF 5 million) were repaid.

In December 2018, Clariant sold 5% of it’s 19.7% stake in the company Stahl Lux 2 SA, which was classified as an associate until this time. Subsequent to the transaction the remaining shareholdings were reclassified to Financial Assets.

While loans are carried at amortized cost participations are valued at fair value through OCI using »Level 3« methods.

The valuation of participations is based on multiples of projected earnings and discounted cash flows. The change in participation value was mainly driven by the fair value estimation performed in 2019 and resulting in an increase of CHF 16 million. The gain on the revaluation, amounting to CHF 14 million net of tax, was recognized in Other comprehensive income.

The key unobservable inputs used in the fair value estimation of the most material participation that constitutes 85% of these shareholdings are as follows: long-term revenue growth rate 1%, long-term pre-tax operating margin 16.8% and weighted average cost of capital 8%. The sensitivity analysis shows that if the long-term growth rate had been higher/lower by 1% with all other variables held constant, the fair value would have been CHF 22 million higher/CHF 16 million lower. If the long-term pre-tax operating margin had been higher/lower by 1% with all other variables held constant, the fair value would have been CHF 7 million higher/lower. If the weighted average cost of capital had been higher/lower by 0.5% with all other variables held constant, the fair value would have been CHF 10 million higher/CHF 8 million lower.