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 2020 loans amounted to CHF 4 million (2019: CHF 9 million). Participations amounted to CHF 198 million in 2020 (CHF 209 million in 2019).

In 2020, loans in the amount of CHF 5 million (2019: CHF 4 million) from associates were repaid.

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 values was mainly driven by the fair value estimation performed in 2020 and resulting in a decrease of CHF 10 million. The loss on the revaluation, amounting to CHF 9 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 87.9% of these shareholdings are as follows: long-term revenue growth rate 1%, long-term pre-tax operating margin 16.3% and weighted average cost of capital 9.1%. 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 23 million higher/CHF 18 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 11 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 12 million lower/CHF 13 million higher.