The table below shows the schedule for the contractual flows (being principal and interest payments):
(in thousands of euro) ≤1 year
2 to 5 years
included ≥ 5 years Total
BPI PTZI IPH41 300 150 - 450
Lease finance obligations – Real estate property 420 - - 420
Down-payment (74 ) - - (74 )
Lease finance obligations – Rent Le Virage 106 1,272 159 1,537
Lease liabilities – Premises Innate Inc. 34 355 144 533
Lease liabilities – Laboratory equipment 179 647 - 826
Lease liabilities – Vehicles 19 22 - 41
Loans – Equipment 57 228 43 328
Loan – Building 1,427 5,706 9,391 16,524
Total 2,468 8,380 9,737 20,585
Fair value of financial liabilities
The fair value of financial liabilities, calculated on the basis of discounted future cash flow, was €5,402 thousand,€4,427 thousand and €16,825thousand as of December 31, 2017, 2018 and 2019 respectively, using level 3 fair value measurements.
10) Employee benefits
Defined benefit obligations
Year ended December 31,
(in thousands of euro) 2017 2018 2019
Allowance for retirement defined benefit 2,255 3,282 3,281
Allowance for seniority awards 366 415 479
Total Defined benefit obligations 2,621 3,697 3,760
French law requires payment of a lump sum retirement indemnity to employees based on years of service and annual compensation at retirement. Benefits do not vest prior to retirement. The Company pays for this defined benefit plan. It is calculated as the present value of estimated future benefits to be paid, applying the projected unit credit method whereby each period of service is seen as giving rise to an additional unit of benefit entitlement, each unit being measured separately to build up the final.
On March 24, 2016, the Company entered into an internal labor agreement with the employees representatives whereby the Company is committed to paying a seniority award after 15 years and 20 years of employment. This award is paid on the anniversary date. A similar award existed for employees having a seniority of 10 years but was not booked due to its insignificant amount. As such, in 2016 the Company recorded a provision for seniority awards and a corresponding charge included in
“Personnel costs other than share-based payments” (see Note 14) other than payments in shares. These awards meet the definition of other long-term benefits under IAS 19. This provision is determined by an external actuary firm based on the assumptions disclosed hereafter and amounts to €479 thousand as of December 31, 2019 (€415 thousand as of December 31, 2018).
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The main actuarial assumptions used to evaluate retirement benefits are the following:
Year ended December 31,
2017 2018 2019
Economic assumptions
Discount rate (iBoxx Corporate AA) for retirement 1.70 % 1.80 % 1.05 %
Annual rate of increase in wages 3.00 % 4.50 % 3.00 %
Demographical assumptions
Type of retirement
At the initiative of the
employee
At the initiative of the
employee
At the initiative of the employee
Annual mobility rate 1.6 % 2.0 % 1.9 %
Rate of contributions 45.20 % 45.20 % 47.07 %
Rate of wages costs 23.29 % 23.29 % 22.54 %
Age at retirement
- Executives (years) 64 64 64
- Non executives (years) 62 62 62
Mortality table TH-TF 00-02 TH-TF 00-02 TH-TF 00-02
Annual turnover by tranche of age All personnel All personnel All personnel
16-24 years 4.0 % 5.0 % 5.0 %
25-29 years 2.5 % 3.0 % 3.5 %
30-34 years 2.0 % 2.5 % 2.5 %
35-39 years 1.5 % 2.0 % 2.0 %
40-44 years 1.0 % 1.5 % 1.5 %
45-49 years 0.5 % 1.0 % 1.0 %
+50 years 0 % 0 % 0 %
Changes in the projected benefit obligation for the periods presented were as follows (in thousands of euro):
As of January 1, 2017 2,418
Service cost 363
Interest costs 36
Actuarial gain (196 )
As of December 31, 2017 2,621
Service cost 434
Interest costs 43
Actuarial loss 599
As of December 31, 2018 3,697
Service cost 630
Interest costs 55
Actuarial gain (622 )
As of December 31, 2019 3,760
There is no asset covering the defined benefit obligations.
An increase/decrease of +/- 50 basis point of the discount rate would result in a decrease/increase of the total benefit obligation of €286 thousand.
In France, pension funds are generally financed by employer and employee contributions and are accounted for as defined contribution plans with the employer contributions recognized as expensed as incurred. They amounted to €982 thousand,
€1,277 thousand and €1,375 thousand in the years ended December 31, 2017, 2018 and 2019, respectively.
F-40 11) Share capital and share base payments
a) Share capital
The Company manages its capital to ensure that the Company will be able to continue as a going concern while maximizing the return to shareholders through the optimization of the debt and equity balance.
We have never declared or paid any dividends on our ordinary shares. We do not anticipate paying cash dividends on our equity securities in the foreseeable future and intend to retain all available funds and any future earnings for use in the operation and expansion of our business, given our state of development.
As of December 31, 2019, the Company’s share capital amounted to €3,941,281.05 divided into (i) 78,811,114 ordinary shares, each with a nominal value of €0.05, (ii) 6,926 “2016” free preferred shares, each with a nominal value of €0.05 and (iii) 7,581 “2017” free preferred shares, each with a nominal value of €0.05, respectively fully paid up.
Share capital does not include BSAs, BSAAR,AGAs and AGAPs that have been granted to certain investors or natural persons, both employees and non-employees of the Company, but not yet exercised.
In October 21, 2019 and December 30, 2019, the retention period for the “2016 free preferred shares” has ended. The number of ordinary shares to which the conversion of one preferred share entitle has been determined according to the fulfilment of the performance criteria. Holders of “2016” preferred shares” are entitled to vote at our shareholders’ meetings, to dividends and to preferential subscription rights, on the basis of the number of ordinary shares to which they are entitled if they convert their preferred shares.
The Group issued preferred shares “2017 free preferred shares” which will become convertible into ordinary shares following a vesting period of one year and a retention period of two years if the performance criteria and presence are met at the end of the retention period. The number of ordinary shares to which the conversion of one preferred share will entitle will be determined according to the fulfilment of the performance criteria. During the retention period, holders of the 2017 preferred shares are entitled to vote the general shareholders’ meetings, to dividends and to preferential subscription rights, as if they held the same number of ordinary shares as their number of vested 2017 free preferred shares. The 2017 preferred shares are not transferrable during the retention period except under certain circumstances. After the end of the retention period, holders of all of preferred shares that have not yet converted them into our ordinary shares, are entitled to vote at our shareholders’ meetings, to dividends and to preferential subscription rights, on the basis of the number of ordinary shares to which they are entitled if they convert their preferred shares.
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The table below presents the historical changes in the share capital of the Company as of December 31, 2017, 2018 and 2019:
Contribution in kind in the context
of the acquisition of C5aR 167,187 36,999,480 3,343,748 - 0.05
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(1) Share issuance costs representing incremental expenses directly attributable to the offering of new shares in the IPO on the Nasdaq and in the European Private Placement (together the “Global Offering”) were recorded through equity for an amount of €621 thousands. They consist mainly of legal, financial, accounting and printing fees associated with drafting and filing the registration statement of Innate Pharma. The other incremental costs incurred in the Global Offering were expensed for an amount of €2,150 thousands.
Holding by the Company of its own shares
The Company held 18,575 of its own shares as of December 31, 2019.
b) Share based payments
The Company has issued BSAs, BSAARs, stock options, AGAs and AGAPs as follows:
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In October 21, 2019 and December 30, 2019, the retention period for the “2016 free preferred shares” has ended. The number of ordinary shares to which the conversion of one preferred share entitle has been determined according to the fulfilment of the performance criteria. Holders of “2016” preferred shares” are entitled to vote at our shareholders’ meetings, to dividends and to preferential subscription rights, on the basis of the number of ordinary shares to which they are entitled if they convert their preferred shares.