Cash and Cash Equivalents
Cash and cash equivalents in the condensed consolidated interim statements of financial position is comprised of cash at banks and on hand and short-term deposits with a maturity of three months or less, which are subject to an insignificant risk of changes in value.
Our objective in managing our cash resources (cash, cash equivalents and marketable securities) is to preserve principal, achieve liquidity requirements, and safeguard funds. We maintain our cash resources in accordance with our investment policy, which defines allowable investments, specifies credit quality standards and is designed to limit our credit exposure to any single issuer. Cash and cash equivalents include deposits and investments. Marketable securities include commercial paper, treasury bills and securities issued by several public corporations and the Dutch, EU or U.S. Treasury. A minimum of two times the amount of expected monthly cash outflow must be liquid at the beginning of each month. Our invested cash resources are deployed to achieve our operating objectives in furthering our programs. We are prohibited from borrowing for investment purposes and from engaging in any non-business related investment activity that would be considered speculative according to the principles of conservative investment management.
For the purposes of the condensed consolidated interim statements of cash flows, cash and cash equivalents consist of cash, short-term deposits and highly-rated corporate bonds, as defined above, net of outstanding bank overdrafts.
There were no new standards, interpretations, or amendments that became effective in the current reporting period which had an impact on the unaudited condensed consolidated interim financial statements.
Investments in Debt Securities
As of September 30, 2021, we have determined that we have the intent and ability to hold all investments in debt securities until maturity. Accordingly, all investments are recorded at amortized cost on our condensed consolidated interim statements of financial position, with the amortization of bond premiums or discounts and earned interest income recorded in our condensed consolidated interim statements of loss.
Reclassification
Certain prior period amounts have been reclassified to conform to the current quarter presentation, including insurance costs of €0.5 million that, for the six months ended June 30, 2021, were allocated to research and development and are now fully allocated as a general and administrative expense, with no impact to earnings per share. This reclassification more accurately reflects the nature of these insurance costs as general and administrative expenses rather than an indirect cost allocated to research and development expenses. There was no impact to any period during the fiscal year ended December 31, 2020 as a result of this reclassification.
Note 3—Significant Accounting Judgments, Estimates and Assumptions
In the application of our accounting policies, the Company is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
Critical judgments made in the process of applying our accounting policies and that have the most significant effect on the amounts recognized in our unaudited condensed consolidated interim financial statements relate to revenue recognition, share-based payments, lease accounting, and to our research and license agreements.
