The following new standards, amendments and interpre-tations take effect after December 31, 2014:
> “IFRIC 21 - Levies”, issued in May 2013. The interpretation defines when a liability in respect of the obligation to pay a levy (other than income taxes) due to the government, whether local, national or international must be reco-gnized. More specifically, the interpretation established that the liability shall be recognized when the obligating event giving rise to the liability to pay the levy (for exam-ple, upon reaching a given threshold level of revenue), as set out in the applicable law, occurs. If the obligating event occurs over a specified period of time, the liability shall be recognized gradually over that period. The inter-pretation will take effect for periods beginning on or af-ter June 17, 2014. The Group does not expect the future application of the provisions to have an impact.
> “Annual improvements to IFRSs 2011-2013 cycle”, issued in December 2013; the document contains formal modi-fications and clarimodi-fications of existing standards that are not expected to have a significant impact on the Group and will apply as from January 1, 2015. More specifically, the following standards were amended:
- “IFRS 3 - Business combinations”; the amendment cla-rifies that IFRS 3 does not apply to the financial sta-tements of a joint arrangement in accounting for the formation of the joint arrangement itself;
- “IFRS 13 - Fair value measurement”; the amendment clarifies that the exception provided for in that stan-dard of measuring financial assets and liabilities on the basis of the net exposure of the portfolio (the “portfo-lio exception”) shall apply to all contracts within the scope of IAS 39 or IFRS 9 even if they do not meet the definitions in IAS 32 of financial assets or liabilities;
- “IAS 40 - Investment property”; under IAS 40, a proper-ty interest held by a lessee under an operating lease may be classified as an investment property if and only if the property would otherwise meet the definition of an investment property and if the lessee uses the fair value model to measure such investments. The amendment also clarifies that management judgment must be used to determine whether the acquisition of
an investment property represents the acquisition of an asset or group of assets or is a business combination under the provisions of IFRS 3. That judgment must be consistent with the guidance of IFRS 3.
“Annual improvements to IFRSs 2011-2013 cycle” amen-ded the Basis for Conclusions of “IFRS 1 - First-time adop-tion of Internaadop-tional Financial Reporting Standards” to cla-rify that a first-time adopter may adopt a new IFRS whose adoption is not yet mandatorily effective if the new IFRS permits early application.
> “Annual improvements to IFRSs 2010-2012 cycle”, issued in December 2013; the document contains formal modi-fications and clarimodi-fications of existing standards that are not expected to have a significant impact on the Group and will apply for period beginning on or after February 1, 2015. More specifically, the following standards were amended:
- “IFRS 2 - Share-based payment”; the amendment se-parates the definitions of “performance conditions”
and “service conditions” from the definition of “vesting conditions” in order to clarify the description of each condition;
- “IFRS 3 - Business combinations”; the amendment cla-rifies how to classify any contingent consideration agreed in a business combination. Specifically, the amendment establishes that if the contingent consi-deration meets the definition of financial instrument it shall be classified as a financial liability or equity. In the former case, the liability shall be measured at fair value and changes in fair value shall be recognized in profit or loss in accordance with IFRS 9. Contingent conside-ration that does not meet the definition of financial in-strument shall be measured at fair value and changes in fair value shall be recognized in profit or loss;
- “IFRS 8 - Operating segments”; the amendments intro-duce new disclosure requirements in order to enable the users of financial statements to understand the judgments adopted by management’s in aggregating operating segments and the reasons for such aggre-gation. The amendments also clarify that the reconci-liation of total segment assets and total assets of the entity is required only if provided periodically by ma-nagement;
- “IAS 16 - Property, plant and equipment”; the amendment clarifies that when an item of property, plant and equipment is revalued the gross carrying amount of that asset shall be adjusted in a manner consistent with the revaluation of the carrying amount.
In addition, it also clarifies that the accumulated depre-ciation shall be calculated as the difference between the gross carrying amount and the carrying amount of the asset after taking account of accumulated impai-rment losses;
- “IAS 24 - Related party disclosures”; the amendment clarifies that a management entity, i.e. an entity provi-ding key management personnel services to an entity, is a related party of that entity. Accordingly, in addi-tion to fees for services paid or payable to the mana-gement entity, the entity must report other transac-tions with the management entity, such as loans. The amendment also clarifies that if an entity obtains key management personnel services from a management entity, the entity is not required to disclose the com-pensation paid or payable by the management entity to those managers;
- “IAS 38 - Intangible assets”; the amendment clarifies that when an intangible asset is revalued, its gross carrying amount shall be adjusted in a manner consi-stent with the revaluation of the carrying amount. In addition, it also clarifies that the accumulated amor-tization shall be calculated as the difference between the gross carrying amount and the carrying amount of the asset after taking account of accumulated impai-rment losses.
“Annual improvements to IFRSs 2010-2012 cycle” amen-ded the Basis for Conclusions of “IFRS 13 - Fair value me-asurement” to clarify that short-term receivables and pa-yables with no stated interest rate to apply to the invoice amount can still be measured without discounting, if the impact of discounting would not be material.
> “Amendments to IAS 19 - Defined benefit plans: em-ployees contributions”, issued in November 2013. The amendments are intended to clarify how to recognize contributions from employees within a defined benefit plan. More specifically, contributions linked to service should be recognized as a reduction in service cost:
- over the periods in which employees render their servi-ces, if the amount of the contributions is dependent on the number of years of service; or
- in the period in which the service is rendered, if the amount of the contributions is independent of the number of years of service.
The amendments will take effect for periods beginning on or after February 1, 2015. The Group is assessing the potential impact of the future application of the
> “IFRS 9 - Financial instruments”, the final version was is-sued on July 24, 2014, replacing the existing “IAS 39 - Fi-nancial instruments: recognition and measurement” and supersedes all previous versions of the new standard. The standard will take effect as from January 1, 2018 and early application will be permitted following endorsement.
The final version of IFRS 9 incorporates the results of the three phases of the project to replace IAS 39 concerning classification and measurement, impairment and hedge accounting.
As regards the classification of financial instruments, IFRS 9 provides for a single approach for all types of financial asset, including those containing embedded derivatives, under which financial assets are classified in their enti-rety, without the application of complex subdivision me-thods.
In order to determine how financial assets should be clas-sified and measured, consideration must be given to the business model used to manage its financial assets and the characteristics of the contractual cash flows. Business model is construed as the manner in which the entity ma-nages its financial assets to generate cash flows, i.e. col-lecting contractual cash flows, selling the financial asset or both.
Financial assets at amortized cost are held in a business model whose objective is to collect contractual cash flows, while those held at fair value through other com-prehensive income (FVTOCI) are held with the objective of collecting contractual cash flows or selling the instru-ment. This category enables the recognition of interest calculated using the amortized cost method through profit or loss and the fair value of the financial asset through OCI.
Financial assets at fair value through profit or loss (FVTPL) is now a residual category that comprises financial instru-ments that are not held under one of the two business models indicated above, including those held for trading and those managed on the basis of their fair value.
As regards the classification and measurement of finan-cial liabilities, IFRS 9 maintains the accounting treatment envisaged in IAS 39, making limited amendments, for which most of such liabilities are measured at amortized cost. In addition, it is still possible to designate a financial liability as at fair value through profit or loss if certain re-quirements are met.
The standard introduces new provisions for financial liabilities designated as at fair value through profit or
changes in fair value due to own credit risk shall be reco-gnized through OCI rather than profit or loss. This part of the standard may be applied early, without having to apply the entire standard.
In view of the fact that during the financial crisis the model of impairment based on “incurred credit losses”
had shown clear limitations connected with the deferral of the recognition of credit losses to the time a trigger event occurred, the standard proposes a new model that gives users of financial statements more information on
“expected credit losses”.
Essentially, the model envisages:
a) the application of a single approach for all financial assets;
b) the recognition of expected credit losses on an on-going basis and the updating of the amount of such losses at the end of each reporting period, with a view to reflecting changes in the credit risk of the financial instrument;
c) the measurement of expected losses on the basis of re-asonable information, obtainable without undue cost, about past events, current conditions and forecasts of future conditions;
d) an improvement of disclosures on expected losses and credit risk.
IFRS 9 also introduces a new approach to hedge ac-counting, with the objective of aligning the representa-tion in the accounts with risk management activities and of establishing a more principles-based approach.
The new approach to hedge accounting will enable en-tities to reflect their risk management activities in the financial statements, extending the criteria for eligibility as hedged items to the risk components of non-financial elements, to net positions, to layer components and to aggregate exposures (i.e. a combination of a non-deri-vative exposure and a derinon-deri-vative). The most significant changes regarding hedging instruments compared with the hedge accounting approach used in IAS 39 involve the possibility of deferring the time value of an option, the forward element of forward contracts and currency basis spreads (i.e. “hedging costs”) in OCI up until the time in which the hedged element impacts profit or loss.
IFRS 9 also eliminates the requirement for testing effec-tiveness under which the results of the retrospective test needed to fall with a range of 80%-125%, allowing enti-ties to rebalance the hedging relationship if risk manage-ment objectives have not changed.
Finally, IFRS 9 does not replace the provisions of IAS 39
concerning portfolio fair value hedge accounting for in-terest rate risk (“macro hedge accounting”) as that phase of the project for replacing IAS 39 has been separated and is currently at the discussion stage. In this regard, in April 2014 the IASB published the Discussion Paper Ac-counting for Dynamic Risk Management: a Portfolio Reva-luation Approach to Macro Hedging.
The potential impact of the future application of IFRS 9 is still being assessed.
> “IFRS 14 - Regulatory deferral accounts”, issued in January 2014. The standard allows first-time adopters to conti-nue to recognize rate-regulated amounts recognized un-der their previous GAAP at first-time adoption of the In-ternational Financial Reporting Standards. The standard may not be adopted by entities that already prepare their financial statements in accordance with the IFRS/IAS. In other words, an entity may not recognize rate-regulated assets and liabilities under IFRS 14 if its current GAAP do not permit such recognition or if the entity has not adopted such accounting treatment as permitted under its current GAAP. The standard shall take effect retrospec-tively, subject to endorsement, for periods beginning on or after January 1, 2016. The application of the standard will have no impact on the Group.
> “IFRS 15 - Revenue from contracts with customers”, is-sued in May 2014, introduces a general framework for the recognition and measurement of revenue, accompa-nied by a set of notes. The new standard replaces “IAS 11 - Construction contracts”, “IAS 18 - Revenue”, “IFRIC 13 - Customer loyalty programmes”, “IFRIC 15 - Agreements for the construction of real estate”, IFRIC 18 - Transfers of assets from customers” and “SIC 31 - Revenue - Barter transactions involving advertising services”. The new stan-dard establishes that an entity must recognize revenue in a manner that faithfully depicts the transfer of goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new reco-gnition approach is based on a five-step model: the en-tity must identify the contract(s) with the customer (step 1); once the contract has been identified, it must iden-tify the performance obligations in the contract, i.e. it must assess its terms and commercial practices in order to identify which goods and services are promised in re-spect of the individual obligations in the contract (step 2);
subsequently, the entity must determine the transaction price (step 3), which is represented by the consideration that it expects to obtain; the entity must then allocate the
transaction price to the individual obligations identified in the contract (step 4) on the basis of the value of each performance obligation; revenue is recognized when the entity satisfies the individual performance obligations (step 5). The standard shall take effect, subject to en-dorsement, for periods beginning on or after January 1, 2017. The Group is assessing the potential impact of the future application of the standard.
> “Amendments to IFRS 11 - Accounting for acquisitions of interests in joint operations”, issued in May 2014. The amendments clarify the accounting treatment of the ac-quisition of an interests in a joint operation that is busi-ness, pursuant to IFRS 3, requiring the application of all the accounting rules for business combinations under IFRS 3 and other applicable IFRS with the exception of those standards that conflict with the guidance on IFRS 11. Under the amendments, a joint operator that acqui-res such inteacqui-rests must measure the identifiable assets and liabilities at fair value; expense acquisition-related costs (with the exception of debt or equity issuance costs); recognize deferred taxes; recognize any goodwill or bargain purchase gain; perform impairment tests for the cash generating units to which goodwill has been allocated; and disclose information required for relevant business combinations. The amendments will take effect, subject to endorsement, for periods beginning on or af-ter January 1, 2016.
> “Amendments to IAS 16 and IAS 38 - Clarification of ac-ceptable methods of depreciation and amortization”, is-sued in May 2014. The amendments provide additional guidance on how the depreciation or amortization of property, plant and equipment and intangible assets should be calculated. The provisions of IAS 16 have been amended to clarify that a revenue-based depreciation method asset is not appropriate. The provisions of IAS 38 have been amended to introduce a presumption that a revenue-based amortization method is inappropriate.
That presumption can be overcome when:
- the intangible asset is expressed as a measure of reve-nue;
- it can be demonstrated that revenue and the con-sumption of the economic benefit generated by an in-tangible asset are highly correlated.
The amendments will take effect prospectively, subject to endorsement, for periods beginning on or after January 1, 2016. The Group is assessing the impact of the future application of the amendments.
sued in June 2014. The amendments change the ac-counting treatment of biological assets that meet the definition of “bearer plants”, such as fruit trees, that cur-rently fall within the scope of “IAS 16 - Property, plant and equipment”. As a consequence, they will be subject to all of the provisions of that standard. Accordingly, for me-asurement subsequent to initial recognition, the entity may choose between the cost model and the revaluation model. The agricultural products produced by the bearer plants (e.g. fruit) will remain within the scope of “IAS 41 - Agriculture”. The amendments will take effect, subject to endorsement, for periods beginning on or after January 1, 2016. The Group does not expect the future applica-tion of the amendments to have an impact.
> “Amendments to IAS 27 - Equity method in separate finan-cial statements” issued in August 2014. The amendments reinstate the equity method as an accounting option for investments in subsidiaries, joint ventures and asso-ciates in an entity’s separate financial statements. The amendments also clarify a number of issues concerning investment entities. Specifically, when an entity ceases to be an investment entity, it must recognize investments in subsidiaries in accordance with IAS 27. Conversely, when an entity becomes an investment entity, it must recogni-ze investments in subsidiaries at fair value through profit or loss in accordance with IFRS 9. The amendments will take effect, subject to endorsement, for periods begin-ning on or after January 1, 2016. As the amendments re-gard the separate financial statements only, they are not expected to have an impact on the consolidated financial statements.
> “Amendments to IFRS 10 and IAS 28 - Sale or contribu-tion of assets between an investor and its associate or joint venture”, issued in September 2014. The amendments established that in the case of the sale or contribution of assets to a joint venture or an associate, or the sale of an in-terest that gives rise to a loss of control while maintaining joint control or significant influence over the associate or joint venture, the amount of the gain or loss recognized shall depend on which the assets or interest constitute a business in accordance with “IFRS 3 - Business combina-tions”. More specifically, if the assets/interest constitute a business, any gain (loss) shall be recognized in full; if the assets/interest does not constitute a business, any gain (loss) shall only be recognized to the extent of the unre-lated investors’ interests in the associate or joint venture, who represent the counterparties in the transaction. The
dorsement, for periods beginning on or after January 1, 2016. The Group does not expect the future application of the amendments to have an impact.
> “Amendments to IAS 1 - Disclosure initiative”, issued in December 2014. The amendments, which form part of a broader initiative to improve presentation and disclosure requirements, include changes in the following areas:
> “Amendments to IAS 1 - Disclosure initiative”, issued in December 2014. The amendments, which form part of a broader initiative to improve presentation and disclosure requirements, include changes in the following areas: