Application of new accounting standards
In the 2013 financial year, HeidelbergCement applied the following standards of the International Accounting Standards Board (IASB) for the first time.
First-time application of accounting standards
Title
Amendments to IAS 1 Presentation of Items of Other Comprehensive Income Amendments to IAS 19 Employee Benefits (Revised 2011)
Amendments to IAS 36 Recoverable Amount Disclosures for Non-Financial Assets Amendments to IFRS 7 Disclosures - Offsetting Financial Assets and Financial Liabilities IFRS 13 Fair Value Measurement
IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine Improvements to IFRSs 2009-2011 Cycle
– The amendments to IAS 1 Presentation of Items of Other Comprehensive Income relate to the presentation
of items shown in other comprehensive income. Components in other comprehensive income that in subse- quent periods will be reclassified to profit or loss under certain conditions should be shown separately from the components that will never be reclassified to profit or loss. The statement of comprehensive income for the Group has been adjusted accordingly.
– The amendments to IAS 19 Employee Benefits (Revised 2011) – subsequently referred to as IAS 19R – had
the following impact on the financial reporting of the HeidelbergCement Group: The existing method of recording expected return on plan assets and the calculation of the interest cost from the defined benefit obligation will now be replaced by recording the net interest from the net defined benefit obligation or the net defined benefit asset. The difference between the interest income from plan assets and actual return on plan assets is included in remeasurement of the defined benefit liability (asset) in the statement of compre- hensive income. Past service costs are immediately recognised in profit or loss as they arise. Administration costs that are incurred while the service is being provided and do not relate to the management of the plan assets (investment-related costs), will be recorded in other operating expenses from now on. The obligation to retrospectively apply IAS 19R led to adjustments to the income statement, the statement of comprehensive income, the statement of cash flows, the balance sheet, and the statement of changes in equity in earlier periods.
– With the amendments to IAS 36 Recoverable Amount Disclosures for Non-Financial Assets, the Interna-
tional Accounting Standards Board (IASB) has corrected overly broad disclosure requirements regarding the calculation of the recoverable amount of impaired non-financial assets. The amendments are mandatory for financial years beginning on or after 1 January 2014. Early application is permissible. HeidelbergCement has opted for early application of this standard.
– The amendment to IFRS 7 Disclosures – Offsetting Financial Assets and Financial Liabilities results in
additional disclosures relating to the netting of financial instruments. In addition to expanded disclosures regarding the actual netting carried out, disclosure requirements are being introduced for existing netting rights that do not comply with the balance sheet netting criteria in accordance with IAS 32. The amendments to IFRS 7 did not have any significant impact on the reporting of the HeidelbergCement Group.
– IFRS 13 Fair Value Measurement introduces a uniform framework for the measurement of the fair value
of assets and liabilities, which applies to all IFRS with a few exceptions (IFRS 2 Share-based Payment and IAS 17 Leases). IFRS 13 is to be applied prospectively. The application of IFRS 13 does not have any significant impact on the fair values determined by the Group.
– IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine describes the accounting of stripping
costs during the production phase in surface mining and clarifies when production stripping costs should lead to the recognition of an asset and how that asset should be classified and measured both initially and in subsequent periods. The retrospective application of IFRIC 20 resulted in balance sheet and income statement reclassifications in the prior period. As at the reporting date, the effects of the initial application of IFRIC 20 were quite similar in magnitude to those on 31 December 2012.
– As part of the annual improvements project Improvements to IFRS 2009–2011 Cycle, the IASB made minor
amendments to five standards (IAS 1 Presentation of Financial Statements, IAS 16 Property, Plant, and Equip- ment, IAS 32 Financial Instruments: Presentation, IAS 34 Interim Financial Reporting, and IFRS 1 First-time Adoption of IFRS). The changes did not have any impact on the reporting of the HeidelbergCement Group. The following tables show the impact of the retrospective application of IAS 19R and IFRIC 20 on the income statement, the statement of comprehensive income, the statement of cash flows, and the balance sheet in the previous period. The retrospective adjustment of equity is shown in the statement of changes in equity.
Income statement 2012
€m Before
adjustment IAS 19R IFRIC 20 Adjusted
Employee and personnel costs -2,330.4 -0.1 -2,330.5
Other operating expenses -3,877.0 -9.0 8.8 -3,877.2
Operating income before depreciation (OIBD) 2,477.2 -9.1 8.8 2,476.9
Depreciation of property, plant and equipment -794.1 -7.2 -801.3
Amortisation of intangible assets -69.8 -1.6 -71.4
Operating income 1,613.3 -9.1 1,604.2
Earnings before interest and taxes (EBIT) 1,248.3 -9.1 1,239.2
Foreign exchange gains and losses 4.5 0.5 5.0
Other financial result -86.7 -7.1 -93.8
Financial result -640.9 -6.6 -647.5
Profit before tax from continuing operations 607.4 -15.7 591.7
Income taxes -150.9 -0.7 -151.6
Net income from continuing operations 456.5 -16.4 440.1
Profit for the financial year 545.1 -16.4 528.7
Thereof non-controlling interests 243.9 0.1 244.0
Thereof Group share of profit 301.2 -16.5 284.7
Earnings per share in € (IAS 33)
Earnings per share attributable to the parent entity 1.61 -0.09 1.52
Earnings per share – continuing operations 1.13 -0.09 1.04
Earnings per share – discontinued operations 0.48 0.00 0.48
Consolidated financial statements
Additional information
4
Statement of comprehensive income 2012
€m Before adjustment IAS 19R Adjusted
Profit for the financial year 545.1 -16.4 528.7
Other comprehensive income not being reclassified to profit or loss in subsequent periods
Remeasurement of the defined benefit liability (asset) -243.4 13.4 -230.0
Income taxes 23.8 1.7 25.5
-219.5 15.0 -204.5
Other comprehensive income being reclassified to profit or loss in subsequent periods
Currency translation -112.8 0.1 -112.7
Other comprehensive income -334.3 15.1 -319.2
Total comprehensive income 210.8 -1.4 209.4
Relating to non-controlling interests 177.0 0.1 177.1
Relating to HeidelbergCement AG shareholders 33.8 -1.4 32.4
Statement of cash flows 2012
€m Before adjustment IAS 19R IFRIC 20 Adjusted
Net income from continuing operations 456.5 -16.4 440.1
Income taxes 150.9 0.7 151.6
Depreciation, amortisation, and impairment 1,125.1 8.8 1,133.9
Elimination of other non-cash items 177.6 15.7 193.3
Cash flow 1,537.4 8.8 1,546.2
Changes in operating assets 76.0 -8.8 67.2
Changes in working capital 175.0 -8.8 166.2
Cash flow from operating activities 1,513.4 1,513.4
Balance sheet 31 December 2012
€m Before adjustment IAS 19R IFRIC 20 Adjusted
Assets
Other intangible assets 297.7 3.9 301.6
Land and buildings 5,272.7 14.9 5,287.6
Fixed assets 22,226.7 18.8 22,245.5
Deferred taxes 442.0 2.6 444.6
Other non-current receivables 275.4 -7.0 268.4
Total non-current assets 22,963.9 2.6 11.8 22,978.2
Other current operating receivables 365.6 -11.8 353.8
Total current assets 5,025.6 -11.8 5,013.8
Balance sheet total 28,005.2 2.6 28,007.8
Equity and liabilities
Retained earnings 6,673.5 -5.4 6,668.1
Equity attributable to shareholders 12,614.6 -5.4 12,609.2
Non-controlling interests 1,098.8 -0.5 1,098.3
Total equity 13,713.4 -5.9 13,707.5
Non-current pension provisions 1,018.7 11.6 1,030.3
Total non-current liabilities 10,034.2 11.6 10,045.9
Current pension provisions 87.4 2.0 89.4
Other current operating liabilities 989.8 -5.2 984.7
Total current liabilities 4,257.5 -3.2 4,254.4
Total liabilities 14,291.8 8.5 14,300.3
Changes in the statement of cash flows
In order to improve transparency, the presentation of proceeds from and repayment of bonds and loans in the statement of cash flows was amended to the effect that proceeds and repayments relating to the syndicated facility agreement are reported on a net basis within a reporting period. Furthermore, changes to short-term interest-bearing liabilities are now reported separately. The following table shows the adjustments to the pre- vious period.
Statement of cash flows 2012
€m adjustmentBefore Adjustment Adjusted
Proceeds from bond issuance and loans 1,873.7 -1,532.4 341.3
Repayment of bonds and loans -3,003.7 1,531.4 -1,472.3
Changes in short-term interest-bearing liabilities 1.0 1.0
Cash flow from financing activities -1,262.4 0.0 -1,262.4
Accounting standards that have been published but not yet applied in the financial year
The IASB and IFRIC adopted the standards and interpretations listed below, whose application was not yet mandatory for the 2013 financial year. HeidelbergCement will not apply these standards and interpretations until the date when their application first becomes mandatory and after endorsement by the European Commission.
Published, but not yet applicable accounting standards
Title Date of first-time
application 1)
Endorsement by the EU Commission Amendments to IAS 19 Defined Benefit Plans: Employee Contributions 1 July 2014 no Amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities 1 January 2014 yes IFRS 9 Financial Instruments and subsequent amendments to IFRS 9, IFRS 7 and IAS 39 open no
IFRS 10 Consolidated Financial Statements 1 January 2014 yes
IFRS 11 Joint Arrangements 1 January 2014 yes
IFRS 12 Disclosure of Interests in Other Entities 1 January 2014 yes
IFRIC 21 Levies 1 January 2014 yes
Improvements to IFRSs 2010-2012 Cycle 1 July 2014 no
Improvements to IFRSs 2011-2013 Cycle 1 July 2014 no
1) Fiscal years beginning on or after that date
– The amendments to IAS 19 Defined Benefit Plans: Employee Contributions clarify the accounting of em-
ployee contributions or contributions made by third parties for defined benefit pension plans. Contributions that are independent of the years of service may be deducted from past service costs in the period in which the corresponding service was rendered. However, if the contributions are dependent on the number of years of service, they are to be attributed to the periods of service in the same way as the gross benefits. The amendments are not expected to have a significant impact on the financial position and performance of the Group.
- The amendment to IAS 32 Offsetting Financial Assets and Financial Liabilities clarifies details concerning
the netting of financial assets and liabilities: The right to netting must be enforceable not only in the ordinary course of business, but also in the event of a payment default and insolvency of all contract parties. The amendment is not expected to have any impact on the consolidated financial statements.
Consolidated financial statements
Additional information
4
– In November 2009, the IASB published the new standard IFRS 9 Financial Instruments for the classifica-
tion and measurement of financial assets. This standard constitutes the first part of the three-part project to completely replace IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 pursues a new, less complex approach for the categorisation and measurement of financial assets and financial liabilities. Instead of the previous four measure ment categories for financial instruments on the assets side, there are now only two. The categorisation is based firstly on the company’s business model for the group of financial instruments under consideration and secondly on the characteristics of the contractual cash flows of the relevant financial asset. Regulations for the accounting of financial liabilities pursuant to IFRS 9 were published in October 2010 and essentially correspond to the previous regulations in IAS 39. The only changes made were those within the context of the fair value option: changes in the fair value attributable to changes in the entity’s own credit risk are to be recognised outside profit or loss in other comprehensive income. Furthermore, there will no longer be an option to measure derivative liabilities at cost for unquoted equity instruments in future. The IASB published IFRS 9 Financial Instruments (Hedge Accounting and Amendments to IFRS 9, IFRS 7, and IAS 39) in November 2013. This expansion of the standard is based on the third part of the project to completely replace IAS 39 and contains general regulations for future accounting of hedging relationships. In com parison with the previous regulations in IAS 39, the main amendments relate, among others, to the elim- ination of applicable thresholds for effective hedging relationships, as part of the retrospective effectiveness test, in favour of evidence of the economic relationship between the hedged item and the hedging instrument. Furthermore, the new regulations provide an expanded scope of eligible hedging instruments and hedged items, as well as expanded disclosures relating to hedge accounting. The effects of the initial application of IFRS 9 on the financial position and performance of the Group are currently being analysed.
- IFRS 10 Consolidated Financial Statements establishes a single definition of the term control and sets out
the existence of parent-subsidiary relationships in concrete terms. Control exists when an investor has deci- sion-making powers, is exposed to variable returns, and is able to influence the level of the variable returns as a result of the decision-making powers. IFRS 10 replaces the requirements of IAS 27 (Consolidated and Separate Financial Statements), related to consolidated financial statements, and SIC-12 Consolidation – Spe- cial Purpose Entities). The first-time application of IFRS 10 may have an impact on the composition of the consolidation scope.
– IFRS 11 Joint Arrangements governs accounting in situations where a company exercises joint control over
a joint venture or a joint operation. The economic substance of the arrangement, not its legal form, is the de- cisive factor in its classification. IFRS 11 supersedes IAS 31 (Interests in Joint Ventures). The most significant effect of the new standard is the abolition of proportionate consolidation for joint ventures. In the future, all joint ventures are to be accounted for using the equity method in accordance with the amended version of IAS 28 (Investments in Associates and Joint Ventures). Assets and liabilities as well as income and expenses of a joint operation will continue to be included proportionately in the consolidated financial statements. The first-time application of IFRS 11 will have an impact on the structure of HeidelbergCement’s consolidated financial statements. The assets and liabilities as well as the income and expenses of joint ventures will no longer be shown proportionately in the relevant balance sheet or income statement items, but will only be shown in a separate line using the equity method: the carrying amount in the balance sheet and the result from participations in the income statement.
The estimated impact from the first-time application of IFRS 10 and IFRS 11 on selected items of the income statement and balance sheet of the Group for the financial year 2013 is presented in the following tables.
Income statement 2013
€m As reported and IFRS 11IFRS 10 Adjusted
Revenue 13,936 -798 13,138
Operating income before depreciation (OIBD) 2,424 -184 2,240
Amortisation and depreciation -818 53 -764
Operating income 1,607 -131 1,476
Additional ordinary result 2 -8 -7
Result from participations 41 82 124
Earnings before interest and income (EBIT) 1,650 -57 1,593
Financial result -569 20 -549
Profit before tax from continuing operations 1,081 -37 1,044
Income taxes -233 24 -210
Net income from continuing operations 848 -13 835
Net income from discontinued operations 98 98
Profit for the financial year 945 -13 933
Thereof non-controlling interests 200 -3 197
Thereof Group share of profit 745 -9 736
Balance sheet 31 December 2013
€m As reported IFRS 10 and IFRS 11 Adjusted Assets Fixed assets 21,134 -121 21,013 Miscellaneous assets 5,732 -308 5,424 26,866 -429 26,437
Equity and liabilities
Equity 12,582 -59 12,523
Provisions 2,122 -10 2,112
Liabilities 12,162 -360 11,802
Total liabilities 14,284 -370 13,914
26,866 -429 26,437
– IFRS 12 Disclosure of Interests in Other Entities includes all of the disclosure requirements for subsidiaries,
joint arrangements, and associates, which were previously included in IAS 27, IAS 31, and IAS 28, and ex- tends the disclosure requirements in relation to the consolidation scope and subsidiaries with non-controlling interests.
– IFRIC 21 Levies clarifies that a company is to recognise a liability for public levies as soon as an activity
occurs that triggers a corresponding payment obligation. IFRIC 21 further highlights that liabilities for levy obligations that are linked to reaching a threshold value are only to be recognised when the defined thresh- old has been reached. The initial application of IFRIC 21 is not expected to have an impact on the financial position and performance of the Group.
– As part of the annual improvements projects Improvements to IFRS 2010–2012 Cycle and Improvements
to IFRS 2010–2013 Cycle, the IASB made minor amendments to a total of nine standards. The effects of the
initial application of the improvements on the financial position and performance of the Group are currently being analysed.
Consolidated financial statements
Additional information
4