Annual Report 2013

Changes in Accounting Policies

Application of New and Amended IFRS and IFRIC

The Group has adopted the following new and amended IFRS and IFRIC in the consolidated financial statements for the annual period beginning on January 1, 2013:

  • IAS 1 Financial Statement Presentation (amended) – Presentation of Items of Other Comprehensive Income;
  • IFRS 7Financial Instruments: Disclosures (amended) – Offsetting Financial Assets and Financial Liabilities;
  • IFRS 10 Consolidated Financial Statements;
  • IFRS 11 Joint Arrangements;
  • IFRS 12 Disclosure of Involvement in Other Entities;
  • IFRS 13 Fair Value Measurement;
  • IAS 19 Employee Benefits (revised);
  • IAS 27 Separate Financial Statements (revised);
  • IAS 28 Investments in Associates and Joint Ventures (revised);
  • Improvements to IFRSs.

The principal effect of these changes in policies is discussed below:

IAS 1 Financial Statement Presentation (amended) – Presentation of Items of Other Comprehensive Income

The amendment changes the grouping of items presented in other comprehensive income. Items that could be reclassified to profit or loss at a future point in time should be presented separately from items that will never be reclassified. The amendment affected presentation only and had no impact on the Group’s financial position or performance.

IFRS 7 Financial Instruments: Disclosures (amended) – Offsetting Financial Assets and Financial Liabilities

The amendment requires disclosures to include information that will enable users of an entity’s financial statements to evaluate the effect or potential effect of netting arrangements, including rights of set-off associated with the entity’s recognised financial assets and recognised financial liabilities, on the entity’s financial position. The amendment did not have any impact on the financial position or performance of the Group.

IFRS 10 Consolidated Financial Statements

IFRS 10 replaces the portion of IAS 27 Consolidated and Separate Financial Statements that addresses the accounting for consolidated financial statements. It also addresses the issues raised in SIC-12 Consolidation – Special Purpose Entities. IFRS 10 establishes a single control model that applies to all entities including structured entities. IFRS 10 had no impact on the consolidation of Group’s subsidiaries.

IFRS 11 Joint Arrangements

IFRS 11 replaces IAS 31 Interests in Joint Ventures and SIC-13 Jointly-controlled Entities – Non‑monetary Contributions by Venturers. IFRS 11 removes the option to account for jointly controlled entities using proportionate consolidation. Jointly controlled entities must be accounted for using the equity method. The application of the new standard did not have an impact on financial position or performance of the Group.

IFRS 12 Disclosure of Involvement in Other Entities

IFRS 12 includes all of the disclosures that were previously in IAS 27 Consolidated and Separate Financial Statements related to consolidated financial statements, as well as all of the disclosures that were previously included in IAS 31 Interests in Joint Ventures and IAS 28 Investments in Associates. These disclosures relate to an entity’s interests in subsidiaries, joint arrangements, associates and structured entities. The Group provides these disclosures in Notes 12, 13 and 28.

IFRS 13 Fair Value Measurement

IFRS 13 establishes a single source of guidance under IFRS for all fair value measurements. IFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under IFRS when fair value is required or permitted. IFRS 13 also requires specific disclosures on fair values, some of which replace existing disclosure requirements in other standards, including IFRS 7 Financial Instruments: Disclosures. The Group provides these disclosures in Note 32.

IAS 19 Employee Benefits (revised)

The revision includes a number of amendments to the accounting for defined benefit obligations, including removing the “corridor” mechanism (the revised standard requires actuarial gains and losses to be recognised in other comprehensive income when they occur) and the change of the timing for the recognition of past-service costs (the revised standard requires past-service costs to be recognised in the period of a plan amendment, unvested benefits are not spread over a future-service period). Other amendments include new disclosures, such as, quantitative sensitivity disclosures.

IAS 19 Employee Benefits (revised) has been applied by the Group retrospectively. The transition to IAS 19 Employee Benefits (revised) had an impact on the defined benefit obligations of the Group due to the change in the accounting for unvested past service costs. Until December 31, 2012, the Group’s unvested past service costs were recognised as an expense on a straight-line basis over the average period until the benefits become vested. Upon transition to the revised IAS 19, past service costs are recognised immediately in the period of a plan introduction or amendment. Also, the adoption of the revised standard affected the presentation of financial statements as actuarial gains and losses are now recognised in other comprehensive income and permanently excluded from profit and loss. Until December 31, 2012 the Group’s accounting policy was to recognise actuarial gains and losses in full amount in the income statement in the period in which they occurred.

The impact of changes in accounting policies was as follows:

  • employee benefits liability increased by 1,299 as at January 1, 2012;
  • retained earnings attributable to equity holders of the parent increased by 1,374 as at January 1, 2012;
  • other reserves decreased by 2,584 as at January 1, 2012;
  • cost of sales for the year ended December 31, 2012 increased by 4,560 with the corresponding change of other comprehensive income;
  • balance of non-controlling interests decreased by 89 as at January 1, 2012.

IAS 27 Separate Financial Statements (revised)

As a consequence of the new IFRS 10 Consolidated Financial Statements and IFRS 12 Disclosure of Involvement with Other Entities, what remains of IAS 27 is limited to accounting for subsidiaries, jointly controlled entities, and associates in separate financial statements. The revision had no impact on the consolidated financial statements of the Group.

IAS 28 Investments in Associates and Joint Ventures (revised)

As a consequence of the new IFRS 11 Joint Arrangements and IFRS 12 Disclosure of Involvement with Other Entities, IAS 28 has been renamed to IAS 28 Investments in Associates and Joint Ventures, and describes the application of the equity method to investments in joint ventures in addition to associates. The application of the revised standard did not have an impact on financial position or performance of the Group.

Improvements to IFRSs

In May 2012, the IASB issued “Improvements to IFRSs”. The document sets out amendments to International Financial Reporting Standards primarily with a view of removing inconsistencies and clarifying wording. Amendments are generally intended to clarify requirements rather than result in substantive changes to current practice. These amendments did not have any impact on the financial position or performance of the Group.

New Accounting Pronouncements

The following new or amended (revised) IFRS and IFRIC have been issued but are not yet effective and not applied by the Group. The listing of standards and interpretations issued is those that the Group reasonably expects to have an impact on disclosures, financial position and performance when applied at a future date. The Group intends to adopt these standards when they become effective.

IFRS 9 Financial Instruments (effective for financial years beginning on or after January 1, 2015)

IFRS 9 will replace IAS 39 Financial Instruments: Recognition and Measurement. The standard as issued addresses classification and measurement of financial assets and financial liabilities and hedge accounting. Subsequently IASB will also address impairment methodology. The Group will quantify the impact of IFRS 9 application when the final standard is issued.

IFRS 10 Consolidated Financial Statements, IFRS 12 Disclosure of Interests in Other Entities, IAS 27 Separate Financial Statements (amendements) – Investment Entities (effective for financial years beginning on or after January 1, 2014)

These amendments provide an exception to the consolidation requirement for entities that meet the definition of an investment entity under IFRS 10. The exception to consolidation requires investment entities to account for subsidiaries at fair value through profit or loss. The Group expects that the adoption of the amended standards will not have a significant impact on its financial position or performance in the period of initial application.

IAS 19 Employee Benefits (amendment) – Defined Benefit Plans: Employee Contributions (effective for financial years beginning on or after July 1, 2014)

The amendment clarifies the requirements that relate to how contributions from employees or third parties that are linked to service should be attributed to periods of service. The amendment is not expected to impact the Group’s financial position or performance.

IAS 32 Financial Instruments: Presentation (amended) – Offsetting Financial Assets and Financial Liabilities (effective for financial years beginning on or after January 1, 2014)

The amendment clarifies financial assets and financial liabilities offsetting rules. These amendments are not expected to impact the Group’s financial position or performance.

IAS 36 Impairment of Assets (amended) – Recoverable Amount Disclosures for Non-Financial Assets (effective for financial years beginning on or after January 1, 2014)

This amendment addresses the disclosure of information about the recoverable amount of impaired assets if that amount is based on fair value less costs of disposal. The adoption of the amended standard will not have a significant impact on its financial position or performance in the period of initial application.

IAS 39 Financial Instruments: Recognition and Measurement (amended) – Novation of Derivatives and Continuation of Hedge Accounting (effective for financial years beginning on or after January 1, 2014)

This amendment provides relief from discontinuing hedge accounting when novation of a hedging instrument to a central counter party meets specified criteria. The Group expects that the adoption of the amended standards will not have a significant impact on its financial position or performance in the period of initial application.

IFRIC 21 Levies (effective for financial years beginning on or after January 1, 2014)

IFRIC 21 clarifies that an entity recognises a liability for a levy when the activity that triggers payment, as identified by the relevant legislation, occurs. For a levy that is triggered upon reaching a minimum threshold, the interpretation clarifies that no liability should be anticipated before the specified minimum threshold is reached. The Group does not expect that IFRIC 21 will have a significant impact on its financial position or performance in the period of initial application.

Improvements to IFRSs (effective for financial years beginning on or after July 1, 2014)

In December 2013, the IASB issued “Annual Improvements to IFRSs”. The documents set out amendments to International Financial Reporting Standards primarily with a view of removing inconsistencies and clarifying wording. Amendments are generally intended to clarify requirements rather than result in substantive changes to current practice. These improvements will not have any impact on the financial position or performance of the Group.