The following new standards and amendments were adopted by the Group since 1 January 2013:
- Amendments to IAS 19 – Employee Benefits;
- IFRS 13 – Fair Value Measurement;
- Amendments to IAS 1 – Presentation of Financial Statements: Presentation of items of Other Comprehensive Income;
- Amendments to IFRS 7 – Financial Instruments: Disclosures - Offsetting Financial Assets and Financial Liabilities;
- Amendments to IAS 1 – Presentation of Financial Statements (as part of the Annual Improvements to IFRS’s – 2009-2011 Cycle).
The nature and effects of changes are explained below.
Amendments to IAS 19 – Employee Benefits
The Group adopted IAS 19, as amended, effective 1 January 2013. The revised standard modifies the requirements for recognizing defined benefit plans and termination benefits. The main changes relate to the:
- Recognition of the plan deficit or surplus: The amendments remove the previous option of deferring actuarial gains and losses under the off balance sheet “corridor method”, and require them to be recognized directly in Other comprehensive income/(losses). In addition, the amendments require the immediate recognition of past service costs in the Income statement. These amendments led to the recognition of the entire plan deficit or surplus in the balance sheet.
- Net interest expense: The interest expense, calculated by using a discount rate, and the expected return on plan assets, calculated by using a long-term rate of return of assets, are replaced by the net interest expense on the plan deficit or surplus, which consists of (i) the interest expense calculated on the present value of the obligations, (ii) the interest income arising from the valuation of the plan assets, and (iii) the interest expense or income on the effect of the asset ceiling. All above components are calculated by using the discount rate applied for measuring the obligation at the beginning of the period.
- Classification of net interest expense: The Group recognizes net interest expense in Financial income/(expenses). Under the previous version of IAS 19, the Group recognized all income and expense arising from the measurement of funded pension plan assets and liabilities in operating costs, by function, while the interest expense relating to unfunded defined benefit plans was included in Financial income/(expenses).
- Administrative expenses: the amendments require that the cost of managing plan assets should be deducted from the return on plan assets (through Other comprehensive income/losses) and all other administrative costs relating to assets should be recognized in the Income statements in the year they occur. Under the previous version of IAS 19, the Group recognized all administrative costs and costs for managing plan assets in the Income statements in the year in which they occur, as a deduction from the expected return on assets.
The Group applied the relevant transitional provisions and restated the comparative amounts reported in this Annual report on a retrospective basis. The impacts of the adoption of these amendments on amounts previously reported are set out below:
|At 1 January 2012||At 31 December 2012|
Amount as previously reported
|IAS 19 amendments adoption effect||Amounts as restated||
Amounts as previously reported
|IAS 19 amendments adoption effect||Amounts as restated|
|Effect on Statement of financial position|
|Investments and other financial assets||2,660||3||2,663||2,290||(3)||2,287|
|Defined benefit plan assets||97||8||105||105||(12)||93|
|Deferred tax assets||1,690||(1)||1,689||1,736||2||1,738|
|Provision for employee benefits||7,026||2,558||9,584||6,694||4,792||11,486|
|Deferred tax liabilities||760||1||761||802||(1)||801|
|Equity attributable to owners of the parent||8,727||(1,369)||7,358||9,059||(2,872)||6,187|
as previously reported
|IAS 19 revised |
|Effects on income statement|
|Cost of sales||71,474||227||71,701|
|Selling, general and administrative costs||6,731||32||6,763|
|Research and development costs||1,835||15||1,850|
|Profit/(loss) from continuing operations||1,411||(515)||896|
|Profit/(loss) for the period||1,411||(515)||896|
|Profit/(loss) for the period attributable to:|
|Owners of the parent||348||(304)||44|
|(in €)||Amount as previously
|IAS 19 revised adoption effect||Amounts as restated|
|Basic and diluted earnings/(loss) per share|
|Basic earnings/(loss) per ordinary share||0.286||(0.250)||0.036|
|Diluted earnings/(loss) per ordinary share||0.284||(0.248)||0.036|
|(€ million)||Amounts as previously reported||IAS 19 revised adoption effect||Valori rideterminati|
|Effects on Statement of comprehensive Income|
|PROFIT/(LOSS) FOR THE PERIOD (A)||1,411||(515)||896|
|Items that will never be reclassified to Income statement (B1)||-||(1,839)||(1,839)|
|Items tha may be reclassified to Income statement (B2)||(151)||89||(62)|
|Total Other comprehensinve income/(losses), net of tax (B1)+(B2)=(B)||(151)||(1,750)||(1,901)|
|Total OTher comprehensive income/(losses) (A)+(B)||1,260||(2,265)||(1,005)|
|(€ million)||Amount as previously reported||IAS 19 revised adoption effect||Amount as restated|
|Effects on Consolidated statement of cash flows|
|Cash flows from/(used in) operating activities:|
|Profit/(loss) for the period||1,411||(515)||896|
|Other non-cash items||47||515||562|
IFRS 13 – Fair Value Measurement
The new standard clarifies the measurement of fair value for the purpose of the financial statements and is applicable to all IFRSs permitting or requiring a fair value measurement or the presentation of disclosures based on fair value. Moreover, IFRS 13 includes extensive disclosure requirements on the fair value measurements. In accordance with the relevant transitional provision, the Group adopted the new fair value measurement guidance prospectively since 1 January 2013 without applying the new disclosure requirements in the standard for comparative information reported in this Annual report. Other than the additional disclosures on the fair value measurement reported in the Note 30, the adoption of the new standard had no significant effect on the amounts recognized in this Annual report.
Amendments to IAS 1 – Presentation of Financial Statements: Presentation of items of Other Comprehensive Income
The amendments required items of Other comprehensive income/(losses) to be grouped on the basis of whether they will be reclassified subsequently to the Income Statements when specific conditions are met. The Group adopted these amendments in this Annual report and modified the presentation of items of Other comprehensive income. Comparative information has been reclassified accordingly.
Amendments to IFRS 7 – Financial Instruments: Disclosures: Offsetting Financial Assets and Financial Liabilities
The amendments require information about the effect or potential effect of netting arrangements for financial assets and liabilities on an entity’s financial position. The Group applied the amendments since 1 January 2013 retrospectively. The adoption of the amendments had no impacts on the disclosure or on the amounts recognized in this Annual report.
Amendments to IAS 1 – Presentation of Financial Statements (as part of the Annual Improvements to IFRS’s – 2009-2011 Cycle)
On 17 May 2012, the IASB issued a number of amendments to IFRSs (“Annual Improvements to IFRS’s – 2009-2011 Cycle”). The amendments that are relevant to the Group, effective 1 January 2013, are the amendments to IAS 1 – Presentation of Financial Statements. The amendments clarify the way in which comparative information should be presented when an entity changes accounting policies or retrospectively restates or reclassifies items in its financial statements and when an entity provides comparative information in addition to the minimum comparative financial statements. The amendments were applied by the Group for the restatement of the amounts presented in the statements of financial position as a result of applying the amendments to IAS 19 by adding a third Statement of financial position as of 1 January 2012.