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, 2010:

  • IFRS 2 Share-based Payment (amended);
  • IFRS 3 Business Combinations (revised) and IAS 27 Consolidated and Separate Financial Statements (amended);
  • IAS 39 Financial Instruments: Recognition and Measurement (amended);
  • IFRIC 17 Distribution of Non-cash Assets to Owners;
  • Improvements to IFRSs (April 2009)

The principle effect of these changes in policies is discussed below.

IFRS 2 Share-based Payment – Group Cash-settled Share-based Payment Transactions
The standard has been amended to clarify the accounting for group cash-settled share-based payment transactions. This amendment also supersedes
IFRIC 8 and IFRIC 11. The adoption of this amendment did not have any impact on the financial position or performance of the Group.

IFRS 3 Business Combinations (Revised) and IAS 27 Consolidated and Separate Financial Statements (Amended)

The Group applies the revised standards from January 1, 2010. IFRS 3 (Revised) introduces significant changes in the accounting for business combinations occurring after this date. Changes affect the valuation of non-controlling interest, the accounting for transaction costs, the initial recognition and subsequent measurement of a contingent consideration and business combinations achieved in stages. These changes will impact the amount of goodwill recognised, the reported results in the period that an acquisition occurs and future reported results.

IAS 27 (Amended) requires that a change in the ownership interest of a subsidiary (without loss of control) is accounted for as equity transaction (i.e. transaction with owners in their capacity as owners). The amended standard changes the accounting for losses incurred by the subsidiary as well as the loss of control of a subsidiary. The changes by IFRS 3 (Revised) and IAS 27 (Amended) affect transactions with non-controlling interests and will affect future acquisitions or loss of control of subsidiaries.

IAS 39 Financial Instruments: Recognition and Measurement – Eligible Hedged Items
The amendment clarifies that the entity is permitted to designate a portion of the fair value changes or cash flow variability of a financial instrument as a hedged item. This also covers the designation of inflation as a hedged risk or portion in particular situations. The amendment had no effect on the financial position or performance of the Group.

IFRIC 17 Distribution of Non-cash Assets to Owners (effective for annual periods beginning on or after July 1, 2009)

This interpretation provides guidance on accounting for arrangements whereby an entity distributes non-cash assets to shareholders either as a distribution of reserves or as dividends. The interpretation had no effect on the financial position or performance of the Group.

Improvements to IFRSs
In April 2009 the International Accounting Standards Board issued “Improvements to International Financial Reporting Standards”, primarily with a view to removing inconsistencies and clarifying wording. These are separate transitional provisions for each standard. The document sets out amendments to different International Financial Reporting Standards, which are mainly related to changes for presentation, recognition or measurement purposes terminology or editorial changes. The group illustrates the adoption of these amendments.

Reclassifications

Certain corresponding information, presented in the consolidated financial statements for the year ended December 31, 2009 has been reclassified in order to achieve comparability with the presentation used in these consolidated financial statements.

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 Group intends to adopt these standards when they become effective.

IAS 12 Income Taxes (amended) – Deferred Tax: Recovery of Underlying Assets (effective for financial years beginning on or after January 1, 2012)

The amendments provide a practical approach for measuring deferred tax liabilities and deferred tax assets when investment property is measured using the fair value model. The Group expects that 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 24 Related Party Disclosures (revised) (effective for financial years beginning on or after January 1, 2011)

The revision clarifies the definition of a related party to simplify the identification of such relationships and to eliminate inconsistencies in its application, introduces a partial exemption of disclosure requirements for government – related entities. The Group does not expect a significant impact of the revised standard on its results of operations and financial position in the period of initial application.

IAS 32 Financial Instruments: Presentation (amended) – Classification of Rights Issues (effective for financial years beginning on or after February 1, 2010)

The amendment alters the definition of a financial liability in order to classify rights issues (and certain options or warrants) as equity instruments in cases where such rights are given pro rata to all of the existing owners of the same class of an entity’s non-derivative equity instruments, or to acquire a fixed number of the entity’s own equity instruments for a fixed amount in any currency. The Group expects that the adoption of the amended standard will not have a significant impact on its financial position or performance in the period of initial application.

IFRS 7 Financial Instruments: Disclosures (amended) – Disclosures – Transfers of Financial Assets (effective for financial years beginning on or after July 1, 2011)

The International Accounting Standards Board has amended the required disclosures relating to transfers of financial assets. The objective of the amendments is to help users of financial statements evaluate the risk exposures relating to such transfers and the effect of those risks on an entity’s financial position. The Group expects that the adoption of the amended standard will not have a significant impact on its financial position or performance in the period of initial application.

IFRS 9 Financial Instruments (effective for financial years beginning on or after January 1, 2013)

The standard as issued reflects the first phase of the International Accounting Standards Boards work on the replacement of IAS 39 and applies to classification and measurement of financial assets and financial liabilities. In subsequent phases, the International Accounting Standards Board will address impairment methodology and hedge accounting. The adoption of the first phrase of IFRS 9 will have an effect on the classification and measurement of the Group’s financial assets and financial liabilities. The Group will quantify the effect in conjunction with the other phases, when issued, to present a comprehensive picture.

IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments (effective for financial years beginning on or after July 1, 2010)

The new interpretation addresses the accounting by an entity when the terms of a financial liability are renegotiated and result in the entity issuing equity instruments to a creditor of the entity to extinguish all or part of the financial liability. The amendment is deemed to have no impact on the financial statement of the Group.

Amendments to IFRIC 14/IAS 19 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction – Prepayments of a Minimum Funding Requirement (effective for financial years beginning on or after January 1, 2011)

The amendment provides guidance on assessing the recoverable amount of a net pension asset. The amendment permits an entity to recognise a prepayment of pension contributions as an asset rather than an expense. The amendment is deemed to have no impact on the financial statement of the Group.

Improvements to IFRSs (effective for financial years beginning on or after either July 1, 2010 or January 1, 2011)

In May 2010 the International Accounting Standards Board issued “Improvements to IFRSs”, primarily with a view to removing inconsistencies and clarifying wording. These are separate transitional provisions for each standard. The document sets out amendments to International Financial Reporting Standards, which are mainly related to changes for presentation, recognition or management purposes terminology or editorial changes.

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