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In these consolidated financial statements, the Group applied for the first time the following standards, amendments to the existing standards published by the International Accounting Standards Board (“IASB”) and endorsed in the European Union, which came into force in 2018 and have effect on the Group’s consolidated financial statements:
IFRS 9 introduces a new model for determining impairment losses – a model of expected credit losses Most of the IAS 39 requirements relating to classification and measurement of financial liabilities were transferred to IFRS 9 without any modification. The crucial change is the requirement imposed on entities to present in other comprehensive income the effects of changes in their own credit risk on account of financial liabilities subject selected for measurement at fair value through profit or loss. These changes in hedge accounting aimed to align hedge accounting to risk management more closely. The standard has retrospective application, while the restatement of data is not required for the periods preceding the period of initial application. Data transformation is permitted only if it is possible without utilizing current knowledge, while the restated financial statements reflect all the requirements of IFRS 9. The impact of the standard on the consolidated financial statements is described in detail in Note 2.6.2. The impact of the standard on the consolidated financial statements is described in detail in Note 2.6.1.
Standard
Brief description of changes
Impact on the statements
IFRS 9 “Financial Instruments”
IFRS 9 supersedes IAS 39. This standard implements a single model contemplating only two categories for the classification of financial assets: fair value measurement and amortized cost measurement. The assets are classified upon the initial recognition and depend on the financial instruments management model adopted by the entity and the characteristics of contractual cash flows from these instruments.
The application of IFRS 9 resulted in a change of the approach to estimating the impairment of financial assets measured at amortized cost and a change in classification and measurement of the Group’s financial assets.
IFRS 15 “Revenue from Contracts with Customers”
IFRS 15 “Revenue from Contracts with Customers” supersedes IAS 18 and IAS 11 and the relevant interpretations. The rules put prescribed by IFRS 15 concern all agreements that generate revenues. The fundamental rule in the new standard is to recognize revenue in the amount of the transaction price at the time when control over the goods or services are transferred to the client. All the goods or services sold in bundles that can be distinguished within the bundle should be recognized separately. In addition, all discounts and rebates pertaining to the transaction price should in principle be allocated to the various elements of the bundle. In the event that the amount of revenue is floating, according to the new standard the floating amounts are classified as revenue insofar as there is a large probability that in the future no reversal of revenue recognition will transpire as a result of revaluation. Moreover, according to IFRS 15 the costs incurred to acquire and secure a contract with a client should be capitalized and settled over time over the period of consuming the benefits from that contract.
The Group applies the IFRS 15 rules while incorporating the 5 steps model in reference to the analysis concerning the recognition of revenues from contracts with clients, which was described in detail in Note 2.6.1.
Explanations to IFRS 15 “Revenue from Contracts with Customers”
Explanations to IFRS 15 “Revenue from Contracts with Customers” provide additional information and explanations concerning the main assumptions adopted in IFRS 15, among others on the identification of separate duties, determination whether the entity acts as an intermediary (agent) or as the main supplier of goods and services (principal) and how royalty revenues arising from licenses are registered. In addition to the explanations, transition relief and simplifications were introduced for the entities applying the new standard for the first time.
Application of the standard will have no material effect on the amounts presented in the consolidated financial statements
The changes listed below, which are in effect from 1 January 2018, are not related to the Group’s business or have no material effect on the Group’s consolidated financial statements:
When approving these consolidated financial statements, the Group did not elect for early application of the standards enumerated below, amendments to standards and interpretations that were published and endorsed in the EU but have not as yet become effective.
The standards designated below will exert an impact on the consolidated financial statements. The impact exerted by these standards on the Group’s consolidated financial statements has been depicted in Note 2.7.
IFRS 16 substantially carries forward the lessor accounting requirements in IAS 17. Accordingly, a lessor continues to classify its leases as operating leases or finance leases, and to account for those two types of leases differently. *Annual periods beginning on or after the respective date, with an option of earlier application
Standard
Brief description of changes
Effective date *
MSSF 16 „Leasing”
This new standard establishes the rules for recognizing, measuring, presenting and making disclosures concerning lease contracts. Under every lease transaction, a lessee obtains the right to use an asset and an obligation to make lease payments. Thus IFRS 16 abolishes the classification of an operating lease and finance lease according to IAS 17 and introduces a single model for accounting registration of leases by a lessee. A lessee will be obligated to recognize: (a) assets and liabilities for all lease transactions concluded for a period above 12 months, except for the situations where an assets is a low-value asset; and (b) depreciation of the leased asset separately from interest on the lease liability in the income statement.
1 January 2019
The endorsed changes listed below to the standards that have not yet taken effect are not applicable to the Group’s operations or will not exert an influence on the consolidated financial statements:
IFRS as approved by the EU do not currently differ materially from the regulations adopted by the International Accounting Standards Board (IASB), with the exception of the following standards, amendments to standards and interpretations, which as at the date of these consolidated financial statements have not yet been adopted for application.
The standards and interpretations listed below (yet to be endorsed) do not pertain to the Group’s operations or will not exert a material impact on the consolidated financial statements.
* Annual periods beginning on or after the respective date, as specified by the International Accounting Standards Board (IASB), are subject to change after their approval by the EU.
Standard
Effective date *
IFRS 14 “Regulatory Deferral Accounts”
By the decision of EU, IFRS 14 will not be endorsed.
Amendments to IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in Associates and Joint Ventures” – sale or contributions of assets between an investor and its associate or joint venture.
Endorsement of this amendment has been deferred by the EU.
IFRS 3 “Business Combinations”
1 January 2020
Amendment to IAS 1 “Presentation of Financial Statements” and IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors”
1 January 2020
Amendments to IAS 19 “Employee Benefits” – Defined-Benefit Plan Amendment, Curtailment or Settlement
1 January 2019
Amendments to references to the IFRS Framework
1 January 2020
Amendments to various standards „Annual Improvements to IFRS (2015-2017 cycle)”
1 January 2019
IFRS 17 “Insurance Contracts”
1 January 2021
The Group intends to apply the above standards that are applicable to its operations from the time they take force.