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The International Accounting Standards Board (IASB) and International Financial Reporting Interpretations Committee (IFRIC) have adopted further standards and interpretations, which were not yet mandatory in the 2008 financial year. These IFRSs can only be applied if they are endorsed by the EU, which is still pending in some cases.
Collection of amendments to various IFRSs (2008) “Improvements to IFRSs“ is the first standard issued as part of the IASB’s “Annual Improvement Process” and includes a number of minor IFRS changes. The amendments seek to specify the rules and eliminate unintended inconsistencies among the standards. Most of the amendments become effective for fiscal years starting on or after January 1, 2009. The impact of the first-time application of these amendments on the RWE Group’s consolidated financial statements is currently being reviewed.
IFRS 1 (2008) and IAS 27 (2008) “Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate“ simplifies the initial recognition of investments in the separate financial statements of entities applying IFRS for the first time. The amendments become effective for fiscal years starting on or after January 1, 2009. Their first-time application will have no impact on the RWE Group’s consolidated financial statements.
IFRS 1 (2008) “First-time Adoption of International Financial Reporting Standards” is a restructured version of the previous IFRS 1 with unchanged contents. The first-time application will have no impact on the RWE Group’s consolidated financial statements.
Amendment of IFRS 2 (2008) “Vesting Conditions and Cancellations“ clarifies the definition of vesting conditions in share-based payments and stipulates that all cancellations of share-based payments should receive identical accounting treatment, regardless of the party responsible for cancellation. This amendment of IFRS 2 becomes effective for the first time for fiscal years starting on or after January 1, 2009. The first-time application is not expected to have a material impact on the RWE Group’s consolidated financial statements.
IFRS 3 (2008) “Business Combinations“ contains amended regulations on the accounting of business combinations. In particular, these changes involve the scope of application and the treatment of successive share purchases and the introduction of an option allowing non-controlling interests to be measured at fair value or at the proportionate share of net assets. Depending on which option a company exercises, any goodwill is recognized in full or only in proportion to the majority owner’s interest. IFRS 3 (2008) becomes effective for the first time for fiscal years starting on or after July 1, 2009. The impact of the first-time application of these amendments on the RWE Group’s consolidated financial statements is currently being reviewed.
IAS 1 (2007) “Presentation of Financial Statements” contains new regulations on the presentation of financial statements. Above all, future non-owner changes in equity are to be strictly separated from owner changes in equity, and disclosure on other comprehensive income is to be extended. IAS 1 (2007) becomes effective for the first time for fiscal years starting on or after January 1, 2009. In particular, the application of IAS 1 (2007) will result in changes in the presentation of the income statement and statement of changes in equity in RWE’s consolidated financial statements.
IAS 23 (2007) “Borrowing Costs”: By revising IAS 23, the IASB abolished the option for the treatment of borrowing costs directly incurred in connection with the acquisition, construction or production of qualified assets. In the future, these borrowing costs must be assigned to the asset’s cost and capitalized. IAS 23 (2007) becomes effective for the first time for fiscal years starting on or after January 1, 2009. This change in accounting methods for borrowing costs will be effective from fiscal 2009 and will essentially have an effect on net interest and depreciation.
IAS 27 (2008) ”Consolidated and Separate Financial Statements“: By revising IAS 27, the IASB changed the regulations on treatment of transactions with non-controlling interests of a group and the treatment in the event of loss of control over a subsidiary. Transactions which result in the parent company changing its ownership interest in a subsidiary without a loss of control are to be accounted for as equity transactions without an effect on profit or loss. Moreover, the standard regulates how deconsolidation gains or losses are to be calculated and how residual ownership interest in the former subsidiary is to be measured following partial sale. The revised version of IAS 27 becomes effective for the first time for fiscal years starting on or after July 1, 2009. The impact of the application of the new rules on the RWE Group’s consolidated financial statements is currently being reviewed.
IAS 32 (2008) and IAS 1 (2008) “Puttable Financial Instruments and Obligations Arising on Liquidation“ includes amended rules for differentiating between liabilities and equity. Certain financial instruments that were previously classified as liabilities must be recognized as equity in the future. The new rules become effective for the first time for fiscal years starting on or after January 1, 2009. They are not expected to have a material impact on the RWE Group’s consolidated financial statements.
IAS 39 Amendments (2008) “Eligible Hedged Items“ provides clarification on issues in relation to hedge accounting. The amendments supplement the principles for designating inflation risks as an underlying transaction and for designating hedging instruments used to hedge a one-sided risk. These amendments become effective for the first time for fiscal years starting on or after July 1, 2009. They are not expected to have a material impact on the RWE Group’s consolidated financial statements.
IAS 39 and IFRS 7 Amendments (2008) “Reclassification of Financial Assets – Effective Date and Transition” presents transitional regulations and clarification on the effective date of the option introduced in 2008, according to which certain non-derivative financial assets which were previously designated at fair value can be accounted for at amortized cost. The first-time application is not expected to have a material impact on the RWE Group’s consolidated financial statements.
IFRIC 13 “Customer Loyalty Programmes” addresses the accounting of revenue in connection with loyalty award credit programmes offered by manufacturers or service providers directly, or via third parties. This Interpretation becomes effective for the first time for fiscal years starting on or after July 1, 2008. The impact of the first-time application of IFRIC 13 on the RWE Group’s consolidated financial statements is currently being reviewed.
IFRIC 15 “Agreements for the Construction of Real Estate“ addresses the accounting treatment of real estate sales in cases where a contract is entered into with the purchaser prior to the completion of the construction work. This Interpretation primarily determines the conditions under which IAS 11 and IAS 18 are applicable and the point in time at which the corresponding revenue is realized. This Interpretation becomes effective for the first time for fiscal years starting on or after January 1, 2009. The first-time application is not expected to have a material impact on the RWE Group’s consolidated financial statements.
IFRIC 16 “Hedges of a Net Investment in a Foreign Operation“ clarifies uncertainties relating to the currency hedges of foreign operations. Above all, the Interpretation determines the risks that can be hedged, the group companies that are allowed to hold the hedging instrument, and the accounting treatment applicable in the event that the foreign entity is divested. This Interpretation becomes effective for the first time for fiscal years starting on or after October 1, 2008. The RWE Group’s consolidated financial statements are not expected to be materially influenced by this.
IFRIC 17 “Distributions of Non-cash Assets to Owners” establishes regulations for the accounting of non-cash dividends. This Interpretation becomes effective for the first time for fiscal years starting on or after July 1, 2009. The first-time application is not expected to have a material impact on the RWE Group’s consolidated financial statements.
IFRIC 18 “Transfer of Assets from Customers” regulates the accounting treatment of assets which are transferred by a customer to a company for the purpose of connection to a network or to provide ongoing access to a supply of goods or services. This Interpretation was published on January 29, 2009 and becomes effective for the first time in respect of assets transferred on or after July 1, 2009. The impact of the application of the Interpretation on the RWE Group’s consolidated financial statements is currently being reviewed.
The following IFRS, which became effective on January 1, 2008, is not being applied by the RWE Group as it is still pending EU approval:
IFRIC 12 “Service Concession Arrangements” governs the accounting for arrangements in which a public agency concludes a contract with a private company for the supply of public services. In order to provide these services, the private company uses infrastructure which remains under public control. The private company is responsible for the construction, operation and maintenance of the infrastructure. This Interpretation became effective for the first time for fiscal years starting on or after January 1, 2008. The application is not expected to have a material impact on the RWE Group’s consolidated financial statements.
