Application of IAS 19.93A: To increase the transparency of reporting, in accordance with IAS 19.93A, the RWE Group started fully recognizing actuarial gains and losses from defined benefit pension plans and similar obligations in the period in which they occur as of January 1, 2008. This method replaces the ‘corridor method.’ According to the ‘corridor method’ applied previously, actuarial gains and losses were recognized as profit or loss over the anticipated average remaining working lives of the qualified employees, to the extent that they exceeded 10 % of the greater of the benefit obligation or the fair value of the plan assets. According to the new method under IAS 19.93A, all actuarial gains and losses are recognized immediately. They are reported as a component of other comprehensive income outside profit or loss, in a consolidated statement of recognized income and expenses. After having been reported as part of other comprehensive income for the first time, actuarial gains and losses are immediately assigned to retained earnings. They remain outside profit or loss in subsequent periods as well. This retroactive adjustment increased provisions for pensions and similar obligations as of January 1, 2007, by € 257 million to a total of € 11,841 million. Furthermore, it reduced other non-current receivables and other assets by € 413 million to € 680 million, because these items include the surplus of plan assets over benefit obligations. Taking the € 219 million in deferred taxes recognized outside profit or loss into account, equity as of January 1, 2007, declined by a total of € 451 million. Due to the discontinuation of the amortization of actuarial gains and losses recognized with an effect on income, staff costs for the first three quarters of 2007 decreased by € 10 million, and income taxes increased by € 3 million.
“Reclassification of Financial Assets (Amendments to IAS 39 Financial Instruments: Recognition and Measurement and IFRS 7 Financial Instruments: Disclosures)“ allows entities under specific conditions to measure certain non-derivative financial assets, which were previously accounted for at fair value, at amortized cost. Published on October 13, 2008, the amendments further mandate more extensive disclosure on the reclassification of financial assets in the notes to consolidated financial statements. The amendments became applicable for the first time effective July 1, 2008. This did not have an impact on the RWE Group’s consolidated financial statements.
Furthermore, the International Financial Reporting Interpretations Committee (IFRIC) approved a new interpretation, which must be applied by the RWE Group from fiscal 2008 onwards:
IFRIC 11 “IFRS 2 – Group and Treasury Share Transactions” provides guidance on how to apply IFRS 2 to share-based payments involving a company’s own equity instruments or equity instruments of a company from the same group. The first-time application of IFRIC 11 does not have an effect on the RWE Group‘s consolidated financial statements.