(3) Adjustments to the accounting policies
The accounting policies applied are the same as those used in the previous year, with the following exceptions:
In the course of focusing on the core market of Germany, the management decided to sell MLP Finanzdienstleistungen AG, Vienna, Austria in the fourth quarter of the financial year 2008. The sale was completed in the fourth quarter of 2009, with the company being deconsolidated. A decision was also taken in the first quarter of 2009 to withdraw from the market in the Netherlands. For this reason the revenues and expenses of MLP Finanzdienstleistungen AG in the Netherlands were reclassified to the earnings from discontinued operations. The prioryear figures were adjusted accordingly. The reporting changes have no effect on net profit or earnings per share.
Since 2009, MLP no longer considers expenses for the use of PC hardware, notebooks, copiers and software maintenance no longer as operating leases but as expenses for the usage of IT services. The assessment changes have no effect on net profit or earnings per share.
In the financial year 2009, MLP became aware of two cases which were recorded incorrectly in the previous years. In one case a trailer commission and in the other an expense allocated to the wrong period of time. The errors are corrected retroactively in line with IAS 8. The effects of the adjustment in 2008 on the earnings per share was less than € 0.01.
The revised amounts of the statement of financial concerned position items are illustrated in the table below:
| All figures in €’000 | As at Jan 1, 2008 |
As at Dec 31, 2008 |
|---|---|---|
| Increase in deferred tax assets | 1,242 | 1,322 |
| Decrease in other accounts receivable and other assets | 1,800 | 1,692 |
| Decrease in shareholders’ equity | 3,005 | 3,197 |
| Increase in other liabilities | 2,447 | 2,827 |
The table below illustrates the effects of the error correction and the change in presentation with regard to the previous year’s figures:
| All figures in €’000 | 2008 adjusted |
2008 as reported |
+ / – | of which IFRS 5 | of which error correction |
|---|---|---|---|---|---|
| Revenue | 552,267 | 554,807 | – 2,540 | – 2,540 | – |
| Other revenue | 42,933 | 42,940 | – 8 | – 8 | – |
| Total revenue | 595,200 | 597,748 | – 2,548 | – 2,548 | – |
| Personnel expenses | – 108,869 | – 110,626 | 1,757 | 1,757 | – |
| Depreciation / amortisation and impairment | – 20,971 | – 20,988 | 17 | 17 | – |
| Other operating expenses | – 181,769 | – 182,084 | 316 | 588 | – 272 |
| Earnings before interest and tax (EBIT) | 56,161 | 56,619 | – 459 | – 187 | – 272 |
| Finance cost | – 9,543 | – 9,543 | – | – | – |
| Earnings before tax (EBT) | 46,618 | 47,076 | – 459 | – 187 | – 272 |
| Income taxes | – 15,941 | – 16,020 | 80 | – | 80 |
| Earnings from continuing operations after tax | 30,677 | 31,056 | – 379 | – 187 | – 192 |
| Earnings from discontinued operations after tax | – 6,084 | – 6,271 | 187 | 187 | – |
| Net profit (total) | 24,593 | 24,785 | – 192 | – | – 192 |
The revised version of IAS 1 “Presentation of financial statements” is to be applied for the first time in the financial year 2009. IAS 1 (revised) extends the income statement to include a transition of profit/loss (net profit) to total comprehensive income including the presentation of components of other comprehensive income (statement of comprehensive income). This also changes the presentation of the statement of changes in equity. In the statement of changes in equity, transactions with owners are shown separately. Profit/loss and other earnings are apportioned to the individual equity capital components. The prior-year figures were adjusted accordingly. The reporting changes have no effect on net profit, total comprehensive income or earnings per share.
Furthermore, in the financial year 2009 the following new or amended standards were to be applied for the first time:
- Revision of IAS 23 “Borrowing costs”. The main amendment concerns the elimination of the option of recognising immediately as an expense borrowing costs that are directly attributable to a qualifying asset. In accordance with the new standard, borrowing costs must be capitalised as part of the acquisition or manufacturing costs of the asset.
- Revision of IAS 32 and IAS 1 “Puttable financial instruments”. According to the existing version of IAS 32, financial instruments must be classified as financial liabilities if the issuer can be required to pay cash or another financial asset in return for redeeming or repurchasing a financial instrument. As a result of the changes, puttable financial instruments and liabilities which only have to be paid back upon the issuer’s liquidation are now classified as equity if specified criteria are met. The classification of these instruments as equity triggers additional disclosure obligations in the notes.
- Revision of IAS 39 “Reclassification of financial assets”. On October 27, 2008, the IASB published an updated version of the amendments of IAS 39 dated October 13, 2008, which were adopted by the EU in September 2009. This version clarifies the fact that any reclassification that takes place on or after November 1, 2008, will become effective at the time of the reclassification. Reclassifications taking place before November 1, 2008, can become effective on July 1, 2008, or at a later date. Retroactive reclassifications at a date before July 1, 2008, are not permitted.
- Amendment to IFRS 1 and IAS 27 “Cost of an investment in a subsidiary, jointly controlled entity or associate”. The amendment makes it easier to measure the acquisition costs of shares in subsidiaries, jointly-controlled entities and associates in the separate individual financial statements on first-time adoption of the IFRSs.
- Amendment to IFRS 2 “Vesting conditions and cancellations”. The amendments clarify the term “vesting conditions” and provide clearer regulation of the accounting treatment of the cancelation of a plan induced by other party than the company.
- Amendments to IFRS 7 “Improving disclosures about financial instruments”. Essential changes: Measurements at fair value are to be disclosed in line with the three-level fair value hierarchy. In addition, minimum disclosure requirements concerning liquidity risks have been extended.
- Amendment to IAS 39 and IFRIC 9. “Embedded derivatives”. The amendments clarify the accounting treatment of embedded derivatives for companies which have made use of the reclassification changes published by the IASB in October 2008.
- IFRIC 13 “Customer loyalty programmes” addresses the accounting by entities that grant their customers award credits when purchasing other goods or services. In particular the question of how these companies have to recognise their obligations to clients redeeming their credits in the balance sheet was clarified.
- IFRIC 16 “Hedges of a net investment in a foreign operation”. IFRIC 16 clarifies: (a) foreign exchange differences arising from net investments that arise from differing functional currencies within a Group can be hedged and (b) hedging instruments can be held by any entity within the Group with the exception of the entity in relation to which the currency risk arising from the net investment is hedged.
- Improvements of IFRS 2008. In May 2008, the Board published, for the first time, a collection of amendments designed to change various IFRSs with the primary objective of removing inconsistencies and clarifying wordings. Each standard has its own transitional provisions.
The amendment to IFRS 7 requires further disclosures in particular regarding financial instruments measured at fair value. Because they are not relevant to MLP, the other new or amended IFRS mentioned above do not have any influence on the consolidated financial statements.
The application of the following new or amended standards and new interpretations was not yet binding for the financial year beginning on January 1, 2009, and they were not early adopted:
- Revision of IFRS 3 and IAS 27 “Business combinations, Phase II”. The changes in the standards largely relate to the method used to account for business combinations, the recognition of goodwill and transactions with minority interests. As a departure from the legal position hitherto, IFRS 3 and IAS 27, inter alia, provide for the following rules: (a) Incidental acquisition costs that are incurred when the business combination is created are to be recognised as expenditure. (b) In the amount of the fair value of contingent considerations the level of which depends on events that occur after acquisition (e. g. payments based on earn-out clauses), an asset, a liability or an equity instrument is to be recognised at the time of acquisition. (c) There is the option of capitalising the goodwill relating to the minority interests using the full goodwill method. (d) Disposals of shares that do not involve a loss of control will be recognised as straightforward transactions between the shareholders, i.e. recognised directly in other comprehensive income. The same applies to acquisitions of other shares in subsidiaries after control has been achieved. The revised standards are to be applied to financial years beginning on or after July 1, 2009.
- Revision of IAS 24 “Related party disclosures”. The revision provides a simplification of disclosure requirements of state-controlled entities. In addition the definition of “related party” has been revised. IAS 24 is to be applied, if accepted in its current form by the EU, to financial years beginning on or after January 1, 2011.
- Amendment to IAS 32 “Classification of rights issues”. The amendments state that certain rights issues as well as options and warrants in foreign currency with the issuer to whose equity instruments these rights relate, are no longer to be reported as liabilities but as shareholders’ equity. IAS 32 is to be applied to financial years beginning on or after February 1, 2010.
- Amendment to IAS 39 “Eligible hedged items”. The amended standard specifies which risks and which portions of a hedged item can be designated under hedge accounting. The revised standard is to be applied to financial years beginning on or after July 1, 2009.
- Amendment to IFRS 1 “Additional exemptions for first-time adopters”. The amendments apply to the retroactive application of IFRS and are aimed at avoiding unnecessary costs during the transition to IFRS. The amendments of IFRS 1 are to be applied retroactively, if accepted in its current form by the EU, to financial years beginning on or after January 1, 2010.
- Amendment to IFRS 2 “Group cash-settled share-based payment transactions”. The amendments clarify the accounting for group cash-settled share-based payment transactions. An entity that receives goods or services in a share-based payment arrangement must account for those goods or services no matter which entity in the group settles the transaction, and no matter whether the transaction is settled in shares or cash. The amendments of IFRS 2 are to be applied retroactively, if accepted in its current form by the EU, to financial years beginning on or after January 1, 2010.
- IFRS 9 “Financial instruments”. IFRS 9 pursues a new, less complex approach for the classification of assets. IFRS 9 is to be applied, if accepted in its current form by the EU, to financial years beginning on or after January 1, 2013.
- Amendment to IFRIC 14 “Prepayment of a Minimum Funding Requirement”. The amendment applies in the limited circumstances of when an entity is subject to minimum funding requirements and makes an early payment of contributions to cover those requirements. The amendment permits such an entity to treat the benefit of such an early payment as an asset. If accepted in its current form by the EU, the amendment has an effective date for mandatory adoption of January 1, 2011, with early adoption permitted for 2009 year-end financial statements. The amendments must be applied retroactively to the earliest comparative period presented.
- IFRIC 17 “Distributions of non-cash assets to owners”. According to IFRIC 17, the dividends should be entered on the liabilities side if the dividend has been authorised and is no longer at the discretion of the entity distributing it. Non-cash dividends should be measured at the fair value of the assets being paid out. If there is any difference between the fair value and the carrying amount of the assets, the latter will be recognised in profit or loss. IFRIC 17 has to be applied prospectively to financial years beginning on or after July 1, 2009.
- IFRIC 18 “Transfers of assets from customers”. IFRIC 18 is particularly relevant for entities in the utility sector and deals with agreements in which an entity receives from a customer an item of property, plant, and equipment or cash for acquiring or constructing such item of property, plant, and equipment in order to connect the customer to a network or provide the customer with ongoing access to a supply of goods or services. IFRIC 18 has to be applied to financial years beginning on or after July 1, 2009.
- IFRIC 19 “Extinguishing financial liabilities with equity instruments”. If a debtor issues equity instruments to a creditor to extinguish all or part of a financial liability, those equity instruments are ‘consideration paid’. Accordingly, the debtor should derecognise the financial liability fully or partly. IFRIC 19 is to be applied, if accepted in its current form by the EU, to financial years beginning on or after July 1, 2010. Early adoption is permitted. The interpretation must be applied retroactively to the earliest comparative period presented.
- Improvements of IFRS 2009. In April 2009, the Board published a collection of amendments designed to change various IFRSs with the primary objective of removing inconsistencies and clarifying wordings. Each standard has its own transitional provisions. The amendments are to be applied, if accepted in their current form by the EU, at the earliest to financial years beginning on or after January 1, 2009.
The conditions mentioned in the new IFRIC have not occurred at MLP to date. MLP expects that the new IFRS 9 will lead to changes with regard to the classification of financial assets. The revised version of IFRS 3 will affect the accounting for business combinations. Depending on the nature and volume of future transactions, the changes will have an effect on the Group’s net assets, financial position and results of operations. In all other cases, MLP is not expecting any effects on the representation of the Group’s net assets, financial position or results of operations. MLP will apply the new and / or revised IFRS standards at the latest when their application becomes binding following their acceptance by the EU.