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Integrated Report 2020

2.3. Statement of compliance with IFRS

The present consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as endorsed by the European Union (“IFRS EU”).

The present consolidated financial statements have been prepared in accordance with the requirements specified in International Accounting Standards (“IAS”) and International Financial Reporting Standards endorsed by the European Union (“IFRS EU”), as well as the related interpretations, except for the standards and interpretations listed below, which are awaiting endorsement by the European Union or have already been endorsed by the European Union but entered or will enter into force after the end of the reporting period.

In the period included in these consolidated financial statements, the Group did not early apply standards and interpretations endorsed by the EU, which will enter into force after the balance sheet date.

  • IFRS 17 Insurance Contracts , amendments to IFRS 17, was published on 18 May 2017 with amendments issued on 25 June 2020 and planned effective date on 1 January 2023. IFRS 17 Insurance Contracts will replace IFRS 4 Insurance contracts, which allows insurance contracts to continue to be accounted for in accordance with the accounting principles in national standards and which, as a result, implies multiple different solutions. IFRS 17 requires consistent recognition of all insurance contracts. Liabilities arising from contracts will be recognised at present values instead of historical cost. The standard adoption is set to be conducted based on a full retrospective approach (if the entity would be unable to comply with full retrospective approach, an entity should use the modified retrospective approach or the fair value approach).

The amendments are intended to:

    • reduce costs by simplifying requirements of the standard;
    • simplify the financial results explanation; and
    • ease the transition to the new standard by deferring the effective date of the standard to 2023 and introducing additional relief to ease the first-time adoption of IFRS 17.
  • Amendments to IAS 1 Presentation of Financial Statements – classification of liabilities, was published on 23 January 2020 and on 15 July 2020 the effective date was postponed to 1 January 2023. The amendments relate to the presentation of liabilities in the statement of financial position. In particular, they provide clarification that the classification of liabilities as current or non-current should be based on the rights existing at the end of the reporting period. A prospective approach will apply to the amendments.
  • Amendments to IFRS 3 Business combinations published on 14 May 2020 and are effective for annual periods beginning on or after 1 January 2022. The amendments update the reference in IFRS 3 to the Conceptual framework for financial reporting without changing the accounting requirements for business combinations.
  • Amendments to IAS 16 Property, plant and equipment, published on 14 May 2020 and are effective for annual periods beginning on or after 1 January 2022. The amendments prohibit a company from deducting from the cost of acquisition or development of property, plant and equipment amounts received from the sale of items produced in preparation for the asset’s intended use. Instead, the company should recognise income from the sales and the corresponding expenses in the income statement.
  • Amendments to IAS 37 Provisions, contingent liabilities and contingent assets, published on 14 May 2020 and are effective for annual periods beginning on or after 1 January 2022. They specify which costs an entity should take into account in assessment whether a contract will result in a loss.
  • Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 15 – IBOR reform – Phase II, published on 27 August 2020 and effective for annual periods beginning on 1 January 2021. The regulations published under Phase II of the IBOR reform relate to:
    • contractual cash flow modifications – the addition of a solution to IFRS 9 that will enable the recognition of contractual cash flow modifications due to the IBOR reform by updating the effective interest rate of the contract to reflect the transition to an alternative reference rate (there will be no requirement to derecognise or adjust the carrying amount of financial instruments); a similar solution applies to IFRS 16 for lessees' recognition of lease modifications;
    • hedge accounting – there will be no need to discontinue hedge accounting due to the changes required by the reform if the hedge meets the other criteria for hedge accounting; and
    • disclosures – entities will be required to disclose information about new risks arising from the reform and entity’s management of the transition to alternative reference rates.
  • Amendments to IFRS 4 Insurance contracts – deferral of IFRS 9, published on 25 June 2020 and are effective for annual periods beginning on or after 1 January 2021. The amendments provide two optional arrangements to reduce the impact of different effective dates for IFRS 9 and IFRS 17.
  • Amendments to IFRS 9, IAS 39 and IFRS 17 – IBOR reform, published on 26 September 2019 and are effective for annual periods beginning on or after 1 January 2020. The amendments provide temporary and specific exceptions from the hedge accounting requirements in IAS 39 and IFRS 9, which will allow companies to continue to comply with the existing requirements, assuming that existing benchmark interest rates do not change following the IBOR reform.
  • Amendments to IFRS 16 Leases – COVID-19 related rent concessions, published on 28 May 2020 and are effective for annual periods beginning on or after 1 June 2020. The amendments provide for the option for lessees not to treat rent reductions as lease modifications if they are directly related to COVID-19 and meet certain conditions.
  • Amendments to IFRS 3 Business combinations, published on 22 October 2018 and are effective for periods beginning on or after 1 January 2020. The amendments to IFRS 3 specify and clarify the definition of a business. They also allow for a simplified assessment whether a group of assets and activities constitutes an asset group rather than a business. A prospective approach will apply to the amendments.
  • Amendments to IAS 1 and IAS 8 – Definition of term 'material', published on 31 October 2018 and are effective for annual periods beginning on or after 1 January 2020. The amendments to IAS 1 and IAS 8 unify and clarify the definition of term 'material' and provide guidance to improve consistency in the application of the concept across International Financial Reporting Standards.
  • Amendments to references to conceptual assumptions in IFRS, published on 29 March 2018 and are effective for annual periods beginning on or after 1 January 2020. The purpose of the amendments is to replace references to previous assumptions existing in a number of standards and interpretations with references to revised conceptual assumptions

The above-mentioned standards and amendments to existing standards, in the Group’s opinion, will not have a material impact on its annual consolidated financial statements as at 31 December 2020.

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