Philips 2011 Annual Report Download - page 136

12 Group financial statements 12.10 - 12.10
136 Annual Report 2011
and the distinction between short-term and other long-term benefits
has been revised. The revisions further clarify the classification of
various costs involved in benefit plans like expenses and taxes.
The amendment will have a material impact on income from operations
and net income of the Company, resulting from the changes in
measurement and reporting of expected returns on plan assets (and
interest costs), which is currently reported under income from
operations.
The revised standard requires interest income or expense to be
calculated on the net balance recognized, with the rate used to discount
the defined benefit obligations.
There is no impact on the cash flow statement and the balance sheet,
since the Company already applies immediate recognition of actuarial
gains and losses. The impact on net income leads to lower amount
recognized in actuarial gains and losses in equity.
The impact was determined by applying the revised IAS 19R on current
post employment benefit plans, excluding long term plans not requiring
actuarial valuations and projecting it to 2013. The estimated negative
impacts on EBITA and income before tax for 2013 would be:
EBITA EUR (260) million
Financial income and expenses EUR (90) million
Income before tax EUR (350) million
IFRS 9 ‘Financial Instruments’
The standard introduces certain new requirements for classifying and
measuring financial assets and liabilities. IFRS 9 divides all financial assets
that are currently in the scope of IAS 39 into two classifications, those
measured at amortized cost and those measured at fair value. The
standard along with proposed expansion of IFRS 9 for classifying and
measuring financial liabilities, de-recognition of financial instruments,
impairment, and hedge accounting will be applicable from January 1,
2015, although entities are permitted to adopt earlier. This standard
has not yet been endorsed by the EU. The new standard will primarily
impact the accounting for the available-for-sale securities within Philips
and will, accordingly, change the timing and placement (profit or loss
versus other comprehensive income) of changes in the respective fair
value. The actual impact in the year it is applied cannot be estimated
on a reasonable basis.
IFRS 10 ‘Consolidated Financial Statements’
IFRS 10 replaces the consolidation requirements in SIC-12
Consolidation—Special Purpose Entities and IAS 27 Consolidated and
Separate Financial Statements. IFRS 10 changes the definition of control
so the same criteria are applied to all entities to determine control. The
revised definition of control focuses on the need to have both power
and variable returns before control is present. The new standard
includes guidance on control with less than half of the voting rights
(‘de-facto’ control), participating and protective voting rights and agent/
principal relationships. This new standard will be applicable from
January 1, 2013, but has not yet been endorsed by the EU. The
Company is currently evaluating the impact that this new standard will
have on the Company’s Consolidated financial statements.
The Company is currently assessing the potential other new standards,
amendments to standards and interpretations that are effective for
annual periods on or after January 1, 2012 and which the Company has
not early adopted. None of these are expected to have a material effect
on the Company’s Consolidated financial statements.