All loans and borrowings are initially recognised at the fair value of the consideration received net of issue costs associated with the borrowing. After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method.
Gains and losses are recognised in the statement of profit or loss when the liabilities are derecognised as well as through the effective interest rate method (EIR) amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fee or costs that are an integral part of the EIR. The EIR amortisation is included in finance cost in the statement of profit or loss.
3.11. Foreign currency translation
The presentation and functional currency of FEGNV is the Euro (“EUR” or “€”).
Transactions in foreign currencies are initially recorded in the functional currency at the foreign currency rate ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are retranslated at the foreign currency rate of exchange ruling at the balance sheet date. All differences are taken to the statement of profit or loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined.
3.12. Expenses
Costs and expenses are allocated to the year to which they relate. Losses are recognized in the year in which they are identified.
3.13. Contingencies
Contingent assets are not recognised in the financial statements but disclosed when an inflow of economic benefits is probable. Contingent liabilities are not recognised in the financial statements. They are disclosed in the notes unless the possibility of an outflow of resources embodying economic benefits is remote.
3.14. New and amended standards and interpretations
The accounting policies adopted are consistent with those of the previous financial year, except for the following new and amended IFRS and IFRIC interpretations effective as of 1 January 2013:
I A S 1 P r e s e n t a t i o n o f I t e m s o f O t h e r C o m p r e h e n s i v e I n c o m e – A m e n d m e n t s t o I A S 1 The amendments to IAS 1 change the grouping of items presented in other comprehensive income (OCI). Items that could be reclassified (or ‘recycled’) to profit or loss at a future point in time (for example, net gain on hedge of net investment, exchange differences on translation of foreign operations, net movement on cash flow hedges and net loss or gain on available-for-sale financial assets) would be presented separately from items that will never be reclassified (for example, actuarial gains and losses on defined benefit plans and revaluation of land and buildings). The amendment affects presentation only and has no impact on the FEGNV’s financial position or performance.
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I A S 1 9 E m p l o y e e B e n e f i t s ( R e v i s e d )
The IASB has issued numerous amendments to IAS 19. These range from fundamental changes such as removing the corridor mechanism and the concept of expected returns on plan assets to simple
clarifications and re-wording. The amended standard will impact the net benefit expense as the expected return on plan assets will be calculated using the same interest rate as applied for the purpose of discounting the benefit obligation. These amendments did not impact FEGNV’s financial position or performance.
I A S 2 8 I n v e s t m e n t s i n A s s o c i a t e s a n d J o i n t Ve n t u r e s ( a s r e v i s e d i n 2 0 1 1 )
As a consequence of the new IFRS 11 Joint Arrangements, and IFRS 12 Disclosure of Interests in Other Entities, IAS 28 Investments in Associates, has been renamed IAS 28 Investments in Associates and Joint Ventures, and describes the application of the equity method to investments in joint ventures in addition to associates. As FEGNV does not have any investments in associates and joint ventures, these amendments did not impact FEGNV’s financial position or performance.
I F R S 7 D i s c l o s u r e s – O f f s e t t i n g F i n a n c i a l A s s e t s a n d F i n a n c i a l L i a b i l i t i e s – A m e n d m e n t s t o I F R S 7
These amendments require an entity to disclose information about rights to set-off and related arrangements (e.g. collateral agreements). The disclosures would provide users with information that is useful in evaluating the effect of netting arrangements on an entity’s financial position. The new disclosures are required for all recognised financial instruments that are set off in accordance with IAS 32 Financial Instruments:
Presentation. The disclosures also apply to recognised financial instruments that are subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are set off in accordance with IAS 32. These amendments did not impact FEGNV’s financial position or performance.
I F R S 1 0 C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s , I A S 2 7 S e p a r a t e F i n a n c i a l S t a t e m e n t s IFRS 10 replaces the portion of IAS 27 Consolidated and Separate Financial Statements that addresses the accounting for consolidated financial statements. It also addresses the issues raised in SIC-12
Consolidation —Special Purpose Entities.
IFRS 10 establishes a single control model that applies to all entities including special purpose entities. The changes introduced by IFRS 10 will require management to exercise significant judgement to determine which entities are controlled and therefore are required to be consolidated by a parent, compared with the requirements that were in IAS 27. Based on the analyses performed, IFRS 10 did not have any impact on the currently held investments of FEGNV.
I F R S 1 1 J o i n t A r r a n g e m e n t s
IFRS 11 replaces IAS 31 Interests in Joint Ventures and SIC-13 Jointly-controlled Entities – Non-monetary Contributions by Venturers. IFRS 11 removes the option to account for jointly controlled entities (JCEs) using proportionate consolidation. Instead, JCEs that meet the definition of a joint venture must be accounted for using the equity method. This standard is to be applied retrospectively for joint arrangements held at the date of initial application. IFRS 11 did not have any impact on the currently held investments of FEGNV.
I F R S 1 2 D i s c l o s u r e o f I n t e r e s t s i n O t h e r E n t i t i e s
IFRS 12 includes all of the disclosures that were previously in IAS 27 related to consolidated financial statements, as well as all of the disclosures that were previously included in IAS 31 and IAS 28. These disclosures relate to an entity’s interests in subsidiaries, joint arrangements, associates and structured entities. A number of new disclosures are also required, but has no impact on FEGNV’s financial position or performance.
I F R S 1 3 F a i r Va l u e M e a s u r e m e n t
IFRS 13 establishes a single source of guidance under IFRS for all fair value measurements. IFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under IFRS when fair value is required or permitted. These amendments did not materially impact FEGNV’s financial position or performance.
3.15. Future accounting developments
Standards issued but not yet effective up to the date of issuance of FEGNV’s financial statements are listed below. This listing is of standards and interpretations issued that FEGNV reasonably expects to be applicable at a future date. FEGNV intends to adopt these standards when they become effective.
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I F R S 9 F i n a n c i a l I n s t r u m e n t s
IFRS 9, as issued, reflects the first phase of the IASB’s work on the replacement of IAS 39 and applies to classification and measurement of financial assets and financial liabilities as defined in IAS 39. The standard was initially effective for annual periods beginning on or after 1 January 2013, but the latest communicated effective date is 1 January 2018. In subsequent phases, the IASB is addressing hedge accounting and impairment of financial assets. The adoption of the first phase of IFRS 9 will have an effect on the
classification and measurement of the FEGNV’s financial assets, but will not have an impact on classification and measurements of the FEGNV’s financial liabilities. FEGNV will quantify the effect in conjunction with the other phases, when the final standard including all phases is issued.
I n v e s t m e n t E n t i t i e s ( A m e n d m e n t s t o I F R S 1 0 , I F R S 1 2 a n d I A S 2 7 )
These amendments are effective for annual periods beginning on or after 1 January 2014 provide an exception to the consolidation requirement for entities that meet the definition of an investment entity under IFRS 10. The exception to consolidation requires investment entities to account for subsidiaries at fair value through profit or loss. It is not expected that this amendment would be relevant to FEGNV, since none of the entities in the group would qualify to be an investment entity under IFRS 10.
I A S 3 2 O f f s e t t i n g F i n a n c i a l A s s e t s a n d F i n a n c i a l L i a b i l i t i e s – A m e n d m e n t s t o I A S 3 2 These amendments clarify the meaning of “currently has a legally enforceable right to set-off” and the criteria for non-simultaneous settlement mechanisms of clearing houses to qualify for offsetting. These are effective for annual periods beginning on or after 1 January 2014. These amendments are not expected to be relevant to FEGNV.
I F R I C I n t e r p r e t a t i o n 2 1 L e v i e s ( I F R I C 2 1 )
IFRIC 21 clarifies that an entity recognizes a liability for a levy when the activity that triggers payment, as identified by the relevant legislation, occurs. For a levy that is triggered upon reaching a minimum threshold, the interpretation clarifies that no liability should be anticipated before the specified minimum threshold is reached. IFRIC 21 is effective for annual periods beginning on or after 1 January 2014. FEGNV does not expect that IFRIC 21 will have material financial impact in future financial statements.
I A S 3 9 N o v a t i o n o f D e r i v a t i v e s a n d C o n t i n u a t i o n o f H e d g e A c c o u n t i n g – A m e n d m e n t s t o I A S 3 9
These amendments provide relief from discontinuing hedge accounting when novation of a derivative designated as a hedging instrument meets certain criteria. These amendments are effective for annual periods beginning on or after 1 January 2014. FEGNV has not novated its derivatives during the current period. However, these amendments would be considered for future novations.
4. USE OF ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS