4.4 Legal risk - Scor

are effective for annual periods beginning on or after 1 January 2013 for companies preparing financial statements
in compliance with IFRS issued by the IASB and on or after 1 January 2014 for European listed Companies. The
amendments to IAS 28 are not expected to impact the Group’s financial position or performance.
• Amendments to IAS 32 – Offsetting Financial Assets and Financial Liabilities clarify the meaning of “currently has
a legally enforceable right to set-off”. The amendments also clarify the application of the IAS 32 offsetting criteria to
settlement systems which apply gross settlement mechanisms that are not simultaneous. The European Union
endorsed the amendments on 13 December 2012. These amendments are not expected to impact the Group’s
financial position or performance and become effective for annual periods beginning on or after 1 January 2014.
• IFRS 9 Financial Instruments: Classification and Measurement 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.
The standard is effective for annual periods beginning on or after 1 January 2015. In subsequent phases, the IASB
will address impairment and hedge accounting. The European Union has not decided yet whether to adopt IFRS 9
or not. The adoption of IFRS 9 will affect the classification and measurement of the Group’s financial assets.
However, the Group determined that the effect will be quantified only in conjunction with the other phases when
issued, to present a comprehensive picture.
(E) FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS
Where the functional currency of an entity is not the same as the reporting currency used to present the Group’s
consolidated financial statements, assets and liabilities of the entity are translated using the exchange rate at the balance
sheet date and the statement of income is translated using the average exchange rate for the period. Translation differences
are recognized directly in shareholders’ equity as “translation adjustments”. The foreign exchange rate used for this purpose
are stated under Note 1 (C). Transactions denominated in foreign currencies (currencies other than the functional currency)
are translated into the functional currency at the rate of exchange at the date of the transaction (for practical purposes, an
average rate is used). These rates may differ from the rates used to translate functional currency into reporting currency as
mentioned above.
At each period end, the entity must translate the items on its balance sheet which are denominated in a foreign currency into
the functional currency, using the following procedures:
• monetary items and non-monetary items classified as fair value through income are translated at end of period
exchange rates and the resulting gains and losses are recorded in the statement of income;
• other non-monetary items are translated:
- at the exchange rates in effect on the transaction date for items valued at historical cost; or
- at end of period exchange rates if they are valued at fair value; and
- to the extent that any gains or losses arise, these are directly recorded in shareholders’ equity. In particular
this affects foreign exchange differences for available for sale equity securities and exchange differences
resulting from the conversion of these items are also directly recorded in shareholders’ equity;
• the gains and losses resulting from the translation of net foreign investment hedges are recorded in shareholders’
equity. They are recognized in the statement of income upon the disposal of the net investments.
(F) INTANGIBLE ASSETS
Business combinations and goodwill
Business combinations are accounted for using the purchase method of accounting which requires that the assets acquired
and liabilities assumed be recorded at the date of acquisition at their respective fair values.
Goodwill is initially measured at cost being the excess of the cost of the business combination over the fair value of the
Group’s share of the net assets of the acquired company and is included in intangible assets. If the business combination is
achieved in stages, the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition
date through profit or loss.
Goodwill arising on companies accounted for under the equity method is included within the carrying value of those
investments.
A gain from bargain purchase is generated when the fair value of the net assets acquired by the Group exceeds the
acquisition price and is recognized in the statement of income from the date of acquisition.
After initial recognition, goodwill is measured at cost less any accumulated impairment. At least annually, Goodwill is tested
for impairment.
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