Annual Review 2012 - Luxottica

Consolidated financial statements - NOTES
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IFRS 9 introduces new requirements for classifying and measuring financial assets. The
new standard reduces the number of categories of financial assets pursuant to IAS 39
and requires that all financial assets be: (i) classified on the basis of the model which a
company has adopted in order to manage its financial activities and on the basis of the
cash flows from financing activities; (ii) initially measured at fair value plus any transaction
costs in the case of financial assets not measured at fair value through profit and loss;
and (iii) subsequently measured at their fair value or at the amortized cost. IFRS 9 also
provides that embedded derivatives which fall within the scope of IFRS 9 must no longer
be separated from the primary contract which contains them and states that a company
may decide to directly record - within the consolidated statement of comprehensive
income - any changes in the fair value of investments which fall within the scope of IFRS 9.
The endorsement process of IFRS 9, that should be effective starting from January, 1 2013,
has been suspended. The Group is assessing the full impact of adopting IFRS 9.
IFRS 10 - Consolidated Financial Statements, issued in May 2011. The new model replaces
the current duality of IAS 27 and SIC12. The standard states that an investor, regardless of
the nature of its involvement with an entity (the investee), shall determine whether it is a
parent by assessing whether it controls the investee. An investor controls an investee if and
only if the investor has (i) the power over the investee, (ii) exposure, or rights, to variable
returns from its involvement with the investee and (iii) the ability to use its power over the
investee to affect the amount of the investor’s returns.
IFRS 10 defines relevant activities as activities of the investee that significantly affect the
investee’s returns. Based on the new standard (i) power arises from rights (for the purpose
of assessing power, only substantive rights are considered), (ii) there are possibilities of
having power with less than 50 percent of voting rights, and (iii) potential voting rights are
considered only if they are substantive, differently from IAS 27, under which only potential
voting rights that are currently exercisable or convertible were relevant to determining
control. The new standard introduces some factors to identifying whether a party is acting
as an agent or a principal.
Concurrently with IFRS 10 the IASB issued in May 2011 IAS 27 - Separate Financial
Statements, which prescribes the accounting and disclosure requirements for investments
in subsidiaries, joint ventures and associates when an entity prepares separate financial
statements. IFRS 10 and IAS 27 supersede IAS 27 - Consolidated and separate financial
statements (as amended in 2008).
For IFRS 10 and IAS 27 the IASB indicated January 2013 as the effective date. The European
Commission endorsed the two standards on December 11, 2012 with regulation number
1254 and postponed by one year the original effective date set by the IASB. The standards
are now effective for annual periods beginning on or after January 1, 2014 at the latest. The
Group assessed that the application of the new standard will not have a significant impact
on its consolidated financial statements.
IFRS 12 - Disclosure of Interests in Other Entities, issued in May 2011. IFRS 12 provides
expanded disclosures about an entity’s interests in subsidiaries, associates and joint
arrangements. IFRS 12 moves away from requiring a ‘boiler plate’ list of disclosures to
a more principles based approach. IFRS 12 applies only to the consolidated accounts.