Information concerning financial instruments (IFRS 9)
With the application of9 (Financial Instruments) as of January 1, 2018, there have been changes affecting the classification of financial instruments as well as changes affecting the calculation of impairments of receivables.
Forroup, the first-time application has had an impact within the framework of determining anticipated bad debts. In addition, all investments as well as all receivables which are sold on within the framework of factoring agreements will be classified “at fair value” in future.
a) Classification of financial assets
Within the framework of9, the number of categories previously applicable under 39 has been reduced from four to three. distinction is still made as to whether the valuation effects from other comprehensive income are reclassified to the income statement or remain in shareholders equity.
Financial assets (€million)
Fair value (recog-
Fair value (not recog-
Amortized cost of
As of Dec 31, 2017
Reclassification of other investments
Reclassification of receivables
As of Jan 1, 2018
b) Measurement of financial assets
For the measurement of financial instruments,9 specifies that expected losses are now recognized within the framework of risk provisioning.
For trade receivables, the expected credit losses were determined on a collective basis using an impairment matrix; these expected losses amounted to19 as of June 30, 2018.
For receivables from financing as well as other receivables, the expected impairment requirement for major items was also determined in relation to specific receivables. Risk provisioning of5 was created for this purpose as of June 30, 2018.
The change in the process of determining expected credit losses resulted in a one-off positive effect of24 in roup; this was disclosed separately in equity (see
c) Hedge accounting
With regard to the recognition of hedges, there have been additions in the field of designation possibilities as well as a closer link between hedge accounting and risk management. There is also the need to implement extended accounting and measurement logic. Inroup, this is relevant particularly for a differentiated treatment of the currency basis spreads which, under 9, will no longer be an element of the underlying of a hedge. Any resultant ineffectiveness is, where necessary, recognized in the income statement. With 9, the quantitative limits for the effectiveness test are no longer applicable.