In addition to the recognition and measurement of financial assets, the updated version of IFRS 9 contains new stipulations for accounting impairments of financial assets and revised requirements for the classification and measurement of financial instruments as part of hedge accounting. In the future, financial assets will be measured either at amortized cost or at fair value, depending on the business model of the company in question. The classification model for financial liabilities will be retained. The recognition of impairments will change fundamentally; not only will it be necessary to recognize credit losses actually incurred, but also those expected to be incurred. The goal of the new hedge accounting model under IFRS 9 is to better reflect risk management activities in the financial statements. Cash flow hedge accounting, fair value hedge accounting and hedging of a net investment in a foreign operation remain admissible hedging relationships. In each case, the number of qualifying underlying and hedging transactions was extended. At the moment, WACKER cannot conclusively assess what impacts the first-time application of this standard will have on its earnings, net assets or financial position, or on the presentation of its financial statements.

In accordance with this standard, almost all lease contracts and the associated contractual rights and liabilities are recognized in the statement of financial position. A lease liability is to be recognized for the payment obligations associated with every lease. At the same time, a right of use for the leased asset is capitalized in an amount corresponding to the present value of the future lease payments. This right is amortized while the lease liability is reduced over the lease term by repayments and accrued interest. Accounting relief is granted for short-term leases and assets of low value. WACKER has not yet evaluated the impact of the new standard, but we assume that lease liabilities will rise considerably. That will lead to an increase in financial liabilities and the amount of intangible assets recognized.

The amendment contains details on deductible temporary differences and their assessment. This amendment also clarifies how to estimate future taxable profits for the measurement of deferred tax assets. It has no impact on WACKER’s earnings, net assets or financial position. The clarifications will, however, be relevant when the asset value of deferred tax assets is being assessed in WACKER’s consolidated financial statements.

The amendments are intended to improve the presentation of the company’s changes in net debt. These amendments propose a reconciliation between the opening and closing balances for liabilities arising from financing activities. WACKER expects a more detailed disclosure of information in the statement of cash flows. There will be no major changes in the Group’s earnings, net assets or financial position.

IFRS 15 sets out that an entity shall recognize revenue whenever the customer obtains control of, and can draw an economic benefit from, the promised goods and services. The transfer of significant risks and rewards of ownership is no longer of primary importance, as was still the case under the old IAS 18 “Revenue” rules. Revenue must be recognized in an amount that reflects the consideration to which an entity expects to be entitled. The new model provides a five-step framework for recognizing revenue, which first identifies the contract with a customer and the performance obligations it entails, and then determines and allocates the transaction price. The revenue must be recognized for each individual performance obligation when the customer obtains control of the good or service. WACKER will evaluate the new standard to determine its impact on the recognition of revenue in 2016. The effects cannot be assessed at present. The new standard will result in broader disclosure details in WACKER’s financial statements.

In accordance with these two revised standards, the investor’s gain or loss must always be recognized in full if a transaction constitutes a business as defined in IFRS 3. If this is not the case and the transaction concerns assets that do not constitute a business, the gain or loss is recognized only to the extent of unrelated investors’ interests in the associate or joint venture. The application of these two revised standards currently has no impact on WACKER’s earnings, net assets or financial position.