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Notes to the consolidated financial statements continued• IAS 28 (Amendment), Investments in Associates (and consequentialamendments to IAS 32, Financial Instruments: Presentation, andIFRS 7, Financial Instruments: Disclosures) (effective from 1 January2009). The amendment is part of the IASB’s annual improvementsproject published in May 2008. An investment in an associate istreated as a single asset for the purposes of impairment testing. Anyimpairment loss is not allocated to specific assets included withinthe investment, for example, goodwill. Reversals of impairment arerecorded as an adjustment to the investment balance to the extentthat the recoverable amount of the associate increases. The Groupwill apply the IAS 28 (Amendment) to impairment tests related toinvestments in associates and any related impairment losses from1 April 2009.• IAS 36 (Amendment), Impairment of Assets (effective from1 January 2009). The amendment is part of the IASB’s annualimprovements project published in May 2008. Where fair valueless costs to sell is calculated on the basis of discounted cash flows,disclosures equivalent to those for value-in-use calculation shouldbe made. The Group will apply the IAS 36 (Amendment) andprovide the required disclosure where applicable for impairmenttests from 1 April 2009.• IAS 19 (Amendment), Employee Benefits (effective from 1 January2009). The amendment is part of the IASB’s annual improvementsproject published in May 2008.– The amendment clarifies that a plan amendment that resultsin a change in the extent to which benefit promises are affectedby future salary increases is a curtailment, while an amendmentthat changes benefits attributable to past service gives rise to anegative past service cost if it results in a reduction in the presentvalue of the defined benefit obligation.– The definition of return on plan assets has been amended to statethat plan administration costs are deducted in the calculation ofreturn on plan assets only to the extent that such costs have beenexcluded from measurement of the defined benefit obligation.– The distinction between short-term and long-term employeebenefits will be based on whether benefits are due to be settledwithin or after twelve months of employee service being rendered.– IAS 37 Provisions, Contingent Liabilities and Contingent Assetsrequires contingent liabilities to be disclosed, not recognised.IAS 19 has been amended to be consistent.The Group will apply the IAS 19 (Amendment) from 1 April 2009.• IAS 39 (Amendment), Financial Instruments: Recognition andMeasurement (effective from 1 January 2009). The amendmentis part of the IASB’s annual improvements project published inMay 2008.– The definition of financial asset or financial liability at fair valuethrough profit or loss as it relates to items that are held for tradingis also amended. This clarifies that a financial asset or liabilitythat is part of a portfolio of financial instruments managedtogether with evidence of an actual recent pattern of short-termprofit-taking is included in such a portfolio on initial recognition.– The current guidance on designating and documenting hedgesstates that a hedging instrument needs to involve a party externalto the reporting entity and cites a segment as an example of areporting entity. This means that in order for hedge accounting tobe applied at segment level, the requirements for hedge accountingare currently required to be met by the applicable segment.The amendment removes the example of a segment so that theguidance is consistent with IFRS 8, Operating Segments whichrequires disclosure for segments to be based on informationreported to the chief operating decision-maker.– When re-measuring the carrying amount of a debt instrumenton cessation of fair value hedge accounting, the amendmentclarifies that a revised effective interest rate (calculated at thedate fair value hedge accounting ceases) is used.The Group will apply the IAS 39 (Amendment) from 1 April 2009.It is not expected to have an impact on the Group’s income statement.• IAS 1 (Amendment), Presentation of Financial Statements (effectivefrom 1 January 2009). The amendment is part of the IASB’s annualimprovements project published in May 2008. The amendmentclarifies that some rather than all financial assets and liabilitiesclassified as held for trading in accordance with IAS 39, FinancialInstruments: Recognition and Measurement, are examples ofcurrent assets and liabilities respectively. The Group will applythe IAS 1 (Amendment) from 1 April 2009. It is not expectedto have an impact on the Group’s financial statements.• IFRIC 13, Customer Loyalty Programmes addresses the accountingby entities that operate or otherwise participate in customer loyaltyprogrammes with their customers. This interpretation does not haveany impact on the consolidated financial statements.• IFRIC 16, Hedges of a Net Investment in a Foreign Operation(effective from 1 October 2008). IFRIC 16 clarifies the accountingtreatment in respect of net investment hedging. This includes thefact that net investment hedging relates to differences in functionalcurrency not presentation currency, and hedging instruments maybe held anywhere in the Group. The requirements of IAS 21,The Effects of Changes in Foreign Exchange Rates do apply tothe hedged item. The Group will apply IFRIC 16 from 1 April2009. It is not expected to have a material impact on the Group’sfinancial statements.– This amendment clarifies that it is possible for there to bemovements in to and out of the fair value through profit orloss category where a derivative commences or ceases to qualifyas a hedging instrument in cash flow or net investment hedge.66 Richemont Annual Report and Accounts 2009Consolidated financial statements