Financial Statements 2009 - Manutencoop

assets that are not significant. In the absence of objective evidence of impairment in the valueof financial assets considered individually, whether significant or otherwise, such assets are thenincluded in a group of financial assets with similar credit risk characteristics which is subjected toimpairment testing on a collective basis. Assets measured individually, for which impairment hasbeen or continues to be identified, are not included in the collective tests.If, in subsequent years, the extent of impairment decreases due, objectively, to an event arisingafter the earlier loss in value was recognised, the amount previously written down may bereinstated. Subsequent write-backs are credited to the income statement, to the extent that thecarrying amount of the asset does not exceed its amortised cost at the write-back date.Assets measured at costIf there is objective evidence of the impairment of an unlisted equity investment that is notmeasured at fair value, since its fair value cannot be measured reliably, or of a derivative associatedwith that equity instrument that must be settled by delivery of such instrument, the impairmentloss is calculated as the difference between the carrying amount of the asset and the presentvalue of estimated future cash flows, discounted using the current market yield for a similarfinancial asset.Available-for-sale financial assetsIf the value of available-for-sale financial assets is impaired, the difference between their cost(net of repayments of principal and amortisation) and their current fair value, net of any earlierimpairment charged to the income statement, is reclassified from shareholders' equity to theincome statement. Write-backs in the value of equity instruments classified as available for sale arenot reflected in the income statement. Write-backs in the value of debt instruments are creditedto the income statement if, objectively, the increase in their fair value is related to an event arisingafter the earlier loss in value was recognised in the income statement.Non-current financial payables, Other non-current liabilities, Trade payables, Currentfinancial payables and Other payables.On initial recognition, these are recorded at their fair value (normally represented by the cost ofthe transaction), including any related transaction costs.Subsequently, except for derivatives and liabilities under guarantee contracts, financial liabilitiesare stated at amortised cost using the effective interest method.DerivativesDerivatives are used for hedging purposes, to reduce the risks associated with changes in exchangerates, interest rates and market prices.Consistent with the provisions of IAS 39, derivatives may only be recognised on a hedgeaccounting basis when, at the start of the hedge, they are formally designated as hedges and thehedging relationship is documented, when the hedge is expected to be highly effective, whensuch effectiveness can be measured reliably, and when the hedge actually turns out to be highlyeffective during the various accounting periods in which it is designated as a hedge.All derivatives are measured at fair value, as required by IAS 39.When financial instruments have the characteristics for recognition on a hedge accounting basis,the following accounting treatment is applied:> Fair value hedge – If a derivative is designated as a hedge of the exposure to changes in thefair value of an asset or liability reported in the statement of financial position, where suchchanges are attributable to a specific risk that might affect the income statement, the profitsor losses deriving from subsequent measurement of the fair value of the hedging instrumentare recognised in the income statement. Profits or losses on the hedged item attributable tothe hedged risk modify the carrying amount of such item and are recognised in the incomestatement.> Cash flow hedge – If a derivative is designated as a hedge of the exposure to changes inthe future cash flows deriving from an asset or liability reported in the statement of financialposition, or from an expected transaction that is highly likely to take place, where such changesmight affect the income statement, the effective portion of the profits or losses on the derivativefinancial instrument are recognised in shareholders' equity. The accumulated profits or lossesare released from equity and recognised in the income statement in the period in which thehedged transaction is recognised. The profits or losses associated with a hedge (or part of ahedge) that has become ineffective are recognised immediately in the income statement. If ahedging instrument or hedging relationship is closed out, but the hedged transaction has notyet taken place, the profits or losses until then accumulated in shareholders' equity are releasedto the income statement when the economic effects of the hedged transaction are recognised.If the hedged transaction is no longer likely to take place, any unrealised profits and lossesaccumulated in shareholders' equity are released immediately to the income statement.If hedge accounting cannot be applied, the profits or losses deriving from the measurement at fairvalue of the derivative are recognised immediately in the income statement.Provisions for risks and chargesThe Company records provisions for risks and charges to cover current obligations (legal or implicit)deriving from past events, if the settlement of such obligations is likely to require an outflow ofresources and a reliable estimate of the amount can be made.If the Company believes that the costs covered by a provision for risks and charges will be reimbursed,in whole or in part, as in the case of risks covered by insurance policies, the related indemnity isrecorded separately as an asset if, and only if, such recovery is virtually certain. In such cases, theprovision is classified in the income statement net of the amount recognised for the indemnity.If the discounting effect is significant, the provisions are stated at their present value using apre-tax discounting rate that appropriately reflects the specific risks associated with the liabilityconcerned. When provisions are discounted, the subsequent increases due to the passage of timeare recorded as financial charges.Provision for benefits due on the termination of employmentA liability for benefits due on the termination of employment is recorded when, and only when,the Company is demonstrably committed to: (a) terminating the employment of an employeeor a group of employees before the normal retirement date; or (b) paying benefits for thetermination of employment following the offer of voluntary redundancy incentives. The Companyis demonstrably committed to terminating employment when, and only when, it has a detailedformal plan for such termination and there is no realistic likelihood that this plan will be withdrawn.Employee benefitsItalian legislation (art. 2120 of the Italian Civil Code) envisages that, upon termination of employment,each employee shall receive a severance indemnity (TFR). The calculation of this indemnity is basedon certain items comprising the employees' annual remuneration for each year of work (suitablyrevalued) and on their length of service. Pursuant to Italian legislation, this indemnity is reportedin the financial statements using calculations based on the amount that would be due to eachemployee at the reporting date, assuming that their employment terminated at that time.The International Financial Reporting Interpretations Committee (IFRIC) of the InternationalAccounting Standards Board (IASB) has examined the subject of Italian TFR and concluded,pursuant to IAS 19, that it represents a "defined benefit" plan in the context of post-employmentbenefits. As such, the provision must be calculated using the Projected Unit Credit Method(PUCM), whereby the liability for benefits earned must reflect the expected termination date andmust be discounted to present value.Following the 2007 reform of the relevant Italian regulations governing the TFR accrued subsequentto 1 January 2007 by companies with more than 50 employees, the provision now represents a“defined contributions” plan and payments are charged directly to the income statement as a cost56 - financial statements as of 31 December 2009 - principles and explanatory notes Financial statements as of 31 December 2009 - principles and explanatory notes - 57