2005 Annual Report Julius Baer Holding Ltd. - GAM Holding AG

Notes
15 February 2006. These consolidated financial statements
will be presented for approval at the Annual
General Meeting on 12 April 2006.
Changes in accounting policies and comparability
The Group applied all new and revised IFRS for the
first time in 2005. Adoption of these new and revised
IFRS resulted in the following changes in the accounting
policies of the Group:
IFRS 2 – Share-based Payment
IFRS 2, Share-based Payment, prescribes the
accounting for share-based payments to employees
and other parties. When such payments are made to
employees in the form of shares or share options, the
fair value of these payments at the grant date must
be recognized as compensation expense. Sharebased
payments that are subject to a vesting period
must be expensed using the straight-line method over
the vesting period. Granted options are recognized in
the balance sheet as a liability at fair value until they
are exercised. The new standard is effective for financial
years beginning on or after 1 January 2005. It
applies only to share-based payments granted after
7 November 2002 that have not yet vested as of
1 January 2005. It also applies to liabilities arising
from share-based payments that exist at the effective
date.
The change in accounting due to the new standard
IFRS 2 resulted in restatement of the 2004 figures in
the 2005 financial year. This had the following consequences:
Consolidated shareholders’ equity (excluding minority
interest) declined by a net CHF 22.7 million as of
1 January 2004, with the following changes taking
place among the individual positions within shareholders’
equity:
78 JULIUS BAER GROUP
– The treasury shares, which are deducted from
shareholders’ equity, increased by CHF 11.2 million
as of 1 January 2004.
– The capital reserve increased by CHF 99.8 million
as of 1 January 2004.
– The retained earnings declined by CHF 105.1 million
as of 1 January 2004.
The liabilities increased by CHF 9.3 million as of
1 January 2004.
Personnel expenses increased by CHF 11.2 million for
the 2004 financial year.
IFRS 3 – Business Combinations
IFRS 3 requires that all business combinations be
accounted for using the purchase method. The pooling-of-interests
method is no longer permitted. The
key change within scope of the new standard is that
existing goodwill can no longer be amortized over an
estimated useful life, but must instead be tested for
impairment annually. Intangible assets may be
treated as having an indefinite useful life if supported
by the facts and circumstances. These intangibles are
not amortized, but tested for impairment periodically.
The change in accounting due to the new standard
IFRS 3 does not result in any restatement of the
2004 figures in the 2005 financial year.
Revised IAS 32 and IAS 39 – Financial Instruments
In December 2003, the International Accounting
Standards Board (IASB) issued the revised versions of
IAS 32 and IAS 39. Both standards are effective for
financial years beginning on or after 1 January 2005.
These two standards provide comprehensive guidelines
for the recognition, measurement, presentation
and disclosure of financial instruments. The standards
must be applied retrospectively. Hence, the
comparison data for 2004 provided in the 2005 financial
statements had to be restated accordingly, as if
the revised standards had always been in force.