iesy Repository GmbH - Irish Stock Exchange

Under IFRS, IAS 19 requires provisions for pensions and similar employee benefits to be measured using the projected
unit credit method. This method uses biometric calculations, prevailing long-term capital market interest rates for discounting
purposes, and the latest assumptions about future salaries and pension increases. In addition, IAS 19 prescribes extensive
disclosure requirements for pension obligations.
Accrued Liabilities and Contingencies
Under German GAAP, in addition to the accruals for probable contingencies and contingent losses, accruals for
anticipated expenses that do not result from an obligation to a third party (e.g. cost for repair and maintenance) are permitted
in certain cases.
Under IFRS, the criteria for the recognition of provisions are more restrictive. Accruals are permitted only if they
correspond to an obligation to a third party, are deemed probable to occur and the amount can be reasonably measured.
Accruals for anticipated expenses that do not result from an obligation to a third party are not permitted.
Restructuring Activities
Under German GAAP the recognition of a restructuring provision is allowed if a decision was taken until balance sheet
date and the costs of the restructuring plan can be properly estimated.
Under IFRS, a restructuring provision may be recognized if the company: (a) has a detailed formal restructuring plan
which identifies at least: (i) the business or part of a business concerned; (ii) the principal locations affected; (iii) the location,
function, and approximate number of employees who will be compensated for terminating their employment; (iv)
expenditures expected to occur; and (v) when the plan will be implemented; and (b) has raised a valid expectation in those
affected that it will carry out the restructuring by starting its implementation.
Asset Retirement Obligations
Under German GAAP, the costs expected to be incurred with respect to the asset retirement and restoration obligations
are accrued pro rata over the useful life of the asset.
Under IFRS the expected cost of asset retirement and restoration obligations are included in the historical cost of
property, plant and equipment at their present value if the obligation satisfies the criteria for recognition as a provision under
IAS 37. In parallel to the recognition as an asset, a provision is reported in the same amount.
Incidental Acquisition Cost and Debt Issuance Costs
Under German GAAP not all costs are recorded as acquisition costs. Acquisition costs do not include costs incurred in
the decision-making process such as legal fees, due diligence fees, travel costs, and similar items. Debt issuance costs are
charged immediately to profit and loss.
Under IFRS, the cost of the acquisition includes any incremental direct costs relating to the acquisition including cost
incurred in the decision-making process. Debt issuance costs are capitalized and amortized as additional interest expense over
the life of the debt instrument under the effective interest method.
Derivatives and Hedging
Under German GAAP, derivatives are usually not recorded because they often constitute executory contracts.
Derivatives are recognized only to the extent of a probable loss. Unrealized gains are not recognized. If a derivative and its
related underlying instrument are designated as a hedge for a particular risk exposure (“valuation unit”), changes of the fair
value of the combined derivative and hedged exposure are not recognized in the profit and loss statement or the equity.
Under IFRS all derivative financial instruments including derivatives embedded in host contracts are recognized at fair
value, even if they hedge an underlying transaction. Changes to the fair value of these hedging instruments are recognized
either in the income statement for fair value hedges or directly in shareholder’s equity for cash flow hedges.
Share-based Payments
Under German GAAP, there is no specific guidance covering stock based compensation to employees.
Under IFRS, an entity is required to recognize share-based payment transactions, resulting from issuing equity
instruments to its employees, in its financial statements. The fair value of either the equity instruments granted or the
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