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Airbus Annual Report - Documents
- FINANCIAL STATEMENTS 2013
- 2 — AIRBUS GROUP FINANCIAL STATEMENTS 2013
- AIRBUS GROUP FINANCIAL STATEMENTS 2013 — 3 EADS N.V. — Consolidated Financial Statements (IFRS) 5 Notes to the Consolidated Financial Statements (IFRS) 13 EADS N.V. — Auditors’ report on the Consolidated Financial Statements (IFRS) 111 Company Financial Statements 115 Notes to the Company Financial Statements 119 1 2 3 4 5 FINANCIAL STATEMENTS 2013
- 4 — AIRBUS GROUP FINANCIAL STATEMENTS 2013 1
- AIRBUS GROUP FINANCIAL STATEMENTS 2013 — 5 EADS N.V. — Consolidated Income Statements (IFRS) for the years ended 31 December 2013, 2012 and 2011 6 EADS N.V. — Consolidated Statements of Comprehensive Income (IFRS) for the years ended 31 December 2013, 2012 and 2011 7 EADS N.V. — Consolidated Statements of Financial Position (IFRS) at 31 December 2013 and 2012 8 EADS N.V. — Consolidated Statements of Cash Flows (IFRS) for the years ended 31 December 2013, 2012 and 2011 9 EADS N.V. — Consolidated Statements of Changes in Equity (IFRS) for the years ended 31 December 2013, 2012 and 2011 10 EADS N.V. — Consolidated Financial Statements (IFRS)
- 6 — AIRBUS GROUP FINANCIAL STATEMENTS 2013 EADS N.V. — Consolidated Financial Statements (IFRS) EADS N.V. — Consolidated Income Statements (IFRS) for the years ended 31 December 2013, 2012 and 2011 (In € million) Note 2013 2012 2011 Revenues 5, 6 59,256 56,480 49,128 Cost of sales(1) 7 (50,895) (48,582) (42,351) Gross margin(1) 8,361 7,898 6,777 Selling expenses (1,217) (1,192) (981) Administrative expenses(1) (1,696) (1,677) (1,433) Research and development expenses 8 (3,160) (3,142) (3,152) Other income 9 236 184 359 Other expenses 10 (263) (229) (221) Share of profit from associates accounted for under the equity method 11 295 241 164 Other income from investments 11 51 6 28 Profit before finance costs and income taxes(1) 5 2,607 2,089 1,541 Interest income 168 237 377 Interest expense (497) (522) (364) Other financial result (301) (168) (233) Total finance costs 12 (630) (453) (220) Income taxes(1) 13 (502) (438) (337) Profit for the period(1) 1,475 1,198 984 Attributable to: Equity owners of the parent (Net income)(1) 1,465 1,197 980 Non-controlling interests 10 1 4 Earnings per share € € € Basic(1) 38 1.85 1.46 1.21 Diluted(1) 38 1.84 1.46 1.20 (1) Previous years’ figures adjusted due to revised IAS 19. The accompanying notes are an integral part of these Consolidated Financial Statements (IFRS).
- AIRBUS GROUP FINANCIAL STATEMENTS 2013 — 7 EADS N.V. — Consolidated Financial Statements (IFRS) 1 EADS N.V. — Consolidated Statements of Comprehensive Income (IFRS) for the years ended 31 December 2013, 2012 and 2011 (In € million) 2013 2012 2011 Profit for the period 1,475 1,198 984 Other comprehensive income Items that will not be reclassified to profit or loss: Remeasurement of the defined benefit liability (asset)(1) (72) (987) (677) Remeasurement of the defined benefit liability (asset) from investments using the equity method 4 (85) 1 Related tax on items that will not be reclassified to profit or loss(1) 20 335 148 Items that will be reclassified to profit or loss: Foreign currency translation differences for foreign operations (146) (47) (25) Effective portion of changes in fair value of cash flow hedges 1,841 1,047 (365) Net change in fair value of cash flow hedges transferred to profit or loss 450 917 (171) Net change in fair value of available-for-sale financial assets 11 189 (20) Net change in fair value of available-for-sale financial assets transferred to profit or loss (30) 0 0 Changes in other comprehensive income from investments accounted for using the equity method (7) (126) 128 Related tax on income and expense recognise d directly in equity (711) (625) 165 Other comprehensive income, net of tax 1,360 618 (816) Total comprehensive income of the period 2,835 1,816 168 Attributable to: Equity owners of the parent(1) 2,833 1,817 162 Non-controlling interests 2 (1) 6 (1) Previous year s’ figures adjusted due to revised IAS 19. The accompanying notes are an integral part of these Consolidated Financial Statements (IFRS).
- 8 — AIRBUS GROUP FINANCIAL STATEMENTS 2013 EADS N.V. — Consolidated Financial Statements (IFRS) EADS N.V. — Consolidated Statements of Financial Position (IFRS) at 31 December 2013 and 2012 (In € million) Note 2013 2012 Assets Non-current assets Intangible assets 14 13,653 13,429(1) Property, plant and equipment 15 15,856 15,196 Investment property 16 69 72 Investments in associates accounted for under the equity method 17 2,902 2,662 Other investments and other long-term financial assets 17 1,864 2,115 Non-current other financial assets 20 2,076 1,386 Non-current other assets 21 1,653 1,415 Deferred tax assets 13 3,840 4,532(1) Non-current securities 22 4,300 5,987 46,213 46,794(1) Current assets Inventories 18 25,060 23,216 Trade receivables 19 7,239 6,788(1) Current portion of other long-term financial assets 17 181 287 Current other financial assets 20 1,557 1,448 Current other assets 21 2,074 2,046 Current tax assets 632 458 Current securities 22 2,590 2,328 Cash and cash equivalents 31 7,765 8,756 47,098 45,327(1) Total assets 93,311 92,121(1) Equity and liabilities Equity attributable to equity owners of the parent Capital stock 783 827 Share premium 5,049 7,253 Retained earnings 2,300 894(1) Accumulated other comprehensive income 2,929 1,513 Treasury shares (50) (84) 11,011 10,403(1) Non-controlling interests 43 17(1) Total equity 23 11,054 10,420(1) Non-current liabilities Non-current provisions 25 10,046 9,850(1) Long-term financing liabilities 26 3,956 3,506 Non-current other financial liabilities 27 7,158 7,458 Non-current other liabilities 28 10,790 10,524 Deferred tax liabilities 13 1,487 1,502(1) Non-current deferred income 30 239 212 33,676 33,052(1) Current liabilities Current provisions 25 5,323 6,039(1) Short-term financing liabilities 26 1,645 1,273 Trade liabilities 29 10,372 9,921(1) Current other financial liabilities 27 1,467 1,715 Current other liabilities 28 28,159 28,183 Current tax liabilities 616 458 Current deferred income 30 999 1,060(1) 48,581 48,649(1) Total liabilities 82,257 81,701(1) Total equity and liabilities 93,311 92,121(1) (1) Previous year’s figures adjusted due to revised IAS 19 and due to PPA adjustments of prior year’s acquisitions (Please refer to “Notes to the Consolidated Financial Statements (IFRS) – Note 2 a ). The accompanying notes are an integral part of these Consolidated Financial Statements (IFRS).
- AIRBUS GROUP FINANCIAL STATEMENTS 2013 — 9 EADS N.V. — Consolidated Financial Statements (IFRS) 1EADS N.V. — Consolidated Statements of Cash Flows (IFRS) for the years ended 31 December 2013, 2012 and 2011 (In € million) Note 2013 2012 2011 Profit for the period attributable to equity owners of the parent (Net income)(1) 1,465 1,197 980 Profit for the period attributable to non-controlling interests 10 1 4 Adjustments to reconcile profit for the period to cash provided by operating activities: Interest income (168) (237) (377) Interest expense 497 522 364 Interest received 119 198 417 Interest paid (323) (351) (307) Income tax expense(1) 502 438 337 Income taxes paid (243) (219) (100) Depreciation and amortisation 1,968 2,053 1,884 Valuation adjustments 16 318 (408) Results on disposals of non-current assets (58) (21) (29) Results of companies accounted for by the equity method (295) (241) (164) Change in current and non-current provisions(1) 605 258 302 Change in other operating assets and liabilities: (2,164) (76) 1,386 ¬ Inventories (3,151) (1,526) (1,640) ¬ Trade receivables (58) (260) 447 ¬ Trade liabilities 584 754 806 ¬ Advance payments received 513 1,243 1,965 ¬ Other assets and liabilities 267 (141) (327) ¬ Customer financing assets (214) 30 246 ¬ Customer financing liabilities (105) (176) (111) Cash provided by operating activities 1,931 3,840 4,289 Investments: ¬ Purchases of intangible assets, Property, plant and equipment (2,949) (3,270) (2,197) ¬ Proceeds from disposals of intangible assets, Property, plant and equipment 60 73 79 ¬ Acquisitions of subsidiaries, joint ventures, businesses and non-controlling interests (net of cash) 31 (16) (201) (1,535) ¬ Proceeds from disposals of subsidiaries (net of cash) 31 0 0 18 ¬ Payments for investments in associates, other investments and other long-term financial assets (292) (328) (312) ¬ Proceeds from disposals of associates, other investments and other long-term financial assets 157 232 77 ¬ Dividends paid by companies valued at equity 52 46 50 Payments for investments in securities (1,401) (3,237) (11,091) Proceeds from disposals of securities 2,673 6,659 10,713 Change in cash from changes in consolidation (26) 0 0 Cash (used for) investing activities (1,742) (26) (4,198) Increase in financing liabilities 1,679 380 813 Repayment of financing liabilities (534) (505) (399) Cash distribution to EADS N.V. shareholders (467) (369) (178) Dividends paid to non-controlling interests (2) (10) (5) Changes in capital and non-controlling interests 171 144 (65) Change in treasury shares (1,915) (5) (1) Cash (used for) provided by financing activities (1,068) (365) 165 Effect of foreign exchange rate changes and other valuation adjustments on cash and cash equivalents (112) 23 (2) Net (decrease) increase in cash and cash equivalents (991) 3,472 254 Cash and cash equivalents at beginning of period 8,756 5,284 5,030 Cash and cash equivalents at end of period 7,765 8,756 5,284 (1) Previous years’ figures adjusted due to revised IAS 19 and due to PPA adjustments of prior year’s acquisitions. For details, see Note 31 “Consolidated Statements of Cash Flows”. The accompanying notes are an integral part of these Consolidated Financial Statements (IFRS).
- 10 — AIRBUS GROUP FINANCIAL STATEMENTS 2013 EADS N.V. — Consolidated Financial Statements (IFRS) EADS N.V. — Consolidated Statements of Changes in Equity (IFRS) for the years ended 31 December 2013, 2012 and 2011 (In € million) Note Equity attributable to equity holders of the parent Non- controlling interests Total equity Capital stock Share premium Retained earnings(2) Accumulated other comprehensive income Treasury shares Total Available- for-sale financial assets Cash flow hedges Foreign currency translation adjustments Balance at 31 December 2010 816 7,645 46 384 (1,373) 1,435 (112) 8,841 95 8,936 Prior year adjustments(1) (6) (6) (6) Balance at 31 December 2010, adjusted 816 7,645 40 384 (1,373) 1,435 (112) 8,835 95 8,930 Profit for the period(1) 980 980 4 984 Other comprehensive income(1) (527) 182 (399) (74) (818) 2 (816) Total comprehensive income of the period 453 182 (399) (74) 162 6 168 Capital increase 23 4 59 63 63 Capital decrease 23 0 0 Share-based Payment (IFRS 2) 35 15 15 15 Cash distribution to EADS N.V. shareholders / dividends paid to non-controlling interests (178) (178) (5) (183) Equity transaction (IAS 27) (45) (1) (46) (79) (125) Change in non-controlling interests 0 (2) (2) Change in treasury shares 23 (8) (8) (8) Cancellation of treasury shares 23 (7) 7 0 0 Balance at 31 December 2011 820 7,519 463 566 (1,773) 1,361 (113) 8,843 15 8,858 Profit for the period(1) 1,197 1,197 1 1,198 Other comprehensive income(1) (738) (3) 1,356 6 621 (2) 619 Total comprehensive income of the period 459 (3) 1,356 6 1,818 (1) 1,817 Capital increase 23 7 137 144 144 Capital decrease 23 0 0 Share-based Payment (IFRS 2) 35 18 18 18 Cash distribution to EADS N.V. shareholders / dividends paid to non-controlling interests (369) (369) (10) (379) Equity transaction (IAS 27) (46) (46) 14 (32) Change in non-controlling interests 0 7 7 Change in treasury shares 23 (5) (5) (5) Cancellation of treasury shares 23 (34) 34 0 0 Balance at 31 December 2012 827 7,253 894 563 (417) 1,367 (84) 10,403 25 10,428
- AIRBUS GROUP FINANCIAL STATEMENTS 2013 — 11 EADS N.V. — Consolidated Financial Statements (IFRS) 1 (In € million) Note Equity attributable to equity holders of the parent Non- controlling interests Total equity Capital stock Share premium Retained earnings(2) Accumulated other comprehensive income Treasury shares Total Available- for-sale financial assets Cash flow hedges Foreign currency translation adjustments Balance at 31 December 2012 827 7,253 894 563 (417) 1,367 (84) 10,403 25 10,428 Prior year adjustments(1) 0 (8) (8) Balance at 31 December 2012, adjusted 827 7,253 894 563 (417) 1,367 (84) 10,403 17 10,420 Profit for the period 1,465 1,465 10 1,475 Other comprehensive income (48) 31 1,541 (156) 1,368 (8) 1,360 Total comprehensive income of the period 1,417 31 1,541 (156) 2,833 2 2,835 Capital increase 23 9 233 242 2 244 Capital decrease 23 (74) (74) (74) Share-based Payment (IFRS 2) 35 107 107 107 Cash distribution to EADS N.V. shareholders / dividends paid to non-controlling interests (467) (467) (2) (469) Equity transaction (IAS 27) (118) (118) 24 (94) Change in non-controlling interests 0 0 Change in treasury shares 23 0 0 Cancellation of treasury shares 23 (53) (1,896) 34 (1,915) (1,915) Balance at 31 December 2013 783 5,049 2,300 594 1,124 1,211 (50) 11,011 43 11,054 (1) Previous years ’ figures adjusted due to revised IAS 19 and and due to PPA adjustments of prior year’s acquisitions. (2) Due to revised IAS 19 retained earnings are now disclosed in aggregate including remeasurements of the net defined benefit liability and other retained earnings that could have offsetting effects. The accompanying notes are an integral part of these Consolidated Financial Statements (IFRS).
- 12 — AIRBUS GROUP FINANCIAL STATEMENTS 2013 2
- AIRBUS GROUP FINANCIAL STATEMENTS 2013 — 13 2.1 Basis of Presentation 15 2.2 Notes to the Consolidated Income Statements 34 2.3 Notes to the Consolidated Statements of Financial Position 44 2.4 Notes to the Consolidated Statements of Cash Flows 68 2.5 Other Notes to the Consolidated Financial Statements 71 2.6 Appendix “Information on Principal Investments” — Consolidation Scope 102 Notes to the Consolidated Financial Statements (IFRS)
- 14 — AIRBUS GROUP FINANCIAL STATEMENTS 2013 Notes to the Consolidated Financial Statements (IFRS) Contents 2.1 Basis of Presentation 15 1. The Company 15 2. Summary of Signiﬁ cant Accounting Policies 15 3. Scope of Consolidation 30 4. Acquisitions and Disposals 31 2.2 Notes to the Consolidated Income Statements 34 5. Segment Reporting 34 6. Revenues and Gross Margin 38 7. Functional Costs 39 8. Research and Development Expenses 39 9. Other Income 39 10. Other Expenses 40 11. Share of Proﬁ t from Associates Accounted for under the Equity Method and Other Income from Investments 40 12. Total Finance Costs 40 13. Income Taxes 41 2.3 Notes to the Consolidated Statements of Financial Position 44 14. Intangible Assets 44 15. Property, Plant and Equipment 48 16. Investment Property 51 17. Investments in Associates Accounted for Under the Equity Method, Other Investments and Other Long-Term Financial Assets 51 18. Inventories 53 19. Trade Receivables 54 20. Other Financial Assets 55 21. Other Assets 55 22. Securities 56 23. Total Equity 56 24. Capital Management 57 25. Provisions 58 26. Financing Liabilities 65 27. Other Financial Liabilities 67 28. Other Liabilities 67 29. Trade Liabilities 68 30. Deferred Income 68 2.4 Notes to the Consolidated Statements of Cash Flows 68 31. Consolidated Statements of Cash Flows 68 2.5 Other Notes to the Consolidated Financial Statements 71 32. Litigation and Claims 71 33. Commitments and Contingencies 72 34. Information about Financial Instruments 75 35. Share-Based Payment 89 36. Related Party Transactions 97 37. Interest in Joint Ventures 100 38. Earnings per Share 101 39. Number of Employees 101 40. Events after the Reporting Date 101 2.6 Appendix “Information on Principal Investments” — Consolidation Scope 102
- AIRBUS GROUP FINANCIAL STATEMENTS 2013 — 15 Notes to the Consolidated Financial Statements (IFRS) 2 2.1 Basis of Presentation 2.1 Basis of Presentation 1. The Company The accompanying Consolidated Financial Statements present the ﬁ nancial position and the result of the operations of European Aeronautic Defence and Space Company EADS N.V. and its subsidiaries (“EADS” or the “Group”), a Dutch public limited liability company (Naamloze Vennootschap) legally seated in Amsterdam (current registered ofﬁ ce at Mendelweg 30, 2333 CS Leiden, The Netherlands). On 2 January 2014, the Group has been rebranded to Airbus Group as part of a wider reorganisation including integration of the Group’s space and defence activities with associated restructuring measures. The Group’s core business is the manufacturing of commercial aircraft, civil and military helicopters, commercial space launch vehicles, missiles, military aircraft, satellites, defence systems and defence electronics and rendering of services related to these activities. EADS has its listings at the European Stock Exchanges in Paris, Frankfurt am Main, Madrid, Barcelona, Valencia and Bilbao. The Consolidated Financial Statements were authorised for issue by the Group’s Board of Directors on 25 February 2014. They are prepared and reported in euro (“€”), and all values are rounded to the nearest million appropriately. 2. Summary of Signiﬁ cant Accounting Policies Basis of preparation — The Group’s Consolidated Financial Statements are prepared in accordance with International Financial Reporting Standards (“IFRS”), issued by the International Accounting Standards Board (“IASB”) as endorsed by the European Union (“EU”) and with Part 9 of Book 2 of the Netherlands Civil Code. The Consolidated Financial Statements have been prepared on a historical cost basis, except for certain items such as: (i) derivative financial instruments, which are measured at fair value; (ii) financial assets designated at fair value through profit or loss (“Fair Value Option”, see Note 34 “Information about financial instruments”) and available-for-sale financial assets, which are measured at fair value; (iii) contingent consideration classified as a financial liability, such as certain earn-out liabilities, which are measured at fair value; (iv) put options on non-controlling interests classified as financial liabilities, which are measured at the present value of the redemption amount; (v) assets and liabilities designated as hedged items in fair value hedges, which are either measured at fair value or at amortised cost adjusted for changes in fair value attributable to the risks that are being hedged; (vi) share-based payment arrangements, which are measured using the fair-value based measure of IFRS 2; and (vii) defined benefit obligations (or assets), which are measured according to IAS 19, and related plan assets, which are measured at fair value. The measurement models used when historical cost does not apply are further described below. In accordance with Article 402 Book 2 of the Netherlands Civil Code the Statement of Income of the EADS N.V. company financial statements is presented in abbreviated form. The preparation of ﬁnancial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are signiﬁcant to the Consolidated Financial Statements are disclosed in the last subsection “Use of Accounting Estimates” of this Note 2. New, revised or amended IFRS Standards and new Interpretations The IFRS accounting principles applied by the Group for preparing its 2013 year-end Consolidated Financial Statements are the same as for the previous ﬁ nancial year except for those following the application of new or amended Standards or Interpretations respectively as detailed below. a) New or Amended Standard The application of the following amendments to IFRS is mandatory for the Group for the ﬁ scal year starting 1 January 2013. If not otherwise stated, the following amendments did not have a material impact on the Group’s Consolidated Financial Statements as well as its basic and diluted earnings per share. In December 2010, the IASB issued amendments to IAS 12 “Income Taxes” providing practical guidance for the measurement of deferred tax relating to an asset by introducing the presumption that recovery of the carrying amount of that asset will normally be
- 16 — AIRBUS GROUP FINANCIAL STATEMENTS 2013 Notes to the Consolidated Financial Statements (IFRS) 2.1 Basis of Presentation through sale. Respective amendments supersede SIC 21 “Income Taxes – Recovery of Revalued Non Depreciable Assets”. The amendments were endorsed in December 2012 and are applicable for annual periods beginning 1 January 2013. In June 2011, the IASB issued an amended version of IAS 19 “Employee Beneﬁ ts” (endorsed June 2012). The amendment eliminates both the option of deferred recognition of actuarial gains and losses (known as the “corridor method”) and the option of immediately recognising them in proﬁ t or loss, to improve comparability of ﬁ nancial statements. Under the amendment, full recognition of actuarial gains and losses directly in equity becomes mandatory. The Group already applied this method of accounting for actuarial gains and losses. Furthermore, the revised standard introduces a net interest approach, under which for deﬁ ned beneﬁ t obligation and plan assets the same interest rate is applied, and it requires past service costs to be fully recognise d in the period of the related plan amendment. The amended standard also changes the requirements for termination beneﬁ ts and includes enhanced presentation and disclosure requirements. For the Group, the standard becomes applicable for annual periods beginning on 1 January 2013. It requires retrospective application. The introduction of a single net interest component, i.e. the interest expense (income) resulting from multiplying the net deﬁ ned beneﬁ t liability (asset) by the discount rate used to determine the deﬁ ned beneﬁ t obligation (“DBO”), impacts the Group’s Consolidated Financial Statements as there are no longer different rates applicable for plan assets and DBOs. In addition, retrospectively applying the requirement to recognise past service cost fully in the period of the plan amendment requires recognition of unamortised past service cost at the date of transition. Finally, the amended guidance on termination beneﬁ ts henceforth requires the Group to recognise the additional compensation payable under certain German early retirement programmes (Altersteilzeitprogramme) rateably over the active service period of such programmes (as opposed to recognising the additional compensation at its present value at programme inception). Applying the amended standard retrospectively in 2013, the Group’s consolidated opening net equity (retained earnings) as of 1 January 2011 has been adjusted by €-6 million. Comparative consolidated statement of income for 2012 (and 2011) has been restated leading to an impact in Cost of sales for 2012 of €-37 million (for 2011 of €-66 million) and in Administrative expenses of €-5 million (for 2011 of €-6 million). Proﬁ t for the period was affected for 2012 by €-31 million (for 2011 by €-53 million). The impact on earnings per share for 2012 amounts to €-0.04 on basic and diluted earnings per share (for 2011 €-0.06 on basic and €-0.07 on diluted earnings per share). If the Group had not applied IAS 19R beginning 1 January 2013, its proﬁ t before ﬁ nance costs and income taxes would have increased by around €+75 million, while basic and diluted earnings per share would have had a positive impact of approximately €+0.08 in 2013. Regarding past service costs, the initial application of the revised standard in 2013 has no signiﬁ cant effect on the Group’s Consolidated Net income. The retrospective adjustments in the opening balance sheet as of 1 January 2011 result in an increase of pension liabilities of € 45 million and a decrease of retained earnings of € 29 million. Regarding German early retirement programmes, the initial application of the revised standard has no signiﬁ cant effect on the Group’s Consolidated Net income. The retrospective adjustments in the opening balance sheet as of 1 January 2011 result in a decrease of provisions of € 34 million and an increase of retained earnings of € 23 million. Amendments to IAS 1 “Presentation of Items of Other Comprehensive Income”, which were issued in June 2011, require separate presentation of items of other comprehensive income that are reclassiﬁ ed subsequently to proﬁ t or loss (recyclable) and those that are not reclassiﬁ ed to proﬁ t or loss (non-recyclable). The amended standard became effective for ﬁ nancial periods beginning on or after 1 July 2012. The amendments were endorsed in June 2012. In May 2011, the IASB issued IFRS 13 “Fair Value Measurement” (endorsed in December 2012). IFRS 13 deﬁ nes fair value, sets out in a single IFRS a framework for measuring fair value and requires disclosures about fair value measurements. IFRS 13 seeks to reduce complexity and improve consistency in the application of fair value measurement principles. The new standard deﬁ nes fair value as an exit price, i.e. as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at measurement date. It further establishes a three level fair value hierarchy regarding the inputs used for fair value determination. IFRS 13 has been applied prospectively from 1 January 2013. The Group did not make a signiﬁ cant revision of its valuation methods that are deemed consistent with IFRS 13 guidance; credit and debit value adjustments had been incorporated in the valuation of derivative ﬁ nancial instruments prior to the application of IFRS 13. Accordingly, the initial application of IFRS 13 did not have a material impact on the Group’s Consolidated Financial Statements. In December 2011, the IASB issued amendments to IFRS 7 “Financial Instruments: Disclosures” (endorsed in December 2012) expanding disclosure requirements for ﬁ nancial assets and liabilities that are set off in the statement of ﬁ nancial position or subject to netting agreements. The Group provides the disclosure required by the amendments retrospectively for all periods presented . The IASB issued various amendments to IFRS Standards within the Annual Improvements 2009-2011 Cycle, which have become applicable as of 1 January 2013. The amendments refer to IFRS 1, IAS 1, IAS 16, IAS 32 and IAS 34. b) New or Amended Interpretations There are no new or amended interpretations applicable to the Group which became effective for the ﬁ nancial period beginning after 31 December 2012.
- AIRBUS GROUP FINANCIAL STATEMENTS 2013 — 17 Notes to the Consolidated Financial Statements (IFRS) 2 2.1 Basis of Presentation New, revised or amended IFRS Standards and Interpretations issued but not yet applied A number of new or revised standards, amendments and improvements to standards as well as interpretations are not yet effective for the year ended 31 December 2013 and have not been applied in preparing these Consolidated Financial Statements. The potential impacts from the application of those newly issued standards, amendments and interpretations are currently under investigation. In general and if not otherwise stated, these new, revised or amended IFRS and their interpretations are not expected to have a material impact on the Group’s Consolidated Financial Statements as well as its basic and diluted earnings per share. In November 2009, the IASB issued IFRS 9 “Financial Instruments (2009)” (not yet endorsed) as the ﬁ rst step of its project to replace IAS 39 “Financial Instruments: Recognition and Measurement”. Amongst other changes to the accounting for ﬁ nancial instruments, IFRS 9 replaces the multiple classiﬁ cation and measurement models for ﬁ nancial assets and liabilities in IAS 39 with a simpliﬁ ed model that is based on only two classiﬁ cation categories: amortised cost and fair value. Further, the classiﬁ cation of ﬁ nancial assets under IFRS 9 is driven by the entity’s business model for managing its ﬁ nancial assets and the contractual cash ﬂ ow characteristics of these ﬁ nancial assets. However, in response to feedback received from interested parties, the IASB reconsidered the IFRS 9 classiﬁ cation model and issued in November 2012 an Exposure Draft which proposes limited amendments to IFRS 9 to introduce, amongst others, a fair value through other comprehensive income (OCI) measurement category as a third classiﬁ cation category for particular ﬁ nancial assets that are held within a business model in which assets are managed both for collecting contractual cash ﬂ ows and for sale. In October 2010 the IASB added to IFRS 9 the requirements for the classiﬁ cation and measurement of ﬁ nancial liabilities (not yet endorsed). The amendment carried forward unchanged most of the requirements in IAS 39 for classifying and measuring financial liabilities, but changed the IAS 39 requirements for accounting for own credit risk to the effect that changes in the credit risk of a ﬁ nancial liability carried at fair value will not affect proﬁ t or loss unless the liability is held for trading. In November 2013, the IASB added to IFRS 9 amendments related to hedge accounting (not yet endorsed). The amendments replace the hedge accounting requirements of IAS 39 and establish a comprehensively reviewed and more principle-based approach to hedge accounting that aligns hedge accounting more closely with risk management. In addition the amendments removed 1 January 2015 as the mandatory effective date of IFRS 9 and clarify that the mandatory effective date will be determined when the outstanding phases of the IAS 39 replacement project, principally dealing with impairment issues, are ﬁ nalised. In light of the 2013 changes, and those still to come, the Group continues to assess the potential impacts from the expected application of IFRS 9. In May 2011, the IASB published its improvements to the accounting and disclosure requirements for consolidation, off balance sheet activities and joint arrangements by issuing IFRS 10 “Consolidated Financial Statements”, IFRS 11 “Joint Arrangements”, IFRS 12 “Disclosure of Interests in Other Entities” and consequential amendments to IAS 27 “Separate Financial Statements” and IAS 28 “Investments in Associates and Joint Ventures”. IFRS 10 supersedes the requirements related to Consolidated Financial Statements in IAS 27 “Consolidated and Separate Financial Statements” (amended 2008) as well as SIC 12 “Consolidation – Special Purpose Entities”. IFRS 11 supersedes IAS 31 “Interests in Joint Ventures” (amended 2008) and SIC 13 “Jointly Controlled Entities – Non-Monetary Contributions by Venturers”. IFRS 12 replaces disclosure requirements in IAS 27, IAS 28 and IAS 31. All of the new or amended standards mentioned above have been endorsed in December 2012. IFRS 10 deﬁ nes the principle of control and establishes control as the sole basis for determining which entity should be consolidated in the Consolidated Financial Statements: An investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. The standard provides additional guidance to determine control in cases difﬁ cult to assess such as in situations where an investor holds less than a majority of voting rights, but has the practical ability to direct the relevant activities of the investee unilaterally by other means as well as in cases of agency relationships which were neither addressed by IAS 27 nor by SIC 12. IFRS 11 provides guidance for the accounting of joint arrangements by focusing on the rights and obligations arising from the arrangement. The standard distinguishes between two types of joint arrangements: joint operations and joint ventures. A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement (i.e. joint operators) have rights to the assets, and obligations for the liabilities, relating to the arrangement. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement (i.e. joint venturers) have rights to the net assets of the arrangement. IFRS 11 requires a joint operator to recognise and measure the assets and liabilities (and recognise the related revenues and expenses) in relation to its interest in the arrangement applicable to the particular assets, liabilities, revenues and expenses. A joint venturer is required to recognise an investment and to account for this investment using the equity method. The proportionate consolidation method may no longer be used for joint ventures. IFRS 12 provides disclosure requirements for all forms of interests in other entities, including subsidiaries, joint arrangements, associates, structured entities (formerly referred to as “special purpose entities”) and off-balance sheet vehicles in one single standard. The standard requires an entity to disclose information that enables users of ﬁ nancial statements to evaluate the nature of, and risks associated with, its interests in other entities and the effects of those interests on its ﬁ nancial position, ﬁ nancial performance and cash ﬂ ows. In June 2012, the IASB issued the Transition Guidance (Amendments for IFRS 10, IFRS 11 and IFRS 12), which was endorsed in April 2013 and provides transition relief in IFRS 10, IFRS 11 and IFRS 12 by limiting the number of periods for which adjusted comparative information is to be disclosed.
- 18 — AIRBUS GROUP FINANCIAL STATEMENTS 2013 Notes to the Consolidated Financial Statements (IFRS) 2.1 Basis of Presentation IFRS preparers in the EU have to apply IFRS 10 to 12 and amendments to IAS 27 and IAS 28 for ﬁ nancial periods beginning on or after 1 January 2014 with early application allowed. The abandonment of the proportionate consolidation method for joint ventures will have a considerable impact on the Group’s Consolidated Financial Statements as the Group has opted to apply this method for the consolidation of its joint ventures under IAS 31. For further information about principle joint ventures accounted for under the proportionate consolidation method, please refer to Note 37 “Interest in Joint Ventures”. Based on preliminary assessment, retrospective application of the equity method for joint ventures would have reduced the Group’s 2013 consolidated proﬁ t before ﬁ nance cost and income tax by approximately € 32 million, the Group’s revenue by approximately € 1,703 million and the Group’s cash and cash equivalents by approximately € 495 million. The impact on these ﬁ nancial ﬁ gures in 2014 cannot be reasonably estimated. The retrospective adjustments in the opening balance sheet as of 1 January 2012 will result in a decrease of retained earnings of € 148 million. Impact from the ﬁ rst time application of IFRS 10 is still under ﬁ nal assessment but no material impact on the presentation of the Group’s ﬁ nancial statements is expected. In December 2011, the IASB issued amendments to IAS 32 “Financial Instruments: Presentation” clarifying the IASB’s requirements for offsetting financial instruments (endorsed in December 2012). The amendments will have to be applied retrospectively for annual periods beginning on 1 January 2014. In May 2013, the IASB issued IFRIC 21 “Levies” (not yet endorsed). IFRIC 21 covers the recognition and measurement of levies. IFRIC 21 is effective from 1 January 2014. On 27 June 2013 the IASB issued amendments to IAS 39 “Novation of Derivatives and Continuation of Hedge Accounting” (endorsed in December 2013). Under the amendments there would be no need to discontinue hedge accounting if a hedging derivative was novated, provided certain criteria are met. The amendments are effective for annual periods beginning on or after 1 January 2014. In November 2013, the IASB issued amendments to IAS 19 “Employee Contributions” (not yet endorsed). The amendments clarify which employee (or third party) contributions may be accounted for as a reduction of the service cost in the period in which the related service is rendered rather than as negative beneﬁ ts attributed to periods of service under the plan’s beneﬁ t formula or on a straight-line basis. The amendments will have to be applied for annual periods beginning on or after 1 July 2014. In December 2013, the IASB issued various amendments to IFRS Standards within the Annual Improvements 2010-2012 Cycle and the Annual Improvements 2011-2013 Cycle (both not yet endorsed). The amendments of the Annual Improvements 2010-2012 Cycle refer to IFRS 2, IFRS 3, IFRS 8, IFRS 13, IAS 16, IAS 24 and IAS 38. The amendments of the Annual Improvements 2011-2013 Cycle refer to IFRS 1, IFRS 3, IFRS 13 and IAS 40. All amendments are effective for annual periods beginning on or after 1 July 2014 with early application allowed. Amended IFRS Standards issued and early adopted In May 2013, the IASB issued amendments to IAS 36 “Recoverable Amount Disclosures for Non-Financial Assets” (endorsed in December 2013). The amendments to IAS 36 modify disclosure requirements in IAS 36 “Impairment of Assets” regarding measurement of the recoverable amount of impaired assets. The amendments to IAS 36 are applicable for periods beginning on or after 1 January 2014 with early adoption permitted. The Group has opted to early adopt the amendments to IAS 36 for 2013 annual period. Signiﬁ cant Accounting Policies The principal accounting policies applied in the preparation of these Consolidated Financial Statements are set out below. These policies have been consistently applied to all ﬁ nancial years presented, unless otherwise stated. Consolidation — The Consolidated Financial Statements include the subsidiaries of the Group. Subsidiaries are all entities controlled by the Group, i.e. over which it has the power to govern ﬁ nancial and operating policies. An entity is presumed to be controlled by the Group when EADS owns more than 50% of the voting power of the entity which is generally accompanied with a respective shareholding. Potential voting rights currently exercisable or convertible are also considered when assessing control over an entity. Special purpose entities (“SPEs”) are consolidated as any subsidiary, when the relationship between the Group and the SPE indicates that the SPE is in substance controlled by the Group. SPEs are entities which are created to accomplish a narrow and well-deﬁ ned objective. Subsidiaries are fully consolidated from the date control has been transferred to the Group and de- consolidated from the date control ceases. Business Combinations — Business combinations are accounted for under the acquisition method of accounting as at the acquisition date, which is the date on which control is transferred to the Group. Goodwill is measured at the acquisition date as: ¬ the fair value of the consideration transferred; plus ¬ the recognised amount of any non-controlling interests in the acquiree; plus ¬ if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree; less ¬ the net recognised amount (generally fair value) of the identiﬁ able assets acquired and liabilities assumed. Before recognising a gain on a bargain purchase in the Consolidated Income Statement, a reassessment is made of whether all of the assets acquired and all of the liabilities assumed have been correctly identiﬁ ed, and a review is undertaken of the procedures used to measure (a) the identiﬁ able assets and liabilities, (b) any non-controlling interest, (c) the consideration transferred and (d) for a business combination achieved in stages, the Group’s previously held equity interest in the acquiree.
- AIRBUS GROUP FINANCIAL STATEMENTS 2013 — 19 Notes to the Consolidated Financial Statements (IFRS) 2 2.1 Basis of Presentation Any non-controlling interest will be measured at either fair value (full goodwill method), or at its proportionate interest in the identiﬁ able assets and liabilities of the acquiree (partial goodwill method), on a transaction-by-transaction basis. The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are recognised separately in proﬁ t or loss. Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred. Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration is classiﬁ ed as equity, it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent consideration are recognised in proﬁ t or loss. When share-based payment awards (replacement awards) are required to be exchanged for awards held by the acquiree’s employees (acquiree’s awards) and relate to past services, then all or a portion of the amount of the acquirer’s replacement awards is included in measuring the consideration transferred in the business combination. This determination is based on the market-based value of the replacement awards compared with the market- based value of the acquiree’s awards and the extent to which the replacement awards relate to past and/or future service. Acquisitions and disposals of non-controlling interests are accounted for as transactions with owners in their capacity as equity owners of the Group and therefore no goodwill or gain / loss is recognised as a result of such transactions. The adjustments to non-controlling interests are based on a proportionate amount of the net assets of the subsidiary. Goodwill is tested for impairment in the fourth quarter of each ﬁ nancial year and whenever there is an indication for impairment. After initial recognition goodwill is measured at cost less accumulated impairment losses. For impairment testing purpose, goodwill is allocated to those Cash Generating Units (“CGUs”) or group of CGUs – at EADS on segment level or one level below – that are expected to beneﬁ t from the synergies arising from the business combination. The Group’s subsidiaries prepare their ﬁ nancial statements at the same reporting date as the Group’s Consolidated Financial Statements and apply the same accounting policies for similar transactions. Investment in associates and jointly controlled entities — For investments the Group jointly controls (“joint ventures”) with one or more other parties (“venturers”), the Group recognises its interest by using the proportionate method of consolidation. Joint control is contractually established and requires unanimous decisions regarding the ﬁ nancial and operating strategy of an entity. Investments in which the Group has significant influence (“investments in associates”) are accounted for using the equity method and are initially recognised at cost. Signiﬁ cant inﬂ uence in an entity is presumed to exist when the Group owns 20% to 50% of the entity’s voting rights. The investments in associates include goodwill as recognised at the acquisition date net of any accumulated impairment loss. The investments’ carrying amount is adjusted by the cumulative movements in recognised income and expense. When the Group’s share in losses equals or exceeds its interest in an associate, including any other unsecured receivables, no further losses are recognised, unless the Group has incurred obligations or made payments on behalf of the associate. Total comprehensive income is attributed to the owners of the parent and to the non-controlling interest, even if this results in the non-controlling interests having a deﬁ cit balance. The ﬁ nancial statements of the Group’s investments in associates and joint ventures are generally prepared for the same reporting period as for the parent company. Adjustments are made where necessary to bring the accounting policies and accounting periods in line with those of the Group. Foreign currency translation — The Consolidated Financial Statements are presented in euro. The assets and liabilities of foreign entities, whose functional currency is other than euro, are translated using period-end exchange rates, whilst the statements of income are translated using average exchange rates during the period, approximating the foreign exchange rate at the dates of the transactions. All resulting translation differences are recognised as a separate component of total equity (“Accumulated other comprehensive income” or “AOCI”). If a foreign subsidiary is a not wholly owned, then the relevant proportionate share of the translation difference is allocated to the non-controlling interests. Transactions in foreign currencies are translated into euro at the foreign exchange rate prevailing at transaction date. Monetary assets and liabilities denominated in foreign currencies at the end of the reporting period are translated into euro at the exchange rate in effect at that date. These foreign exchange gains and losses arising from translation are recognised in the Consolidated Income Statement except when deferred in equity as qualifying cash ﬂ ow hedges. Non-monetary assets and liabilities denominated in foreign currencies that are stated at historical cost are translated into euro at the foreign exchange rate in effect at the date of the transaction. Translation differences on non-monetary ﬁ nancial assets and liabilities that are measured at fair value are reported as part of the fair value gain or loss. However, translation differences of non- monetary ﬁ nancial assets measured at fair value and classiﬁ ed as available for sale are included in AOCI. When a foreign operation is disposed of such that control, signiﬁ cant inﬂ uence or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassiﬁ ed to proﬁ t or loss as part of the gain or loss on disposal. When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative translation reserve is allocated to non-controlling interests. When the Group disposes of only part of its investment in an associate or joint venture that includes a foreign operation while retaining signiﬁ cant inﬂ uence or joint control, the relevant proportion of the cumulative translation reserve is reclassiﬁ ed to proﬁ t or loss.
- 20 — AIRBUS GROUP FINANCIAL STATEMENTS 2013 Notes to the Consolidated Financial Statements (IFRS) 2.1 Basis of Presentation Current and non-current assets and liabilities — The classiﬁ cation of an asset or liability as current or non-current in general depends on whether the item is related to serial production or subject to long-term production. In the serial production business, an asset or liability is classiﬁ ed as current when the item is realised or settled within 12 months after the reporting period, and as non-current otherwise. In the construction contract business, an asset or liability is classiﬁ ed as current when the item is realised or settled within the Group’s normal operating cycle for such contracts, and as non-current otherwise. As a result, assets and liabilities relating to the construction contract business, such as inventories, trade receivables and payables and receivables from PoC, that are sold, consumed or settled as part of the normal operating cycle are classiﬁ ed as current even when they are not expected to be realised within 12 months after the reporting period. Revenue recognition — Revenue is recognised to the extent that it is probable that the economic beneﬁ t arising from the ordinary activities of the Group will ﬂ ow to EADS, that revenue can be measured reliably and that the recognition criteria, as stated below for each type of revenue-generating activity, have been met. Revenue is measured at the fair value of the consideration received or receivable after deducting any discounts, rebates, liquidated damages and value added tax. For the preparation of the Consolidated Income Statement intercompany revenues are eliminated. Revenues from the sale of goods are recognised upon the transfer of risks and rewards of ownership to the buyer which is generally on delivery of the goods. Revenues from services rendered are recognised in proportion to the stage of completion of the transaction at the end of the reporting period. When the Group entities provide more than one element of revenue (goods and/or services), the consideration received is allocated by reference to the relative fair values of the separate elements of revenue when the amounts are separately identiﬁ able. For construction contracts, when the outcome can be estimated reliably, revenues are recognised by reference to the percentage of completion (“PoC”) of the contract activity by applying the estimate at completion method. Depending on the nature of the contract, the percentage of completion is determined, and revenue recognised, as contractually agreed technical milestones are reached, as units are delivered or as the work progresses. Whenever the outcome of a construction contract cannot be estimated reliably – for example during the early stages of a contract or when this outcome can no longer be estimated reliably during the course of a contract’s completion – all related contract costs that are incurred are immediately expensed and revenues are recognised only to the extent of those costs being recoverable (“early stage method of accounting”). Once the outcome of such contracts can (again) be estimated reliably, revenue is accounted for according to the PoC method henceforward, without restating the revenues previously recorded under the early stage method of accounting. Changes in proﬁ t rates are reﬂ ected in current earnings as identiﬁ ed. Contracts are reviewed regularly and in case of probable losses, loss-at- completion provisions are recorded. For construction contracts such loss-at-completion provisions are not discounted. Sales of aircraft that include asset value guarantee commitments are accounted for as operating leases when these commitments are considered substantial compared to the fair value of the related aircraft. Revenues then comprise lease income from such operating leases. Revenue related to construction or upgrade services under a service concession arrangement is recognised based on the stage of completion of the work performed, consistent with the Group’s accounting policy on recognising revenue on construction contracts. Interest income is recognised as interest accrues, using the effective interest rate method. Dividend income / distributions — Dividend income as well as the obligation to distribute dividends to the Group’s shareholders is recognised when the shareholder s’ right to receive payment is established. Leasing — The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of (i) whether the fulﬁ lment of the arrangement is dependent on the use of a speciﬁ c asset or assets, and (ii) the arrangement conveys a right to use the asset(s). The Group is a lessor and a lessee of assets, primarily in connection with commercial aircraft sales ﬁ nancing. Lease transactions where substantially all risks and rewards incident to ownership are transferred from the lessor to the lessee are accounted for as ﬁ nance leases. All other leases are accounted for as operating leases. Assets leased out under operating leases are included in property, plant and equipment at cost less accumulated depreciation (see Note 15 “Property, plant and equipment”). Rental income from operating leases (e.g. aircraft) is recorded as revenue on a straight- line basis over the term of the lease. Assets leased out under ﬁ nance leases cease to be recognised in the Consolidated Statement of Financial Position after the inception of the lease. Instead, a ﬁ nance lease receivable representing the discounted future lease payments to be received from the lessee plus any discounted unguaranteed residual value is recorded as part of other long-term ﬁ nancial assets (see Note 17 “Investments in associates accounted for under the equity method, other investments and other long-term ﬁ nancial assets”). Unearned ﬁ nance income is recorded over time in “Interest income”. Revenues and the related cost of sales are recognised at the inception of the ﬁ nance lease. Assets obtained under ﬁ nance leases are included in property, plant and equipment at cost less accumulated depreciation and impairment if any (see Note 15 “Property, plant and equipment”), and give rise to an associated liability from ﬁ nance leases. If such assets are further leased out to customers, they are classiﬁ ed either as an operating lease or as a finance lease, with the Group being the lessor (headlease-sublease transactions), and accounted for accordingly. When the Group is the lessee under an operating lease contract, rental payments are recognised on a
- AIRBUS GROUP FINANCIAL STATEMENTS 2013 — 21 Notes to the Consolidated Financial Statements (IFRS) 2 2.1 Basis of Presentation straight line basis over the lease term (see Note 33 “Commitments and contingencies” for future operating lease commitments). An operating lease may also serve as a headlease in a headlease- sublease transaction. If so, the related sublease is an operating lease as well. Headlease-sublease transactions typically form part of commercial aircraft customer ﬁ nancing transactions. Product-related expenses — Expenses for advertising, sales promotion and other sales-related expenses are charged to expense as incurred. Provisions for estimated warranty costs are recorded at the time the related sale is recorded. Research and development expenses — Research and development activities can be (i) contracted or (ii) self-initiated. (i) Costs for contracted research and development activities, carried out in the scope of externally financed research and development contracts, are expensed when the related revenues are recorded. (ii) Costs for self-initiated research and development activities are assessed whether they qualify for recognition as internally generated intangible assets. An intangible asset may only be recognised if technical as well as commercial feasibility can be demonstrated and cost can be measured reliably. It must also be probable that the intangible asset will generate future economic benefits and that it is clearly identifiable and allocable to a specific product. Further to meeting these criteria, only such costs that relate solely to the development phase of a self-initiated project are capitalised. Any costs that are classiﬁ ed as part of the research phase of a self- initiated project are expensed as incurred. If the research phase cannot be clearly distinguished from the development phase, the respective project related costs are treated as if they were incurred in the research phase only. Capitalised development costs are generally amortised over the estimated number of units produced. In case the number of units produced cannot be estimated reliably capitalised development cost are amortised over the estimated useful life of the internally generated intangible asset. Amortisation of capitalised development costs is recognised in cost of sales. Internally generated intangible assets are reviewed for impairment annually when the asset is not yet in use and further on whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Income tax credits granted for research and development activities are deducted from corresponding expenses or from capitalised amounts when earned. Borrowing costs — Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time (generally more than 12 months) to get ready for its intended use or sale are capitalised as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that the Group incurs in connection with the borrowing of funds. The Group capitalises borrowing costs for qualifying assets where construction was commenced on or after 1 January 2009. Further, the Group continues to expense borrowing costs relating to construction projects that commenced prior to 1 January 2009. Intangible assets — Intangible assets comprise (i) internally generated intangible assets, i.e. internally developed software and other internally generated intangible assets (see above: “Research and development expenses”), (ii) acquired intangible assets, and (iii) goodwill (see above: “Consolidation”). Separately acquired intangible assets are initially recognised at cost. Intangible assets acquired in a business combination are recognised at their fair value at acquisition date. Acquired intangible assets with ﬁ nite useful lives are generally amortised on a straight line basis over their respective estimated useful lives (3 to 10 years) to their estimated residual values. The amortisation expense on intangible assets with ﬁ nite lives is recognised in the Consolidated Income Statement within the expense category consistent with the function of the related intangible asset. The amortisation method and the estimate of the useful lives of the separately acquired intangible asset is reviewed at least annually and changed if appropriate. Intangible assets having an indeﬁ nite useful life are not amortised but tested for impairment at the end of each ﬁ nancial year as well as whenever there is an indication that the carrying amount exceeds the recoverable amount of the respective asset (see below “Impairment of non-ﬁ nancial assets”). For such intangible assets the assessment for the indeﬁ nite useful life is reviewed annually on whether it remains supportable. A change from indeﬁ nite to ﬁ nite useful life assessment is accounted for as change in estimate. Gains or losses arising from the derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the Consolidated Income Statement when the asset is derecognised. Property, plant and equipment — Property, plant and equipment is valued at acquisition or manufacturing costs less accumulated depreciation and impairment losses. Such costs include the estimated cost of replacing, servicing and restoring part of such property, plant and equipment. Items of property, plant and equipment are generally depreciated on a straight-line basis. The costs of internally produced equipment and facilities include direct material and labour costs and applicable manufacturing overheads, including depreciation charges. The following useful lives are assumed: buildings 10 to 50 years; site improvements 6 to 30 years; technical equipment and machinery 3 to 20 years; and other equipment, factory and ofﬁ ce equipment 2 to 10 years. The useful lives, depreciation methods and residual values applying to property, plant and equipment are reviewed at least annually and in case they change signiﬁ cantly, depreciation charges for current and future periods are adjusted accordingly. If the carrying amount of an asset exceeds its recoverable amount an impairment loss is recognised immediately in proﬁ t or loss. At each end of the reporting period, it is assessed whether there is any indication that an item of property, plant and equipment may be impaired (see also below “Impairment of non-ﬁ nancial assets”).
22 — AIRBUS GROUP FINANCIAL STATEMENTS 2013 Notes to the Consolidated Financial Statements (IFRS)
2.1 Basis of Presentation When a major inspection is performed, its cost is recognised in the carrying amount of the plant and/or equipment as a replacement if the recognition criteria are satisﬁ ed. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are recognised as an expense in the Consolidated Income Statement of the period in which they are incurred. Cost of an item of property, plant and equipment initially recognised comprise the initial estimate of costs of dismantling and removing the item and restoring the site on which it is located at the end of the useful life of the item on a present value basis. A provision presenting the asset retirement obligation is recognised in the same amount at the same date in accordance with IAS 37 “Provisions, Contingent Liabilities and Contingent Assets”. Property, plant and equipment also includes capitalised development costs for tangible developments of specialised tooling for production such as jigs and tools, design, construction and testing of prototypes and models. In case recognition criteria are met, these costs are capitalised and generally depreciated using the straight-line method over ﬁ ve years or, if more appropriate, using the number of production or similar units expected to be obtained from the tools (sum-of-the-units method). Especially for aircraft production programmes such as the Airbus A380 with an estimated number of aircraft to be produced using such tools, the sum-of-the-units method effectively allocates the diminution of value of specialised tools to the units produced. Property, plant and equipment is derecognised when it has been disposed of or when the asset is permanently withdrawn from use. The difference between the net disposal proceeds and the carrying amount of such assets is recognised in the Consolidated Income Statement in the period of derecognition. Investment property — Investment property is property, i.e. land or buildings, held to earn rentals or for capital appreciation or both. The Group accounts for investment property at cost less accumulated depreciation and impairment losses, similar to other items of property, plant and equipment. Inventories — Inventories are measured at the lower of acquisition cost (generally the average cost) or manufacturing cost and net realisable value. Manufacturing costs comprise all costs that are directly attributable to the manufacturing process, such as direct material and labor, and production related overheads (based on normal operating capacity and normal consumption of material, labour and other production costs), including depreciation charges. Net realisable value is the estimated selling price in the ordinary course of the business less applicable variable selling expenses. Impairment of non-ﬁ nancial assets — The Group assesses at each end of the reporting period whether there is an indication that a non-ﬁ nancial asset may be impaired. In addition, intangible assets with an indeﬁ nite useful life, intangible assets not yet available for use and goodwill are tested for impairment in the fourth quarter of each ﬁ nancial year irrespective of whether there is any indication for impairment. An impairment loss is recognised in the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount of an asset or a Cash Generating Unit (“CGU”) is the higher of its fair value less costs to sell or its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inﬂ ows that are largely independent of those from other assets or group of assets. In such a case the recoverable amount is determined for the CGU the asset belongs to. Where the recoverable amount of a CGU to which goodwill has been allocated is lower than the CGU’s carrying amount, ﬁ rstly the related goodwill is impaired. Any exceeding amount of impairment is recognised on a pro rata basis of the carrying amount of each asset in the respective CGU. The value in use
Category: Financial statements