Page 88 - Annual Report 2013
P. 88
Financial Statements
AIA has adopted the Revised IAS19 in the accounting period starting on 1 January 2013. The differences
between the previous and the revised IAS19 that affect the AIA retirement indemnity disclosures concern:
• Actuarial Gains/Losses: The IASB now requires immediate recognition of all gains/losses in the Other
Comprehensive Income (OCI), which is a statement of net equity. In other words, the ‘10% corridor’
option under IAS19 for spreading gains/losses is no longer available and companies which have used
this option are forced to recognize gains and losses immediately in the OCI.
• Past Service Cost: Upon transition to IAS19R, all unrecognized Past Service Costs (PSC) existing on the
balance sheet as at that date are recognized in the OCI and stop to be amortized in future P&Ls. For
PSCs arising after the first application of the IAS19R, immediate recognition of the entire amount is
required in the P&L of the period in which the PSC has occurred.
Furthermore, the revised standard requires that the financial year 2012 comparatives presented in the 2013
financial statements are restated to be in line with the revised IAS19, although last year they were published
under the previous IAS19. Hence, in the above disclosure table, the financial year 2012 comparatives are
prepared according to IAS19 Revised.
The total P&L charge for 2013 consists of the following components:
• Service cost, which is calculated at the beginning of the accounting period and represents the cost of one
extra year of service. The 2013 service cost has been updated to be in line with the revised AIA indemnity
policy
• Net interest on the net defined benefit liability/(asset), which for unfunded plans is equal to the interest
cost – the interest cost is calculated at the beginning of the accounting period and represents the cost
due to the fact that at the end of the year the staff will be one year closer to retirement. The 2013 interest
cost has been updated to be in line with the revised AIA indemnity policy
• Recognition of the negative Past Service Cost that arose from the change in the AIA indemnity policy.
Following IAS19 Revised, the entire amount is recognized immediately in the P&L of the current
accounting period.
• Settlement/Curtailment/Termination Loss/(Gain): Four employees were dismissed during the period
receiving an indemnity amount. Also, two employees withdrew receiving an indemnity amount as a
motive to leave the Company. Under IAS19, the obligation due to benefit payments in the above cases
arises from the termination of employment rather than the employee’s service in the Company. The
resulting expense is recognized immediately in the P&L charge of the current accounting period and it
is equal to the difference between the actual indemnity paid and the corresponding projected actuarial
liability (DBO) at end of year.
An actuarial gain (the difference between expected and actual DBO as at the end of 2013) of €251.360
arose during the year due to the following factors:
• Change in financial assumptions: the equivalent discount rate has increased from 3,71% to 3,78%,
producing a gain of €74.642. The inflation and salary increase assumptions have both decreased for
years up to 2018, producing a gain of €227.010. Thus, the change in financial assumptions gives rise to an
overall actuarial gain of €301.652.
• Experience: loss of €50.292 mainly due to higher than assumed salary increases over the period.
According to IAS19 Revised, the entire actuarial gains or losses that arise in each accounting period are
recognized immediately in the Statement of Other Comprehensive Income (OCI). In this case, the gain
arising over 2013 (i.e. €251.360) is recognized as an income in the OCI statement.
Taking into account the above, the provision that the Company should set in the balance sheet of 31
December 2013 should be equal to the DBO as at the same date.
47 of 58 Financial Statements as at 31 December 2013 (Amounts in Euros unless otherwise stated).
AIA has adopted the Revised IAS19 in the accounting period starting on 1 January 2013. The differences
between the previous and the revised IAS19 that affect the AIA retirement indemnity disclosures concern:
• Actuarial Gains/Losses: The IASB now requires immediate recognition of all gains/losses in the Other
Comprehensive Income (OCI), which is a statement of net equity. In other words, the ‘10% corridor’
option under IAS19 for spreading gains/losses is no longer available and companies which have used
this option are forced to recognize gains and losses immediately in the OCI.
• Past Service Cost: Upon transition to IAS19R, all unrecognized Past Service Costs (PSC) existing on the
balance sheet as at that date are recognized in the OCI and stop to be amortized in future P&Ls. For
PSCs arising after the first application of the IAS19R, immediate recognition of the entire amount is
required in the P&L of the period in which the PSC has occurred.
Furthermore, the revised standard requires that the financial year 2012 comparatives presented in the 2013
financial statements are restated to be in line with the revised IAS19, although last year they were published
under the previous IAS19. Hence, in the above disclosure table, the financial year 2012 comparatives are
prepared according to IAS19 Revised.
The total P&L charge for 2013 consists of the following components:
• Service cost, which is calculated at the beginning of the accounting period and represents the cost of one
extra year of service. The 2013 service cost has been updated to be in line with the revised AIA indemnity
policy
• Net interest on the net defined benefit liability/(asset), which for unfunded plans is equal to the interest
cost – the interest cost is calculated at the beginning of the accounting period and represents the cost
due to the fact that at the end of the year the staff will be one year closer to retirement. The 2013 interest
cost has been updated to be in line with the revised AIA indemnity policy
• Recognition of the negative Past Service Cost that arose from the change in the AIA indemnity policy.
Following IAS19 Revised, the entire amount is recognized immediately in the P&L of the current
accounting period.
• Settlement/Curtailment/Termination Loss/(Gain): Four employees were dismissed during the period
receiving an indemnity amount. Also, two employees withdrew receiving an indemnity amount as a
motive to leave the Company. Under IAS19, the obligation due to benefit payments in the above cases
arises from the termination of employment rather than the employee’s service in the Company. The
resulting expense is recognized immediately in the P&L charge of the current accounting period and it
is equal to the difference between the actual indemnity paid and the corresponding projected actuarial
liability (DBO) at end of year.
An actuarial gain (the difference between expected and actual DBO as at the end of 2013) of €251.360
arose during the year due to the following factors:
• Change in financial assumptions: the equivalent discount rate has increased from 3,71% to 3,78%,
producing a gain of €74.642. The inflation and salary increase assumptions have both decreased for
years up to 2018, producing a gain of €227.010. Thus, the change in financial assumptions gives rise to an
overall actuarial gain of €301.652.
• Experience: loss of €50.292 mainly due to higher than assumed salary increases over the period.
According to IAS19 Revised, the entire actuarial gains or losses that arise in each accounting period are
recognized immediately in the Statement of Other Comprehensive Income (OCI). In this case, the gain
arising over 2013 (i.e. €251.360) is recognized as an income in the OCI statement.
Taking into account the above, the provision that the Company should set in the balance sheet of 31
December 2013 should be equal to the DBO as at the same date.
47 of 58 Financial Statements as at 31 December 2013 (Amounts in Euros unless otherwise stated).
