Press Releases
Implementation of IAS/IFRS
Information relating to the adoption of International Accounting Standards from 2005
Bulgari S.p.A. the parent company of the Bulgari group, on the basis of EC Regulation no. 1725 of 29/9/2003 of the Commission of the European Communities which adopted certain international accounting standards compliant with Regulation No. 1606/2002 of the European Parliament, will, from the 2005 financial year, have to draw up its consolidated balance sheet in accordance with IAS (International Accounting Standards) or IFRS (International Financial Reporting Standards) standards. As regards the financial statements of the legal entity, Bulgari S.p.A., the legislative decree relating to the application of IAS/IFRS standards makes it compulsory to apply the new standards starting from 2006, with the option of application from 2005.
With reference to the consolidated accounts to be published during 2005, Consob, in its “International Accounting Standards Consultation Document; periodic reports, invitation/quotation statements, definition of the notion of inter-related parties” published on 17 February 2005, has established a transitional regime setting out the following points:
- for the 1st quarterly report of 2005, use of the former standard (Decree law 127/91, Decree Law 87/92 and Decree Law 173/97) for the preparation of accounts is allowed. Notes to the quarterly report must be drawn up in accordance with the provisions contained in Appendix 3 D of the Issuers Regulation. Issuers who prepare the quarterly report according to the IAS/IFRS standards can amplify the information supplied by harmonising this with the provisions of IAS 34 “interim balance sheets”;
- for the 2005 half-yearly report, application of the provisions established by IAS 34 is required. If it is impossible to apply IAS 34, a statement reconciling shareholders’ equity and profit/loss data drawn up on the basis of the former provisions with data prepared in accordance with international standards must be prepared.
- the 3rd quarterly report must be drawn up using the valuation and measurement principles established by IAS/IFRS standards. The Notes can be drawn up according to the provisions set out in Appendix 3 D of the Issuers Regulation, or according to the provisions of IAS 34.
In relation to the starting date it should be borne in mind that the IAS/IFRS data for the 2005 financial year must be made comparable to that for the 2004 financial year. To this end, a balance sheet as at 31 December 2003, meeting the criteria established in international standards, must be prepared.
In preparation for the efficient management of the impacts of these changes, the Bulgari Group, however, began some time ago a process of analysis and evaluation of the major accounting, organisational, business and computer system problems linked to the introduction of IFRS standards. Preparation of the balance sheet according to international accounting principles will lead, amongst other things, to a change in the corporate information and valuation criteria used.
In this regard the major estimated impacts on the work of the Bulgari Group and Bulgari S.p.A., in terms of information systems or in general economic terms, concern the adoption of the following standards:
IFRS 1 First time application
IFRS 2 Share-based payment
IAS 7 Cash flow statement
IAS 14 Segment reporting
IAS 16 Property, plant & equipment
IAS 19 Employee benefits
IAS 22 Business combination
IAS 36 Impairment of assets
IAS 38 Intangible assets
IAS 39 Financial instruments: recognition and measurement
At present, the implementation of the new procedures has led to quantification of impacts on the main accounting items, with the exception of the application of IAS standard 19 to the “T.F.R.” [“severance pay”] of the Italian companies of the Group. In fact, given the uncertainties in terms of interpretation that still characterise the debate on the nature of T.F.R., no company has yet been given the task of the specific actuarial calculation required. We recall that on the basis of the current interpretation of paragraph 136 of IAS 19, T.F.R. is currently classified as “post-employment benefit” and not as “termination benefit” and it is thus considered as a pension plan with “defined benefits”, the amount of which to be entered in the balance sheet being calculated by adopting a specific actuarial model.
Therefore, regarding the effects of the application of international accounting standards, there is no statement at the moment reconciling the previous standards (Decree Law 127/91, Decree Law 87/92 and Decree Law 173/97) and the IAS/IFRS standards.
The Board of Directors of Bulgari S.p.A. is likely to use the previous standard (Decree Law 127/91, Decree Law 87/92 and Decree Law 173/97) for the 1st quarterly report of 2005 and to apply the provisions established by IAS 34 as from the 2005 half-yearly report.
In the meantime the auditing company has been asked to make some advance checks on the significance and correctness of the valuations which the Group is carrying out internally with regard to the reconciliation reports on shareholders’ equity data at the beginning and at the end of 2004, as well as the profit and loss statement for the same year. The result of these checks will be made public together with the half-yearly data, as envisaged in the Consob consultation document quoted above.