New Accounting Pronouncements

Adoption of new and/or Revised Accounting Standards and Interpretations

During the reporting period, Bechtle has for the first time applied the new and/or revised accounting standards and interpretations of the following new accounting pronouncements issued by the IASB/IFRIC and adopted by the EU (“endorsement”). Each of the following dates of the relevant EU regulation is mandatory:

• IFRS 8 Operating Segments (endorsed on 21 November 2007): IFRS 8 replaces IAS 14 Segment Reporting and follows the “Management Approach” for segment reporting. Consequently, information disclosed about operating segments is identified on the basis of internal reports. IFRS 8 is effective for fiscal years beginning on or after 1 January 2009, with earlier application encour- aged. Bechtle has opted for early application of IFRS 8, beginning with the fiscal year ending on 31 December 2008. Bechtle notes that the segments reportable under IFRS 8 correspond closely to those previously reported under IAS 14. Additional information on the respective segments, together with the adapted comparative information, is disclosed in tem VII “Segment Report” of the notes.


• IFRIC 11 IFRS 2 – Group and Treasury Share Transactions (endorsed on 1 June 2007): The interpretation is effective for fiscal years beginning on or after 1 March 2007. IFRIC11 addresses how to apply IFRS 2 to share-based payment arrangements involving an entity's own equity instruments or equity instruments of another entity in the same group. Since there are no share-based payment transactions at Bechtle, the application of IFRIC 11 has no effect on the consolidated financial statments


• Amendments to IAS 39 and IFRS 7 – Reclassification of Financial Assets (endorsed on 15 October 2008): The amendments are linked to the current financial crisis and the fact that financial instruments are no longer traded or related markets have become inactive or distressed, and apply mandatorily with retroactive effect from 1 July 2008. This permits entities to reclassify financial assets recognised at fair value in profit or loss to another category under certain circumstances, together with extended disclosures in the notes. Since Bechtle holds no such financial instruments, the application of the amendments has no effect on the consolidated financial statements.

New and/or Revised Accounting Standards and Interpretations not yet applied

Bechtle has not applied, ahead of time for fiscal year 2008, the following new and/or revised accounting standards and interpretations of the following new accounting pronouncements issued by the IASB/IFRIC and adopted by the EU (“endorsement”) at the balance sheet date. Each of the following dates of the relevant EU regulation is mandatory:

• Amendment to IAS 23 Borrowing Costs (endorsed on 10 December 2008): The revised standard is effective for fiscal years beginning on or after 1 January 2009. It lays down the capitalisation of borrowing costs in connection with the acquisition, construction or production of qualifying assets. The previous option of immediately recognising borrowing costs as an expense has been removed. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale. Due to the negligible importance of qualifying assets, the application of this revised standard is not expected to have any major effect on the consolidated financial statements.


• Amendment to IFRS 2 Share-based Payment (endorsed on 16 December 2008): The revised standard is effective for fiscal years beginning on or after 1 January 2009. The amendment clarifies the concept of vesting conditions and specifies the accounting treatment of cancellations of a plan by a party other than the entity. Since there are no share-based payment transactions at Bechtle, the amendment of IFRS 2 is not expected to have any effect on the consolidated financial statements.


• IFRIC 13 Customer Loyalty Programmes (endorsed on 16 December 2008): This interpretation is effective for fiscal years beginning on or after 1 January 2009 and addresses accounting by entities offering customer loyalty programmes; specifically, it explains revenue recognition and the accounting of accrued expenses. The interpretation requires customer loyalty award credits to be accounted for as a separate component of the sales transaction in which they are granted. Therefore part of the fair value of the consideration received is allocated to the award credits and deferred. Revenue recognition takes place in the period in which the loyalty awards credits are redeemed or expire. Since Bechtle does not offer customer loyalty programmes, the interpretation is not expected to have any effect on the consolidated financial statements.


• IFRIC 14 IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction (endorsed on 16 December 2008): This interpretation is effective for fiscal years beginning on or after 1 January 2009. It defines the upper limit in relation to the amount of the surplus that can be recognised as an asset – particularly when there is a statutory or contractual minimum funding requirement. Since Bechtle has no pension plan surplus and no corresponding assets, the interpretation is not expected to have any major effect on the consolidated financial statements.


• Amendments to IAS 1 Presentation of Financial Statements (revised 2007) (endorsed on 17 December 2008): The revised standard is effective for fiscal years beginning on or after 1 January 2009, and includes changes to the structure and presentation of financial statements and minimum requirements for their content. Accordingly, the application of the revised standards will affect the structure and presentation of the financial statement, but not the recognition and valuation of assets and liabilities and thus not the actual assets, financial position and earnings of Bechtle.

At the balance sheet date, the following new and/or revised accounting standards and interpretations of the following new accounting pronouncements had been issued by the IASB/IFRIC but not yet adopted by the EU (no “endorsement”). Consequently, Bechtle has not yet applied these new and/or revised standards and/or interpretations. Each of the following dates of the relevant statements of the IASB or IFRIC is mandatory: If the announcement is subsequently adopted by the EU, the EU regulation will include its own date for the mandatory application.

• Amendments to IFRS 1 and IAS 27 – Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate (published on 22 May 2008): The amendments are effective for fiscal years beginning on or after 1 January 2009 and address issues relating to the valuation of investments in the separate financial statements of a parent company. A subsequent adoption of the revised standards by the EU will have no effect on the Bechtle consolidated financial statements.


• IFRS 3 (revised) – Business Combinations (published on 10 January 2008): The revised standard is effective for fiscal years beginning on or after 1 July 2009. IFRS 3 revises how the purchase method of accounting is applied for all business combinations. The key changes relate to the valuation of non-controlling interests (formerly called minority interest), step acquisitions and the treatment of contingent consideration and acquisition-related costs. If adopted by the EU in this form, the application of this revised standard will affect Bechtle's accounting of new acquisitions. The revised treatment of frequently occurring contingent considerations should be mentioned at this point. The revised standard requires contingent consideration to be recognised at fair value at the time of acquisition, with all subsequent changes in debt contingent consideration to be recognised as expense.


• Amendments to IAS 27 – Consolidated and Separate Financial Statements (published on 10 January 2008): The revised standard is effective for fiscal years beginning on or after 1 July 2009. In the revised standard, the partial disposal of an investment in a subsidiary while the parent company retains control, is accounted for as an equity transaction with owners, and recognised directly in equity. It also addresses how to calculate the profit or loss on deconsolidation of a subsidiary and how to remeasure any non-controlling equity investment remaining in the former subsidiary. In the Bechtle group, investments in a subsidiary always amount to 100 per cent. Applying these revised standards – after subsequent adoption by the EU – is not expected to have any major effect on Bechtle, as no such transactions, in particular reduced interests in subsidiaries, exist or are planned.


• Amendments to IAS 32 and IAS 1 – Puttable Financial Instruments and Obligations Arising on Liquidation (published on 14 February 2008): The amendments are effective for fiscal years beginning on or after 1 January 2009 and address the distinction between equity and debt capital in the accounting of capital shares with cancellation rights. While the investor's puttable capital has so far been classified as liability, it may now be classified as equity in certain cases. This is primarily relevant for partnerships. There are no such puttable capital contributions at Bechtle, since the parent company Bechtle AG is a listed company and thus subject to the relevant statutory and company regulations. A subsequent adoption of the revised standards by the EU will therefore have no effect on Bechtle's consolidated financial statements.


• Amendment to IAS 39 Financial Instruments: Recognition and Measurement – Eligible Hedged Items (published on 31 July 2008): The revised standard is effective for fiscal years beginning on or after 1 July 2009. The amendment addresses two particular situations: the designation of inflation in particular situations and the designation of a one-sided risk in a hedged item. It clarifies that an entity may also designate only part of the changes in the cash flows or fair value of a financial instrument as a hedged item. As there are no hedge relationships effective at Bechtle, applying this revised standards – after subsequent adoption by the EU – is not expected to have any effect on the consolidated financial statements.


• IFRIC 12 – Service Concession Arrangements (published on 30 November 2006): This interpretation is effective for fiscal years beginning on or after 1 January 2008 and governs the accounting for agreements where the public sector contracts with private sector operators for the fulfilment of public tasks. In order to fulfil these tasks, the private sector operators use infrastructure that remains under public control. The private sector operator is responsible for the construction, operation and maintenance of the infrastructure. A subsequent adoption of this interpretation by the EU is not expected to have any effect on Bechtle, as the entities included in the consolidated financial statement are not service concession operators under IFRIC 12.


• IFRIC 15 – Agreements for the Construction of Real Estate (published on 3 July 2008): This interpretation is effective for fiscal years beginning on or after 1 January 2009 and particularly relevant for real estate developers. It governs accounting treatment of real estate sales concluded before construction is complete. In particular, the interpretation clarifies in which cases IAS 11 or IAS 18 should be applied and when their revenue is to be recognised. As Bechtle does not develop nor sell real estate, applying this interpretation – after subsequent adoption by the EU – is not expected to have no effect on the consolidated financial statements.


• IFRIC 16 – Hedges of a Net Investment in a Foreign Operation (published on 3 July 2008): This interpretation is effective for fiscal years beginning on or after 1 October 2008 and addresses issued relating to the hedging of foreign currency risks arising from a net investment in a foreign operation. In particular, the interpretation defines what risks can be hedged, which subsidiary can hold the hedging instrument and how it should be recognised on disposal of the foreign operation. Currently, there are no such hedge relationships effective at Bechtle regarding foreign currency risks arising from net investments in foreign operations. However, such hedging relationships are likely in the future, on account of Bechtle's subsidiaries in Switzerland. Against this background, Bechtle is currently investigating possible consequences from the application of this interpretation – subject to subsequent adoption by the EU.


• IFRIC 17 – Distributions of Non-cash Assets to Owners (published on 27 November 2008): This interpretation is effective for fiscal years beginning on or after 1 July 2009 and provides guidance on distributions of non-cash assets to owners. In particular, the interpretation governs the date when the declaration of a dividend payment is announced and its calculation. The difference between the dividend paid and the carrying amount is to be recognised as expense. Since Bechtle does not currently pay nor plans to pay non-cash dividends, applying this interpretation – after subsequent adoption by the EU – is not expected to have any effect on the consolidated financial statements.


• IFRS 1 (revised) – First-time Adoption of International Financial Reporting Standards (published on 27 November 2008): The revised standard is merely an improved structure to make it easier for the reader to understand, no regulatory changes have been made. The revised standard is effective for fiscal years beginning on or after 1 July 2009 for first-time adopters of IFRS. Consequently, subsequent adoption of the revised standards by the EU will not have any effect on the Bechtle consolidated financial statements.


• Changes to IFRS “Improvements to International Financial Reporting Standards: Annual Improvements Process” (published on 22 May 2008): As part of the annual amendment process, minor and nonurgent changes are collected and published annually in a single omnibus standard. The amendments are primarily concerned with the elimination of inconsistencies between standards and unclear wording. This first omnibus of the 2007 annual amendment process contains 34 changes. It contains changes to the accounting standards as well as terminology and editorial changes. Most of the amendments are effective for fiscal years beginning on or after 1 January 2009. If adopted by the EU, Bechtle does not currently anticipate that the application of these amendments will have any major effect on the consolidated financial statements.


• Update to amendment to IAS 39 and IFRS 7: Reclassification of Financial Assets (published on 27 November 2008). The purpose of this revision of the amendment is simply to clarify the effective dates of the amendment. Consequently, any reclassification made on or after 1 November 2008 will be effective from the date of reclassification. However, reclassifications made before 1 November 2008, may become effective on 1 July 2008 or a later date. Reclassifications cannot be applied retrospectively before 1 July 2008. The application of the initial amendments to IAS 39 und IFRS 7, as previously adopted by the EU, has no effect on the consolidated financial statements, since Bechtle holds no such financial instruments. Consequently, a subsequent adoption of the updated amendments by the EU will have no effect on Bechtle's consolidated financial statements.