The accounting and valuation principles applied to the consolidated financial statements of 31 December 2013 were also applied to the first nine months of 2014 and may be found on our website at www.morphosys.com/financial-reports. The following standards, which were mandatorily applicable for the first time on 1 January 2014, are exceptions to this principle. The following explains the nature and effect of the new standards.
- IFRS 10 "Consolidated Financial Statements": This standard replaces the provisions for Group accounting contained in the previous IAS 27 "Consolidated and Separate Financial Statements" and includes issues which were previously regulated in SIC 12 "Consolidation – Special Purpose Entities". Thus, in the future, IAS 27 will only deal with provisions for separate financial statements and is referred to as "Separate Financial Statements". IFRS 10 introduces a single consolidation model for all entities on the basis of control. Control only exists when the following three criteria are cumulatively fulfilled: (a) an investor has control over the investee; (b) the investor has a risk exposure or rights to variable returns from its involvement with the investee; and (c) the investor has the ability to use its power over the investee to affect the amount of its returns from the investee. The first-time application of IFRS 10 has no impact on the consolidation of the Group's investments. Therefore, the scope of consolidation remains unchanged.
- IFRS 11 "Joint Arrangements": IFRS 11 introduces new accounting provisions for joint arrangements and replaces IAS 31 "Interests in Joint Ventures" and SIC 13 "Jointly Controlled Entities – Non-Monetary Contributions by Venturers". A joint arrangement is defined as a contractual arrangement whereby two or more parties exercise joint control. IFRS 11 differentiates between just two types of joint arrangements – joint operations and joint ventures. The classification now adopts an economic approach, which is focused on the type of rights and obligations arising from the agreement. Jointly controlled assets are abolished by IFRS 11. In addition, the previous option of applying the proportionate consolidation method for joint ventures was rescinded. In the future, these entities will be only included in the consolidated financial statements using the equity method. On 30 September 2014, the Group was not involved in any joint ventures and thus IFRS 11 does not apply to the MorphoSys Group.
- IFRS 12 "Disclosure of Interests in Other Entities": IFRS describes the disclosure requirements for all forms of interests in other entities, including subsidiaries, joint arrangements, associated companies, and structured entities. The disclosure requirements are more extensive than the requirements of the previous provisions. None of these disclosure requirements apply to condensed interim consolidated financial statements unless material events and transactions in the interim period require their disclosure. Consequently, the Group has made no such disclosures on 30 September 2014.
- Amendments to IFRS 10 "Consolidated Financial Statements ", IFRS 12 "Disclosure of Interests in Other Entities", and IAS 27 "Separate Financial Statements – Investment Entities": The amendments provide an exception to the consolidation requirement for entities that meet the requirements of an investment entity under IFRS 10. This exception requires that investment entities must be assessed at fair value through profit or loss. These changes have no impact on the Group since none of the Group companies are an investment entity as defined by IFRS 10.
- Amendments to the transitional provisions of IFRS 10 "Consolidated Financial Statements", IFRS 11 "Joint Arrangements", and IFRS 12 "Disclosure of Interests in Other Entities": The amendments clarify that the date of the first-time adoption of IFRS 10 is the first day of the financial year of the first-time adoption. Therefore, for the MorphoSys Group, this date is 1 January 2014. Moreover, provisions under IFRS 12 regarding disclosures in the notes have been amended. These were observed by the MorphoSys Group.
- IAS 27 "Separate Financial Statements": IAS 27 (revised 2011) contains the remaining provisions applying to the separate financial statements following the inclusion of former IAS 27 provisions regarding consolidation in the new IFRS 10 "Consolidated Financial Statements". In addition, changes to IFRS 12 also have an impact on IAS 27. The Group companies do not prepare separate financial statements that comply with International Financial Reporting Standards. Therefore, IAS 27 has no impact on companies of the MorphoSys Group.
- IAS 28 "Investments in Associates": IAS 28 (revised 2011) contains provisions regarding interests in joint ventures and associated entities that are being assessed solely using the equity method pursuant to IFRS 11. For the first time, additional amendments to IAS 28 require that in the case of a planned partial sale of associated companies or joint ventures, the interest held for sale must be accounted for pursuant to IFRS 5 "Non-Current Assets Held for Sale and Discontinued Operations" provided that the classification requirements of IFRS 5 are met. On 30 September 2014, the Group was not involved in any associated companies, and thus the first-time adoption of IAS 28 has no impact on the interim consolidated financial statements.
- IAS 32 "Financial Instruments – Presentation": IAS 32 governs the presentation and disclosure of all types of financial instruments. With the amendments to IAS 32, which took effect on 1 January 2014, the requirements for offsetting financial assets and financial liabilities have been adjusted. This adjustment did not result in any changes for the Group's balance sheet dated 30 September 2014.
- Amendments to IAS 36 "Recoverable Amount Disclosures for Non-Financial Assets": The inadvertently broad amendments to IAS 36, which were evoked by IFRS 13 with regard to disclosures on the recoverable amount of cash generating units, were corrected by the amendments to IAS 36. Thus, disclosures in relation to the recoverable amount of impaired assets are only required if the recoverable amount was determined on the basis of its fair value less costs to sell. Further amendments to IAS 36 also relate to disclosure requirements with regard to the fair value if the recoverable amount is based on the fair value less costs to sell. On 30 September 2014, the Group did not have any impaired assets that were measured at fair value less costs to sell. Therefore, the amendments to IAS 36 have no effect.
- Amendments to IAS 39 "Financial Instruments: Recognition and Measurement": On 27 September 2013, the IASB adopted the "Novation of Derivatives and Continuation of Hedge Accounting", which are applicable to financial years beginning on or after 1 January 2014. On 30 September 2014, the Group had not performed any novation for derivatives due to legal or regulatory requirements. Therefore, there is no impact on the Group.
- IFRIC 21 "Levies": The interpretation is applicable to all levies to a governmental institution under the legislation which do not represent payments in the scope of other standards (e.g., IAS 12 "Income Taxes"), fines, or other penalties for a violation of legal regulations. On 30 September 2014, or on any previous reporting dates, the Group was not obliged to pay any such levies. Therefore, this interpretation has no effect on the consolidated financial statements.
The Group has not applied any standard, interpretation, or amendment in advance that was published but not yet effective.