Tiscali 2009 Annual Report Download - page 96

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• Fair value hedges Hedging instruments fall within this classification when used to hedge changes in the
fair value of an asset or liability that are attributable to a specific risk. Changes of value related both to
the hedged item, in relation to changes caused by the underlying risk, and to the hedging instrument
are booked to the income statement. Any difference, representing the partial ineffectiveness of the
hedge, therefore corresponds to the net economic effect.
In accordance with IAS 39, financial hedging derivatives are stated according to the methods established
for hedge accounting only when:
• on commencement of the hedge, formal designation and the documentation of the hedging relationship
itself exist;
• the hedge is expected to be highly effective;
• the effectiveness can be reliably gauged;
• the hedge itself is highly effective during the various accounting periods for which it is designated.
With regard to financial instruments that do not qualify for hedge accounting, changes arising from the fair
value assessment of the derivative are booked to the income statement.
At present, the Group does not apply Hedge accounting and does not have financial derivatives.
Liabilities for pension obligations and staff severance indemnities
Defined benefit schemes (as classified by IAS 19), in particular the Staff Severance indemnities relating
to employees of the parent company and the subsidiaries with registered offices in Italy, are based on
valuations performed at the end of each financial year by independent actuaries. The liability recognised in
the balance sheet is the current value of the obligation payable on retirement and accrued by employees
at the balance sheet date. It should be specified that no assets are held in support of the above scheme.
As permitted by IFRS 1 and IAS 19, the Tiscali Group has not adopted the corridor method but uses the
Projected Unit Credit method and, therefore, the actuarial gains and losses are stated in full in the period in
which they arise and are booked directly to the income statement.
Payments made in relation to outsourced pension schemes and defined contributions schemes are
booked to the income statement in the period in which they are due. The Group does not recognise post-
employment benefit schemes, therefore periodic contributions do not involve further liabilities or obligations
to be recognised as such in the financial statements.
As from 1 January 2007, the 2007 Finance Bill and the related implementing decrees introduced significant
amendments to the regulation of staff severance indemnities (TFR), including the worker’s choice regarding
the allocation of their accruing TFR to supplementary welfare funds or to the “ Treasury Fund” managed by
INPS (national insurance institute for social security).
Therefore, the obligation vis-à-vis INPS and the contribution to the supplementary pension schemes takes
on the form, as per IAS 19, of “Defined contribution schemes”, while the portions recorded in the staff
severance indemnity (TFR) remain “Defined benefit schemes”.
Furthermore, the law changes taking place starting from 2007 implied a new calculation of actuarial
assumptions, and of the consequent methods used to calculate staff severance indemnities, whose effects
were directly ascribed to the income statement.
Consolidated Financial Statements and Explanatory Notes