Airbus 2015 Annual Report Download - page 95

AIRBUS GROUP REGISTRATION DOCUMENT 2015 l 63 l
Management’sDiscussion andAnalysisofFinancial Condition andResultsofOperations
Registration Document 2015
2.
2.1 Operating and Financial Review
2.1.2 Significant Accounting Considerations, PoliciesandEstimates
The Group’s significant accounting considerations, policies
and estimates are described in the Notes to the Consolidated
Financial Statements.
2.1.2.1 Scope of and Changes inConsolidation
For further information on the scope of and changes in
consolidation as well as acquisitions and disposals of interests
in business, please refer to the “Notes to the IFRS Consolidated
Financial Statements — Note2: Significant accounting policies”
and “Note6: Acquisitions and disposals”.
2.1.2.2 Capitalised Development Costs
Pursuant to the application of IAS38 “Intangible Assets”, the
Group assesses whether product‑related development costs
qualify for capitalisation as internally generated intangible
assets. Criteria for capitalisation are strictly applied. All research
and development costs not meeting the IAS38 criteria are
expensed as incurred in the consolidated income statement.
Please refer to the “Notes to the IFRS Consolidated Financial
Statements— Note 2: Significant accounting policies —
Research and development expenses and development costs”
and “Note17: Intangible assets”.
2.1.2.3 Accounting for Hedged Foreign
Exchange Transactions in theFinancial
Statements
At least 70% of the Group’s revenues are denominated
inUSdollars, whereas a major portion of its costs is incurred
ineuros and, to a smaller extent, in pounds sterling. The Group
uses hedging strategies to manage and minimise the impact
of exchange rate fluctuations on its profits, including foreign
currency derivative contracts, interest rate and equity swaps and
other non‑derivative financial assets or liabilities denominated
in a foreign currency. For further information, please refer to
“2.1.7 Hedging Activities”, “Risk Factors — 1. Financial Market
Risks — Foreign Currency Exposure” and to the “Notes to the
IFRS Consolidated Financial Statements — Note2: Significant
accounting policies” and “Note35: Information about financial
instruments”.
2.1.2.4 Foreign Currency Translation
For information on transactions in currencies other than the
functional currency of the Group and translation differences for
other assets and liabilities of the Group denominated in foreign
currencies, please refer to the “Notes to the IFRS Consolidated
Financial Statements — Note2: Significant accounting policies
— Transactions in foreign currency”.
Currency Translation Mismatch
Customer advances (and the corresponding revenues recorded
when sales recognition occurs) are translated at the exchange
rate prevailing on the date they are received. US dollar‑
denominated costs are converted at the exchange rate prevailing
on the date they are incurred. To the extent that USdollar‑
denominated customer advances differ, in terms of timing of
receipt or amount, from corresponding USdollar‑denominated
costs, there is a foreign currency exchange impact (mismatch)
on EBIT*. Additionally, the magnitude of any such difference,
and the corresponding impact on EBIT*, is sensitive to variations
in the number of deliveries.
2.1.2.5 Accounting for Sales Financing
Transactions in the Financial
Statements
The accounting treatment of sales financing transactions varies
based on the nature of the financing transaction and the resulting
exposure. Please refer to the “Notes to the IFRS Consolidated
Financial Statements — Note19: Other investments and other
long‑term financial assets”, “Note22: Provisions, contingent
assets and contingent liabilities” and “Note25: Sales financing
transactions”.
For further information on the significance of sales financing
transactions for the Group, please refer to “2.1.6.4 Sales
Financing”.
2.1.2.6 Provisions for Loss-Making Contracts
Loss‑making contract provisions are reviewed and reassessed
regularly. However, future changes in the assumptions used by
the Group or a change in the underlying circumstances may
lead to a revaluation of past loss‑making contract provisions and
have a corresponding positive or negative effect on the Group’s
future financial performance. Please refer to the “Notes to the
IFRS Consolidated Financial Statements — Note2: Significant
accounting policies — Provision for loss making contracts”
and “Note22: Provisions, contingent assets and contingent
liabilities”.
Financial Statements 2015
11 22 33 44 55
QRegistration Document 2015
Annual Report 2015 Financial Statements 2015
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