ESR Interim Report 2020 (EN)

Notes to Condensed Consolidated Financial Information 30 June 2020 41 NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION ESR Interim Report 2020 2.2 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (continued) (b) Amendments to IFRS 9, IAS 39 and IFRS 7 address the effects of interbank offered rate reform on financial reporting. The amendments provide temporary reliefs which enable hedge accounting to continue during the period of uncertainty before the replacement of an existing interest rate benchmark. In addition, the amendments require companies to provide additional information to investors about their hedging relationships which are directly affected by these uncertainties. The amendments did not have any impact on the financial position and performance of the Group as the Group does not have any interest rate hedge relationships. (c) Amendment to IFRS 16 provides a practical expedient for lessees to elect not to apply lease modification accounting for rent concessions arising as a direct consequence of the covid-19 pandemic. The practical expedient applies only to rent concessions occurring as a direct consequence of the covid-19 pandemic and only if (i) the change in lease payments results in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change; (ii) any reduction in lease payments affects only payments originally due on or before 30 June 2021; and (iii) there is no substantive change to other terms and conditions of the lease. The amendment is effective retrospectively for annual periods beginning on or after 1 June 2020 with earlier application permitted. The amendments did not have any impact on the Group’s condensed consolidated financial information. (d) Amendments to IAS 1 and IAS 8 provide a new definition of material. The new definition states that information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements. The amendments clarify that materiality will depend on the nature or magnitude of information. The amendments did not have any impact on the Group’s condensed consolidated financial information. 3. OPERATING SEGMENT INFORMATION For fund management purposes, the Group is organised into business units based on their products and services and has three reportable operating segments as follows: (a) The investment segment is divided into three main categories: (i) properties that the Group holds on balance sheet, from which the Group derives total return, including rental income and appreciation in value, (ii) co-investments funds and investment vehicles and the real estate investment trusts (“REITs”) the Group manages, fromwhich the Group derives dividend income, pro rata earnings and/or pro rata value appreciation, and (iii) other investments. (b) The fundmanagement segment earns fee income for managing assets on behalf of the Group’s capital partners via funds and investment vehicles. The Group’s fees include base management fees, asset fund management fees, acquisition fees, development fees and leasing fees, as well as promote fees upon reaching or exceeding certain target internal rate of return and after the Group’s capital partners have received their targeted capital returns. (c) The development segment earns development profit through the development, construction and sale of completed investment properties. The development profit includes construction income, fair value gains on investment properties under construction and gains on disposal of subsidiaries. The Group also derives pro rata earnings and pro rata value appreciation through the development activities of the development funds and investment vehicles managed by the Group in proportion to Group’s co-investments in those funds and investment vehicles.