The following new standards and amendments to standards are effective for annual periods beginning after December 31, 2017, and have not been applied in preparing these consolidated financial statements.
| Standard / Amendment | Effective Date 1 | |
| IFRS 15 Revenue from Contracts with Customers | January 1, 2018 | |
| IFRS 9 Financial Instruments (2014) | January 1, 2018 | |
| IFRS 16 Leases | January 1, 2019 | |
| Clarifications to IFRS 15 Revenue from Contracts with Customers | January 1, 2018 | |
| Amendments to IFRS 2: Classification and Measurement of Share-based Payment Transactions | January 1, 2018 | |
| Annual Improvements to IFRS Standards 2014-2016 Cycle (IFRS 1, IAS 28) | January 1, 2018 | |
| Amendments to IFRS 9: Prepayment Features with Negative Compensation | January 1, 2019 | |
| Amendments to IAS 28: Long-term Interests in Associates and Joint Ventures | January 1, 2019 | |
| Annual Improvements to IFRS Standards 2015-2017 Cycle | January 1, 2019 |
1 Shall apply for periods beginning on or after the effective date.
The Company assessed the potential impact that IFRS 9, 15 or 16 will have on its consolidated financial statements. The other amended standards are not expected to have a significant effect on the consolidated financial statements of the Company.
IFRS 9 (Financial Instruments)
Classification
The standard contains a new classification and measurement approach for financial instruments that reflects the business model in which assets are managed and their cash flow characteristics. Based on the new measurement requirements, Affimed will recognize its preferred shares in Amphivena at fair value and will increase retained earnings by approximately €7 million before taxes as of January 1, 2018.
Hedge Accounting
The new hedge accounting requirements will not have an impact on the consolidated financial statements as the Company does not have contracts or transactions which qualify for hedge accounting.
Impairment
The new introduced impairment rules replace the ‘incurred loss’ model in IAS 39 with a forward looking ‘expected credit loss’ (“ECL”) model. This requires considerable judgement as to how changes in economic factors affect ECLs, which will be determined on a probability-weighted basis. Under IFRS 9, the Company has decided to measure loss allowances on the following basis:
| - | Cash and cash equivalents and financial assets: The Company determines the counterparties’ 12-month ECLs that result from possible default events within the 12 months after the reporting date based on the probability of default according to the Bloomberg database. |
| - | Trade receivables: The Company determines the counterparties’ lifetime ECLs that result from all possible default events over the expected life of a financial instrument based on an estimated rating and corresponding probability of default rates according to the Bloomberg database. |
Based on this methodology, incurred losses on cash and cash equivalents and on trade and other receivables as of December 31, 2017 would have no material impact on the consolidated financial statements.
IFRS 15 (Revenue from contracts with customers)
IFRS 15 (Revenue from contracts with customers) establishes a comprehensive framework for determining whether, how much and when revenue is recognized. It replaces existing revenue recognition guidance, including IAS 18 Revenue, IAS 11 Construction Contracts and IFRIC 13 Customer Loyalty Programs. IFRS 15 has not been applied yet by Affimed but application will be required for periods beginning on or after January 1, 2018.
Affimed has finalized the assessment of all contracts with customers and IFRS 15 has no impact on the revenue recognition policy and revenue from current collaboration and service agreements which is recognized according to the stage of completion.
IFRS 16 (Leases)
The new standard specifies how to recognize, measure, present and disclose lease agreements. The standard provides a single lessee accounting model, requiring lessees to recognize assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value. Affimed will be required to recognize “right-of-use” assets related to its premises rented and certain equipment leased. During the next year, the Company will gather and update information related to leases, assess extension and termination options as well as possible exemptions and identify the appropriate discount rate.