Note 6 Investments in bonds

Investments in bonds as at year-end 2019 comprises investments in a debt instrument issued by a large financial institution which serves to cover obligations arising from two cross-border lease contracts (2019: €160 million). The carrying amount of the related lease liabilities was €162 million at year-end 2019 (2018: €157 million). The carrying amount of the investments as at year-end 2019 includes a €1 million provision for credit risk (2018: €2 million).

With the application of IFRS 9 in 2018, the bond investments item underwent a change in the recognition and measurement of the assets concerned. Given the business model, i.e. ‘hold to maturity’, the bonds are carried at amortised cost under IFRS 9. This change means that the carrying amount of the bonds was reduced by €43 million, charged to other reserves. The original recognition in equity of a revaluation reserve of €38 million and the associated deferred tax of €13 million ceases to apply, this change likewise being accounted for in other reserves. This resulted in a net increase in other reserves of €8 million, recognised in the opening balance as at 1 January 2018. The impact of the new impairment model was analysed and the result is a write-down of €2 million. Together with the movement of €43 million connected with the change in the basis of measurement, this makes up the changes in carrying amount due to IFRS 9, including credit losses, totalling €45 million.