Adoption of new accounting standards
New IFRS accounting standards and interpretations adopted in 2009/10
During the year ended 31 March 2010, the Company adopted the following International Financial Reporting Standards (IFRS), International Accounting Standards (IAS) or amendments, and interpretations by the International Financial Reporting Interpretations Committee (IFRIC). The impact of IFRIC 18 is to increase operating profit for the year ended 31 March 2010 and reduce liabilities at 31 March 2010 by £22m. In accordance with the transition provisions of IFRIC 18 ‘Transfers of assets from customers’, comparative amounts have not been restated. None of the other pronouncements had a material impact on the Company’s consolidated results or assets and liabilities.
| IFRIC 18 on transfers of assets from customers | Addresses arrangements whereby an entity receives items of property, plant and equipment or cash which the entity must use to connect customers to a network or provide access to a supply of goods or services, or both. |
| IAS 1 revised on the presentation of financial statements | Requires changes to the presentation of financial statements and adopts revised titles for the primary statements, although companies may continue to use the existing titles. |
| Amendment to IFRS 7 on improving disclosures about financial instruments | Introduces a three-level hierarchy for fair value measurement disclosures and requires entities to provide additional disclosures about the relative reliability of fair value measurements. In addition, the amendment clarifies and enhances existing requirements for the disclosure of liquidity risk. The additional information required by this amendment can be found in note 32 and note 33. |
| IFRS 8 on operating segments | Sets out the requirements for the disclosure of information about an entity’s operating segments and about the entity’s products and services, the geographical areas in which it operates and its major customers. |
| IAS 23 revised on borrowing costs | Removes the option of immediately recognising as an expense borrowing costs that relate to assets that take a substantial period of time to get ready for use or sale. |
| IFRIC 13 on customer loyalty programmes | Clarifies that the sale of goods or services together with customer award credits (for example, loyalty points or the right to free products) is accounted for as a multiple-element transaction. The consideration received from the customer is allocated between the components of the arrangement based on their fair values, which will defer the recognition of some revenue. |
| Amendment to IFRS 2 on share-based payments | Clarifies the definition of vesting conditions and the accounting treatment of cancellations. Vesting conditions are defined as either service conditions or performance conditions. Cancellations by employees are accounted for in the same way as cancellations by the Company. |
| Amendments to IAS 32 and IAS 1 on puttable financial instruments and obligations arising on liquidation | Addresses the classification as a liability or as equity of certain puttable financial instruments and instruments, or components thereof, which impose upon an entity an obligation to deliver a pro rata share of net assets on liquidation. |
| Amendment to IFRS 1 First time Adoption of International Financial Reporting Standards and IAS 27 Consolidated and Separate Financial Statements on the cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate | Permits investments to be recognised on first time adoption of IFRS at cost or deemed cost (fair value or previous GAAP carrying amount) and removes the requirement to recognise dividends out of pre-acquisition profits as a reduction in the cost of the investment. |
| Improvements to IFRS 2008 | Contains amendments to various existing standards. |
| IFRIC 15 on agreements for the construction of real estate | Addresses the timing of revenue recognition for entities engaged in the construction of real estate for their customers. |
| IFRIC 16 on hedges of a net investment in a foreign operation | Clarifies that a hedged risk may be designated at any level in a group and hedging instruments may be held by any company in a group (except the foreign entity being hedged), that net investment hedge accounting may not be adopted in respect of a presentation currency and that on disposal the amounts to be reclassified from equity to profit or loss are any cumulative gain or loss on the hedging instrument and the cumulative translation difference on the foreign operation disposed of. |
| Amendment to IAS 39 Financial Instruments: Recognition and measurement: Reclassification of Financial Assets: Effective Date and Transition | Clarifies the effective date of the reclassification of financial assets. |
| Amendments to IAS 39 and IFRIC 9 on embedded derivatives | Requires reassessment of whether an embedded derivative should be separated out if a financial asset is reclassified out of the fair value through profit or loss category. |
New IFRS accounting standards and interpretations not yet adopted
The following standards and interpretations were not effective for the year ended 31 March 2010. None of these are expected to have a material impact on the Company’s consolidated results or assets and liabilities.
| IFRS 3R on business combinations | Makes a number of changes to the accounting for business combinations, including requirements that all payments to purchase a business are to be recorded at fair value at the acquisition date, with some contingent payments subsequently remeasured at fair value through income; an option to calculate goodwill based on the parent’s share of net assets only or to include goodwill related to the minority interest; and a requirement that all transaction costs be expensed. IFRS 3R has been adopted by the Company with effect from 1 April 2010. |
| IAS 27R on consolidated and individual financial statements | Requires the effects of all transactions with non-controlling interests to be recorded in equity if there is no change in control. The revised standard also specifies the accounting when control is lost. IAS 27R has been adopted by the Company with effect from 1 April 2010. |
| Amendment to IAS 39 Financial Instruments: Recognition and measurement on eligible hedged items | Prohibits designating inflation as a hedgeable component of an instrument, unless cash flows relating to the separate inflation component are contractual and also prohibits the designation of a purchased option in its entirety as the hedge of a one-sided risk in a forecast transaction. The amendment to IAS 39 has been adopted by the Company with effect from 1 April 2010. |
| Revised IFRS 1 on first time adoption of IFRS | Changes the structure, while retaining the substance, of the previously issued version of IFRS 1. The revised version of IFRS 1 has been adopted by the Company with effect from 1 April 2010. |
| IFRIC 17 on distribution of non-cash assets to owners | Requires such a distribution to be measured at the fair value of the asset and any difference between the carrying amount of the asset and its fair value to be recognised in profit or loss. IFRIC 17 has been adopted by the Company with effect from 1 April 2010. |
| Improvements to IFRS 2009 | Contains amendments to various existing standards. The amendments have been adopted by the Company with effect from 1 April 2010. |
| Amendment to IFRS 2 on group cash-settled share-based payments | Clarifies the scope and accounting for group cash-settled share-based payment transactions in separate or individual financial statements when there is no obligation to settle the share-based payment transaction. The amendment to IFRS 2 has been adopted by the Company with effect from 1 April 2010. |
| Amendment to IFRS 1 on first time adoption of IFRS | Provides additional exemptions for first time adopters. The amendment to IFRS 1 will be adopted by the Company with effect from 1 April 2010, subject to endorsement by the European Union. |
| Amendment to IAS 32 on classification of rights issues | Defines as an equity instrument a financial instrument that gives the holder the right to acquire a fixed number of the entity’s equity instruments for a fixed amount of any currency, if the financial instrument is offered pro rata to all existing owners of the same class of non-derivative equity instruments. The amendment to IAS 32 has been adopted by the Company with effect from 1 April 2010. |
| Revised IAS 24 on related party disclosures | Simplifies the definition of a related party and provides a partial exemption for government related entities. The revised version of IAS 24 will be adopted by the Company with effect from 1 April 2011, subject to endorsement by the European Union. |
| IFRS 9 on financial instruments | Requires that financial assets should be classified as at either amortised cost or fair value on the basis of the entity’s business model and contractual cash flows. IFRS 9 will be adopted by the Company with effect from 1 April 2013, subject to endorsement by the European Union. |
| IFRIC 19 on extinguishing financial liabilities with equity instruments | Clarifies that equity instruments issued to extinguish a financial liability should be measured at fair value, unless fair value cannot reasonably be determined in which case the fair value of the liabilities extinguished should be used. IFRIC 19 will be adopted by the Company with effect from 1 April 2011, subject to endorsement by the European Union. |
| Amendment to IFRIC 14 on prepayments of a minimum funding requirement | Permits an entity to treat early payments of contributions to cover a minimum funding requirement as an asset. The amendment to IFRIC 14 will be adopted by the Company with effect from 1 April 2011, subject to endorsement by the European Union. |
| Amendment to IFRS 1 on comparative IFRS 7 disclosures | Provides limited disclosure exemptions in respect of financial instruments for first time adopters of IFRS. The amendment to IFRS 1 will be adopted by the Company with effect from 1 April 2011, subject to endorsement by the European Union. |